“Sell In May And Go Away?” Technicals Suggest Otherwise

As we noted in this week’s Weekly Market Commentary, the S&P 500 Index historically has performed better during the May-through-October period when it has started above its 200-day moving average. This period, of course, is the worst six-month period of the year, and it is known universally as the time to “sell in May and go away.”

Since the S&P 500 started this historically weak period above the 200-day moving average this year, it could be a good sign for the typically volatile summer months. It doesn’t mean there won’t be volatility (we think there will be), but it could suggest a large sell-off likely isn’t in the cards.

Here’s the chart and data we shared in this week’s commentary:

Here’s another chart worth sharing, as it is a great visual. Per Ryan Detrick, Senior Market Strategist, “The average year since 1950, when the S&P 500 started the “sell in May” period above its 200-day moving average, tended to trend higher during these worst six months. Meanwhile, when starting off on the wrong foot (i.e. below the trendline), a big dip into September has been perfectly normal. This could be a subtle clue that any dips could be buying opportunities during the next six months.”

 

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