This well-known saying on Wall Street – “sell in May and go away” – has gone the way of Walkman.
The S&P 500 (.SPX) has had a strong performance in recent Mays. With the index plowing to record highs, 2015 should enjoy another positive May.
Source: Thomson Reuters Eikon
Mixed overall stats, strong recent stats
May might have been historically one of the worst months for stocks. Since the bottom of the Great Recession in 2009 the S&P 500 has had a split performance in May, advancing in 2009, 2013 & 2014, and declining between 2010 and 2012.
However, only the decline of 2011 was sustained. Encouragingly, in more recent times, namely the previous two years, the market enjoyed profitable Mays. Also of notice, the S&P 500 has nailed record highs in 2013, 2014, and 2015.
For as long as the index holds above its rising 21-month exponential moving average, the uptrend remains in good shape.
Source: Thomson Reuters Eikon
A distant risk
The market expects the Fed to start tightening borrowing costs sometime this year. Given the weakness of U.S. economic data, the start of the tightening cycle should be delayed from June to September.
The S&P 500 has already surpassed the 1.382% Fibonacci extension of the uptrend between March 2009 and May 2013. Traders are now eying the 2,200 area. Only a close below the 21-month exponential moving average, currently at 1,961, would endanger the index’s secular uptrend, but this is unlikely.
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