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Here Comes Sell In May

Here Comes Sell In May

April 30, 2021
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“The sun was warm but the wind was chill. You know how it is with an April day. When the sun is out and the wind is still, you’re one month on in the middle of May.” American Poet Robert Frost

One of the best known investment axioms is to “sell in May and go away.” This is largely because the six months from May through October have historically been some of the weakest months of the year for stocks. As you can see below, the next six months have tended to be on the weak side.

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As shown in the LPL Chart of the Day, the next six months have indeed been the worst six months of the year, up only 1.7% on average. To add insult to injury, we are leaving the six most bullish months of the year. In fact, the S&P 500 Index is set to gain close to 30% during these most bullish six months, one of the best six-month gains ever.

View enlarged chart.

“Stocks are up more than 87% from the March lows, suggesting a well-deserved pullback during these troublesome months is quite possible,” explained LPL Financial Chief Market Strategist Ryan Detrick. “But with an accommodative Fed, fiscal and monetary policy, along with an economy that is opening faster than nearly anyone expected, we’d use any weakness as an opportunity to add to positions.”

Here’s the catch, isn’t there always a catch? Stocks have actually been higher during these worst months of the year eight of the past ten years.

View enlarged chart.


IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. All index and market data from FactSet and MarketWatch. This Research material was prepared by LPL Financial, LLC. Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates.  To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.

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