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Stock Market “Sell in May and go away” Study When Stocks Are Down YTD

Stock-Markets / Stock Markets 2018 May 03, 2018 - 03:20 PM GMT

By: Troy_Bombardia

Stock-Markets

As you probably know, “Sell in May and go away’ states that the stock market is seasonally weak from May – September. We already demonstrated that it isn’t as weak as investors think in this study.

Some investors believe that May-September is not seasonally bearish IF…

  1. The stock market falls from January – April, AND…
  2. There’s no recession that year (a recession in 2018 is highly unlikely).

Are they right? Let’s look at what happens next to the U.S. stock market from May-September when

The S&P falls from January – April…

And the S&P isn’t in a recession that year (a recession in 2018 is highly unlikely)

Here are the historical years.

  1. 2018 (present case)
  2. 2005
  3. 2004
  4. 2002
  5. 2000
  6. 1994
  7. 1992
  8. 1984
  9. 1977
  10. 1966
  11. 1962
  12. 1952

Here’s what happened next

2005

The stock market went up from May-September. It also went up from October – December.

 

2004

The stock market was flat from May-September. It went up from October – December.

2002

The stock market went down from May-September. It also went down from October – December.

2000

The stock market was flat from May-September. It went down from October – December.

1994

The stock market went up from May-September. It was flat from October – December.

1992

The stock market was flat from May-September. It went up from October – December.

1984

The stock market went up from May-September. It also went up from October – December.

1977

The stock market went down from May-September. It also went down from October – December.

1966

The stock market went down from May-September. It went up from October – December.

1962

The stock market went down from May-September. It went up from October – December.

1952

The stock market went up from May-September. It also went up from October – December.

Conclusion

From May-September:

  1. 4 cases went up
  2. 3 cases were flat
  3. 4 cases where down

From October – December:

  1. 7 cases were up
  2. 1 case was flat
  3. 3 cases were down

As you can see, “sell in May and go away” is neither consistently bearish nor bearish. It’s random. The probability of the stock market going up from May-September = the probability of the market going down from May-September. It doesn’t matter what the S&P was doing from January – April.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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