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.

IMPORTANT DISCLOSURES

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured. These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

Member FINRA/SIPC

For Public Use — Tracking # 1-758024 (Exp. 05/19)