"Sell in May and go away"?

Posted on by The INO.com Team

The old adage applied to the stock market shortly before summer is, "sell in May and go away." But, with a recession in recent years and supposed recovery underway, is this saying still relevant?

We're curious to know if our Trader's Blog readers believe this saying. Does the time of year affect your trading plans? Drop us a note in our comments section and let us know.

48 thoughts on “"Sell in May and go away"?”

  1. No it does not affect me but my keyboard had a problem, which has improved, but due to researching and thinking out judicial arguments and defence for someone and campaigning for animal and human rights etc.
    I have thrice missed checking my portfolio

  2. Sell in May and Buy in July!

    I think there could just be a little mini-rally in equities, but just for the 2 clear weeks of the 5th to 16th July.

    Of course local caveats apply, e.g transport violence in South Africa, new oil problems or hurricanes in the US, etc etc.

    After the mini-rally, I will again be out of the market until the bottom of the downward spike in October/November.

    Remember, this is not advice. It is just sheer conjecture.

  4. I have suspected that a certain percentage of the run up in the market leading up to May for a number of years has been due to the activity of Mutual funds (etc.) taking advantage of the RRSP (and 401K) season. After the first of May, there is no longer an inflated demand (tax season is over) so the market becomes depressed. That being said I am sure there are some major investors who go by that other axiom (Buy Low Sell High) who are discretely investing contrary to the majority who buy in May.

  5. SELL IN MAY IS ABSURD AND STUPID
    STOCKS GO UP AND STOCKS GO DOWN BASED ON COMBINED SENTIMENT OF THE WHOLE GAMBLING CROWD AND WHATEVER NEWS STORY OF THE MOMENT
    I JUST INVESTED 5K IN A HIGH DIVIDEND HIGHLY RATED STOCK
    BASED ON ITS OBVIOUS FUTURE PATH - UP. I DONT LISTEN TO STORYTELLERS.
    GOOD LUCK SOOTHSAYERS.

  6. personally, bin short since Feb & doin' fine! Ya'll look to me like that strange feller out on the beach with metal dtr headphones on ... oblivious to the tsunami rolling in.

    Graham & Dodd (and Buffet) always said Fundamentals will "eventually" win out over Technicals. Debt is at saturation. "Eventually" is now. 1 of C wave DOWN is underway. Don't mistake 2 of C for a resumption of the "Bull".

    Believe it. Get short or get out!

  7. Here is what some may call my subversive response:

    Sell in May and go away? Or both buy and short in May and all other months by using a robotic computer program with all of the right algorithms to place and monitor your trades?

    It all depends on what kind of human trader you are (or when you want to take your vacation). I suppose if you have a winning robotic trading program running in your computer, you can let it do the buying and selling for you (Is this what the bankers and hedge funds do and the so-called human managers and traders are merely monitoring the results? That would make it a contest between all of the programs. Makes me think of Alan Turing for some reason.) Thus with a computer placing all your orders, you could go away in May and never have to come back. You could have the program send you emails telling you how big of a fortune it has made while you are in your permanent vacation hideaway and you'd only respond if the system breaks down. How do we know that 99 and 44 hundredths of one percent (as pure as Ivory soap) of all trading isn't being initiated and controlled by computer programs at the brokerage/banking firms thus making the markets all rigged? Automation of the initiation of buy and sell orders shouldn't be any harder than the actual automated trade executions that take place or should this be allowed? If word got out to the general public that this was actually taking place and the majority of the public believed it (a big if, of course) then how long would it take before the public completely stopped shovelling fiat money into the stock markets?

  8. Let's see what traffic looks like on Long Island, Martha's Vineyard, Newport and Nantucket this summer.
    Maybe, sell in May and stay at work.

  9. To the degree that the US market influences all others, the answer is yes: but energy has it's seasonal cycle; the ASCO conference in June gives biotech cancer stocks a different peak; and if you are trading China stocks, their 4th quarter is like our summer doldrums.

  10. "Sell in May..." was/is quite an old rhyme, at least 40 years and likely much older than that. A larger percentage of people DID buy and hold stocks then. Nobody had computers, and hardly anybody had charts and the technology we now have. There were few mutual funds, no ETFs or ETNs, and virtually no shorting. I'd bet that if we studied the old stock charts, staying out of the market made more sense back then, at least for the retail investor. But I'm not gonna do that homework.

