Chart of the Week: Sell in May . . .

Thursday, May 05, 2005 | 10:38 AM

CotD observes "The stock market has entered what has historically been the weakest half of the year. Today's chart illustrates that investing in the S&P 500 during the six months of November through April accounted for the vast majority of S&P 500 gains since 1950. "

click for larger graphic

Sell_in_may_20050504

Source: Chart of the Day

"While the May through October period has seen mild gains during major bull markets (i.e. 1950-56 & 1982-97), the overall out performance during the months of November through April is nevertheless compelling. Hence the saying, “sell in May and walk away.”

Note however, that "Selling in May" has not worked in each of the past two years. As we mentioned previously, I am looking for a tradable low somewhere in the June/July time frame.


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Quote of the Day:

"October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February."

-Mark Twain

Thursday, May 05, 2005 | 10:38 AM | Permalink | Comments (2) | TrackBack (0)
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Comments

If you look at SPX inflation adjusted the peak (1966) and the trough (1982) the short cycles of 'sell in May' and the election cycles were pronounced. IF you believe that this cycle peaked in 2000, beware those dismissing seasonal patterns as unimportant.

DJIA adjusted see: http://alumnus.caltech.edu/~ttsmyf/

Posted by: John | May 5, 2005 1:28:22 PM

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