This is the seasonal saying that investors like to discuss: “Sell in May, go.”
But in the market currently led by policy titles, many strategists say that this year the climate does not correspond to the usual models. With prolonged economic uncertainty, fragile technical and geopolitical catalysts such as trade conversations in the United States China in a game, few see a clear case of approaching the sidelines-not only because the calendar says so.
“We are in a different market this year,” said Larry Tensarelli, a chief technical strategist at Blue Chip Daily Trend Report, in front of Yahoo Finance last week. “Historically, if we go back in the last ten years, the sale in May has not really worked too well.”
The saying traces its roots abroad when London traders left their market in the summer before buying again immediately after the famous horse race St. Leger in September. The idea was to miss the slow summer months and to reappear when the markets are historically performing better.
This approach proved to be effective in the first days of modern Wall Street between 1960 and 1987.
But things have shifted after the main market in the market since 1987. Then the fully invested strategy began to excel and remain invested in the summer months became more favorable. Since then, holding a stable during this period has usually been a profitable strategy, at least in balance.
According to data composed of LPL Financial, the S&P 500 (^GSPC) has historically published its weakest average return between May and October-only 1.8% from 1950-in comparison with the stronger period from November to April.
While summer returns is a positive 65% of the time, their relative insufficient implementation has increased the tendency “Selling in May” as a seasonal market behavior. However, not all are convinced that the model is holding on to today’s variable market.
“Seasonality data can give an important idea of the potential market climate, but this does not represent the current time,” writes in a note to Adam Turnquist’s customers, a chief technical strategist at LPL Financial. “And when it comes to markets, tariff uncertainty and monetary policy at the moment have the power to make rain or partially clouds in the sun.”
From a technical point of view, the stocks showed significant progress in April, but remained in recovery mode after the three main indexs published their highest monthly performances for the year.
“It’s a very high cycle powered by volatility news,” Tentarelli added. “I’m looking to buy discounts, not to sell rallies.”
