Skip to main content

Sell in May and go away?

Sell in May and go away? Let's take a quick look at the figures behind this well-known market adage. Charting the market's seasonal returns below.

Here's a look at the S&P 500 and its seasonal returns, November - April vs. May - October,  from 1950 to 2014. This chart comes to us via Chartoftheday.com

Stocks Sell in May


As you can see, the bulk of the market's gains since 1950 came during the "good period" of November through April. The seasonal period covered in the "sell in May" mantra is not nearly as strong. Returns in this summer period have been subpar, as Chart of the Day points out. 

Here's a look at the seasonal period in the SPY (S&P 500 ETF) from the financial crisis of 2008 to today. 



Since 2008, we find an even mix of upward moves and market corrections in this May - October period. The initial "sell in May" period shown here coincides with the selling panic of 2008. The bull market of 2009 - 2014 has been far more supportive of the seasonal pattern. However, the nasty correction of 2011 began with 8 consecutive down weeks in May - June. 

We don't know what the 2014 May - October period holds, but we're not off to a very strong start given the recent divergence between the major indices and the weakness in growth and momentum stocks. Some traders have noted that recent upward moves in the Dow and S&P, weighted towards large cap names, are masking a breakdown in the broader market. 

In Joe Fahmy's latest video update, he says the market needs time to digest its recent moves. Fahmy feels the market is healthy and supportive of long trades 2-3 times a year. When it's not as supportive, you lighten up your positions or go to cash and take a break.  You'll note that this is his last scheduled video until the fall, so at least one trader I follow is taking some time out for travel during this "sell in May" period. 

Popular posts from this blog

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL!  Please bookmark our new web address at Financetrendsletter.com Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner .   Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead! As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter . You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter).  Stay up to date with our real-time insights and updates on Twitter .

Moneyball: How the Red Sox Win Championships

Welcome, readers . T o get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter .   The Boston Red Sox won their fourth World Series title of t he 21st century this we ek. Having won their first Se ries in 86 years back in 200 4, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it? Quick background: in late 2002, team own er and hedge fund manager, John W. Henry (with his partners ) bought the Boston Red Sox and its historic Fenway Park for a reported sum of $ 695 million. Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship. This brings us to one of my fav orite scenes from the 2011 film , Moneyball , in which John W. Henry (played by Ar liss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pi