You have all now been through a lousy May. We were correct to believe in a Sell in May and stay away situation. This the first time in seven years we have had a Sell in May market. The market corrected 10%.
My belief we were in a sell in May situation on my Sell in May and stay away May 12. based on my earnings season perspective. An earnings season bull often ends in profit taking.
Earlier I have presented my belief in seasonality. Arguing if there were 50% of investors believing in seasonal factors, it to be a major factor in market Developments. This year we have had a New Year’s rally, a January effect and some Nice earnings season rallies. This year even With the sell in May situation.
What about the market now June? As the chart shows and as you all probably know June started in a Nice fashion. After the 10% correction in May we have had a very Nice market this first week of the month, The Nasdaq has Advanced 5%.
If the advance continues in the same pace as the previous week we will have a 20 % rise in June, this not likely. The market is up 17% for the year and that is in 5 1/2 months. The market volatile but a 10% correction in May will not be followed by a 20% rise in June.
Friday’s nonfarm payrolls came in on the soft side. The Labour market had produced 75.000 New jobs and my first take this not to be to good for the market. But the market rallied and it seems the market still bullish.
Even if June looks to become a good month do not be surprised if the market Closes up to July in more a hesitant way. The earnings season perspective to Stocks says there is often hesitant markets pre earnings, this due to general market uncertainty.
My May take to when to buy into the market was to buy in when the Train left the station. Those who have jumped on and sit on a Nice Return now, one week into June, must take what I have explained above into their New market analysis. If you have made a momentum play do not forget the market gone up 5% in a week.
We are all happy June looks a lot better than the month of May. Interesting With a sell in May and stay away for the first time in 7 years. Let us now look to quarter 3 and a possible New earnings season rally.