{"id":12798,"date":"2022-05-05T10:36:38","date_gmt":"2022-05-05T10:36:38","guid":{"rendered":"https:\/\/winvestmentsco.com\/why-you-shouldnt-sell-in-may-this-year-weekly-market-commentary-may-2-2022\/"},"modified":"2022-05-05T11:06:10","modified_gmt":"2022-05-05T11:06:10","slug":"why-you-shouldnt-sell-in-may-this-year-weekly-market-commentary-may-2-2022","status":"publish","type":"post","link":"https:\/\/advisors2.bradcable.com\/swwadvisorsdavid\/why-you-shouldnt-sell-in-may-this-year-weekly-market-commentary-may-2-2022\/","title":{"rendered":"Why You Shouldn\u2019t Sell in May This Year | Weekly Market Commentary | May 2, 2022"},"content":{"rendered":"

\u201cSell in May and go away\u201d is probably the most widely cited stock market clich\u00e9 in history. Every year a barrage of Wall Street commentaries, media stories, and investor questions flood in about the popular stock market adage. In this week\u2019s Weekly Market Commentary, we tackle this commonly cited seasonal pattern and why it might not play out this year, similar to recent years.<\/p>\n

The Worst Six Months of the Year<\/b><\/h3>\n

\u201cSell in May and go away\u201d is the seasonal stock market pattern in which the six months from May through October are historically weak for stocks, with many investors believing that it\u2019s better to avoid the market altogether by selling in May and moving to cash during the summer months.<\/p>\n

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\u201cSell in May and go away\u201d began in England originally as \u201csell in May and go away until St. Leger\u2019s Day.\u201d The saying was based around the St. Leger Stakes, a popular horse race in September that marked the end of summer and a return of the big traders and market volume.<\/p>\n

As\u00a0[Figure 1]<\/b>\u00a0shows, since 1950 the S&P 500 Index has gained 1.8% on average during these six months, compared with 7.1% during the November to April period. In fact, out of all six-month combinations, the May through October period has produced the weakest\u2014and least positive\u2014average return.<\/p>\n

But as with many things in life, it is never that simple.<\/p>\n

What have you done for me lately?<\/b><\/h3>\n

As we head into this seasonally weak period, keep a few things in mind. First, the S&P 500 Index has closed higher during the month of May in eight of the past nine years\u2014so \u201cSell in June\u201d might be more appropriate. In addition, various sentiment signals we follow are showing extreme caution and fear, potentially bullish from a contrarian point of view. The CBOE VIX Index (VIX) recently spiked above 30, consistent with stock market lows. Various sentiment polls are flashing extreme fear, while money managers are sitting on a good deal of cash as well. Lastly, we don\u2019t see a recession in 2022, and despite lackluster Q1 gross domestic product (GDP) reported on April 28, we continue to expect economic growth of 3% this year, led by strong corporate earnings, accelerating business investment, and a healthy consumer.<\/p>\n

Here\u2019s the catch\u2014and there\u2019s always a catch: These \u2018worst six months of the year\u2019 have been quite strong lately. In fact, stocks gained nine of the past 10 years during these six months, as you can see in\u00a0[Figure 2]<\/b>. So, although our guard is up for some potential seasonal weakness and choppy action, be aware it could be short-lived and consider using it as a buying opportunity.<\/p>\n

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Is this actually normal?<\/b><\/h3>\n

Clearly 2022 has been one of the worst starts to a year ever for stocks, but how rare is it? Here are some statistics to potentially help calm some nerves.<\/p>\n