    We do deserve vacations after all, if we want them.

  12. HORRIBLE ADVICE! Are we Traders or Lapdogs of the "big boys?" There are excuses of light volume and every other reason why we should be content to mow our lawns, do odd jobs, Bar-B-Que, decorate the boat for the "Flotilla Parade"...instead of claiming our rightful share of the market cash! Last summer was a banner season for me, and I expect the same for 2010. Are we One-Way Traders or are we able to cash in on an up,down or sideways market? This worn-out expression fires me up enough to establish an All-Time Record for my performance, and still have plenty of time to...mow the lawn, decorate the boat...etc...

    1. Hi Nelson,

      I hope you mean horrible saying. We are in no way suggesting this is advice. Thanks for commenting though. We think it's wonderful that traders stare their opinions. It could just save someone from making a mistake.

      Best,

      Lindsay Bittinger
      INO.com & MarketClub

  14. Yes, definitely - always ready for a holiday! Particularly as May is start of our winters - better to stick with FX and go "Trade in the Tropics".
    Cheers

    1. Hi Muzaffar,

      I understand that you would like some assistance in regards to trading gold futures. I will be happy to share with you our complimentary Trend Analysis daily email service. Each day our Chart Analysis Score and Trade Triangle technology will analyze up to 10 markets for you. If you click on the link below, you will be able to receive a daily analysis of the nearby electronic futures contract for gold.

      NYMEX: GC.M10.E

      I hope this helps you Muzaffar. If I can help with anything else please let me know.

      Best,

      Lindsay Bittinger
      INO.com & MarketClub

  18. Buy a Gun in May , Buy Gold on June 1st , Stay away from the dow and QQQ - come back in August . Enjoy the sun and drink a beer
    sorry if this posted twice, got an error.......

  19. The japanese need to start devaluing their yen in preparation for the june-august build up for Christmas inventory, that's a long trend BUY!!!

    Bye!

  20. Why sell in may? Is the idea to take a vacation from monitoring our positions or stay away because of fear? Fear is a big problem but we can put dowside risk minimizing methods. Those who force us to exit are probably profiting from the action. Supply increases and helps drop prices low for the recommending bodies to purchase stocks at atractive prices.

    We have to look at our own objectives and make a decision. Afteral, if we are using Market Club, we are traders and not buy and hold investors. I believe traders can make more while not forgeting this means taking more risks.

    How about playing the market to the downside if the triangles say so? I prefer this method to increase my chances of overall bigger gain throughtout the year.

  21. most markets have seasonal trends.however,one must go short the market most likely to fall.otherwise you don/t gain by going away.

  22. Sell in May and go away rhymes but it`s of course not the intelligent thing to do although it may work in some instances. It`s just more WALL STREET hype to generate their life blood (COMMISSIONS).

  23. In coffee Sell in May and go away is based on a cycle, Summer enters in the North, bringing down consumption, while the largest producing country Brasil, is about to harvest, increasing supply, therefore on most years it makes sense. 2010 appears as an exception though!

  25. Since the market dips in May about twice as many years as not, it is a good factor to take into consideration when weighing up before a decision.So unless the market is a wonderful new bull, follow the adage. Besides it is great to have a break from the stresses and strains of 'being in the market'. There are other things in life, like summer, to be in. Remember: all work and no play makes Jack a dull boy.

  26. Only the "Federal Reserve" is qualified to answer that question these days. "Sell in May and Ben Bernanke will take'th your wealth away". It is more than a little bit evident that the "Federal Reserve" is stepping into the market in after hours trading and beefing up the market. Other country's around the world are beginning to cry FOUL !, and with good reason.

    "If a private enterprise is a failure, it closes down - unless it can get a government subsidy to keep it going; if a government enterprise fails, it is expanded. I challenge you to find exceptions."
    - Milton Friedman

  27. I've never been one to subscribe to this theory but I am rather aggressive and believe that you have to be in the market and make your money work for you so if you ought to buy a hot dog stand instead of putting working capital under the mattress.
    Just my opinion.

