You've heard this expression before: "Sell in May and go away". It is an old Wall Street saying that basically prompts stock investors to sell in May as the market prepares to enter the Summer period that is supposedly characterized of thin volume as fund managers lighten their stock portfolios and reduce their activity due to vacation leaves etc.
But how accurate is this really? Is it reality or a myth? This is the S&P500 (SPX) chart on the 1M (monthly) time-frame where I look into the month of May price action (as well as before and after) since the subprime mortgage crisis of 2007/08.
As you see, out of this sample of 13 events (May months), we've have 8 cases where May was bullish and extended or started a rise, 3 cases where the price action was bearish on or after May for at least one month and 2 cases where May was bearish but a big rally started after. This alone shows that "sell in May and go away" isn't that accurate.
A more interesting aspect is perhaps the fact that in all cases where a big dip preceded May's price action, the actual month of May was Bullish (May 2009, May 2018, May 2020). I mention that because it is directly related to today, as we are all aware of that the price action since the start of the year (January 2022) has been a strong correction due to the raging inflation and the Ukraine - Russia war among other reasons. This indicates that then the market had already correction and is oversold, investors tend to buy in this opportunity in May.
Since S&P500 has already corrected more than -17%, will May 2022 close in green despite the current disappointing opening? Let me know in the comments section below.
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But how accurate is this really? Is it reality or a myth? This is the S&P500 (SPX) chart on the 1M (monthly) time-frame where I look into the month of May price action (as well as before and after) since the subprime mortgage crisis of 2007/08.
As you see, out of this sample of 13 events (May months), we've have 8 cases where May was bullish and extended or started a rise, 3 cases where the price action was bearish on or after May for at least one month and 2 cases where May was bearish but a big rally started after. This alone shows that "sell in May and go away" isn't that accurate.
A more interesting aspect is perhaps the fact that in all cases where a big dip preceded May's price action, the actual month of May was Bullish (May 2009, May 2018, May 2020). I mention that because it is directly related to today, as we are all aware of that the price action since the start of the year (January 2022) has been a strong correction due to the raging inflation and the Ukraine - Russia war among other reasons. This indicates that then the market had already correction and is oversold, investors tend to buy in this opportunity in May.
Since S&P500 has already corrected more than -17%, will May 2022 close in green despite the current disappointing opening? Let me know in the comments section below.
--------------------------------------------------------------------------------------------------------
** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. **
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👑Best Signals (Forex/Crypto+70% accuracy) & Account Management (+20% profit/month on 10k accounts)
💰Free Channel t.me/tradingshotglobal
🤵Contact info@tradingshot.com t.me/tradingshot
🔥New service: next X100 crypto GEMS!
💰Free Channel t.me/tradingshotglobal
🤵Contact info@tradingshot.com t.me/tradingshot
🔥New service: next X100 crypto GEMS!
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.