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Global Outlook

Sell In May?

April 29, 2014, Tuesday, 17:22 GMT | 12:22 EST | 20:52 IST | 23:22 SGT
Contributed by eResearch


Foreword: For those familiar with stock seasonality trends, "Sell in May and Go Away" is a popular saying.

If you break up the year into the two six-month periods of November through April, and May through October, and compare stock returns in the two time frames, then you can see where that saying comes from.

I have done that in the tables below. Over the last 40 years, the S&P 500 Index (SPX) has averaged a gain of 7.56% from November through April, and has been positive 80% of the time.

From May through October, the average return is just 1.74%, with 67% of them positive.

The second table shows the more recent data, and it shows a similar trend. This week I will break down these returns a few more ways and see if there is anything to look forward to over the next several months.



Sell in August?: Here, I broke down the May-through-October returns further into three-month intervals. You can see that, over the last 40 years, the first half of that time frame -- May through July -- has been a lot smoother sailing than the latter part of the time frame, August through October.

However, over the past 10 years (nine returns), the next three months have been very bearish. The May-through-July time frame has been positive for the S&P 500 only 33% of the time, averaging a loss of 0.15%.

Hopefully, this year reverts back to the longer-term tendency, at least for the next three months.