  29. Iwe would be curious to know whether the Trade Triangle method (technology!) lends any support to the Sell In May idea. Seems it would be really easy for y'all to look back at the triangles for INX, SPY, COMP and others to let us know if these summer trends are supported by the triangles. Tom

    1. Hi Tom,

      Actually did look at INX, COMP and the SPY. The "Trade Triangles" didn't seem to really follow the idea of "sell in May and go away." Generally a long position was entered around the end of April or beginning of May and the position wasn't liquidated until mid June. I only looked a May for 2007, 2008 and 2009.

      COMP

      2009 - Long on 4/16, out 6/22
      2008 - Long on 5/1, out on 6/9
      2007 - Long on 4/24, out on 7/26

      SPY

      2009 - Long on 5/4, out on 6/22
      2008 - Long on 5/1, out on 5/23
      2007 - Long on 4/16, out on 6/7

      INX

      2009 - Long on 5/4, out on 6/22
      2008 - Long on 5/1, out on 5/23
      2007 - Long on 4/16, out on 6/7

      I hope this helps Tom.

      Best,

      Lindsay Bittinger
      INO.com & MarketClub

      1. But which of those longs were profitable? Sure I could look it up myself, but you already have the data....

        1. Hey Chip,

          To tell you the truth, I just looked at open position for the month of May. Finding which position were profitable is easy, but just give me a little while to do that since I had something just pop up.

          I'll be happy to find this though for you.

          Best,

          Lindsay Bittinger
          INO.com & MarketCLub

        2. Chip,

          Thanks for your patience. I went ahead and looked at if those specific holds in May turned out to be positive or negative and by what amount.

          COMP
          2009 - Long on 4/16, out 6/22 (+119.71)

          2008 - Long on 5/1, out on 6/9 (-20.83)

          2007 - Long on 4/20, out on 7/26 (+83.42)

          SPY
          2009 - Long on 5/4, out on 6/22 (-1.81)

          2008 - Long on 5/1, out on 5/23 (-2.33)
          
2007 - Long on 4/16, out on 6/7 (+3.37)

          INX
          2009 - Long on 5/4, out on 6/22 (+15.08)
          
2008 - Long on 5/1, out on 5/23 (-21.50)

          2007 - Long on 4/16, out on 6/7 (+36.77)

          5 Win (+258.35)
          5 Loss (-46.47)

          I hope this helps.

          Best,

          Lindsay Bittinger
          INO.com & MarketClub

  32. May 2010 was the worst May-moth in 70 years because of drop in Euro. In 2009, 2008, 2007and 2006 month of May was "normal". Stocks generally went up vs April-- with normal dips. This year (2010) US stocks have dropped heavily in correlation with drop of the Euro. Euro's drop has been exacerbated by debt crisis in Europe and sovereign downgrades. As Euro dropped on Friday and overnight to below 1.22, so are the US stocks dropping. Euro is pushing US stocks sharply lower. As Euro drops lower to 1.8 Vs Dollar or even lower to 1.5, the DOW could drop to around 9600 and $&P to 980 or lower. As Euro drops vs Dollar so shall US equities until they decouple from this correlation. They have to decouple for US stocks to move up because Euro is likely to remain pushed down, around 1.20, for quite sometime.

    That's my two cents input.

  33. I could not subscribe to such an arbitrary rule. I do not see this as sensible advice.

  34. Maybe the saying should be

    "Sell today and stay away" That's the sure thing!

    When the quantum computer figures out the best scenario for the government and the wealthy to cash in, things will stabilize. LOL

  38. Sell in may is the only way "fiat" people at goldman sachs and jpmorgan can rape people one last time before they take their summers off! By the looks at volume on this run up, they may only have themselves to play with as the public is tired of playing a rigged game.

    1. Steve - LOL!!! I had to look at that "fiat" 2x - I initially thought it said "fat"! I guess however that would apply also!

    2. The Blame GameThe public rigs the cotton-pickin' game! The heard mentalilty drove the Tech Wreck and The Real Estate Bubble, as well as every other financial disaster on record. It's part and parcel of the public's willingness to believe that trees grow to the sky and that any asset it completely safe. But it's also wrapped up in the need to blame anyone else but oneself. As long as we can point a finger at someone else for our misdeads we can overlook the three fingers pointing back in our direction.

    3. Steve sounds defeated. Stop blaming fat people. You give us skinny people a bad name.

Comments are closed.