What Happened to Sell in May?

The S&P 500 Index is up approximately 8% since May when we were bombarded with warnings to “Sell in May and Go Away.” Remember, the worst six months of the year historically have taken place from May through October, while the other six months are the best.

As we noted at the time though (in our Weekly Market Commentary) there were many clues that suggested selling stocks in May and waiting until October to move back into equities may not work in 2018. There is still plenty of time for some usual pre-midterm election year volatility, but the reality is the bull market has surprised many by gaining each of the past four months during this seasonally weak period.

“Sell in May has many bears pulling their hair out in frustration. Here’s the catch: history says when ‘Sell in May’ doesn’t work right away, the rest of the year can be quite strong. In fact, when April, May, June, and July are all higher for the S&P 500 (like in 2018), the final five months of the year have gained each of the past 10 times,” explained Senior Market Strategist Ryan Detrick.

As our LPL Chart of the Day shows, the S&P 500 added nearly 10% on average over the final five months of the year when each month from April until July were higher. August still tends to see some seasonal weakness, but the bottom line is that this suggests higher prices may be likely before 2018 is all said and done.


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