Senin, 01 Mei 2023

♟ Should You "Sell in May and Go Away"?

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"The last time the markets faced a serious debt ceiling debate, the S&P 500 dropped 19%. Is that what we're facing here in 2023?"

Bryan Bottarelli, Head Trade Tactician, Monument Traders Alliance

Bryan Bottarelli

We just closed the books on April 2023, which was the Dow's strongest month since January.

But now that the calendar has turned to May, it's important to take note of one of the most long-standing adages on Wall Street...

"Sell in May and go away."

If you follow historical and seasonal trends from the Stock Trader's Almanac, then you're most likely familiar with this saying.

It's based on the market's best six months of the year - versus the market's worst six months of the year.

Historically speaking, the top-performing six-month rolling period, on average, has been November through April. Since 1990, the S&P 500 has gained roughly 7% from November to April - compared with an average gain of about 2% from May to October.

Therefore, the start of May officially ends this historically strong period - and thus, we get the old Wall Street saying.

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Combine this seasonal pattern with the coming battle over the debt ceiling, and we could most certainly see this pattern play out again here in 2023.

Therefore, until it's proven otherwise, I believe it's now time to adopt a more defensive approach to your trading.

Is It Time for a Shift in the Markets
 

Picking up on this pattern, Barron's predicts that we could be headed for a "summer of discontent."

The last time the markets were faced with a serious debt ceiling debate - which was back in 2011 - it resulted in the first-ever Standard and Poor's downgrade of the U.S. government from an AAA rating.

In response, the S&P 500 dropped 19%. Is that what we're facing here in 2023?

It's anyone's guess, but as traders, we must be prepared - and pulling from historical trends is a good place to start.

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MONDAY MARKET MINUTE

  • General Motors Revving Up. The auto giant was up 3% in premarket after Morgan Stanley upgraded it to "Overweight" from "Equal Weight." Could this trigger an upside push? Tracking.
  • Bed Bath & Beyond's Pain Is TJX's Gain? Now that Bed Bath & Beyond (BBBY) filed for bankruptcy protection and announced inventory liquidation and the closing of 400 stores, a prime opportunity could open up for TJX Companies (TJX). Eighty percent of BBBY's stores are within 5 miles of a TJX store (such as Home Goods, Marshalls and T.J. Maxx).
  • JPMorgan Rises on First Republic Rescue. JPMorgan (JPM) acquired the substantial majority of assets and assumed the deposits and certain other liabilities of First Republic Bank (FRC). This news should add a sense of calm to the markets.
  • Getty Getting Interest. After Getty's (GETY) perceived low valuation regarding its dominant market position, investors are looking at upside for the visual media company. Shares are down 80% from SPAC-crazed highs, and now a rebound seems a lot more probable.
  • Iveric Bio Enters Agreement With Astellas Pharma. Iveric Bio (ISEE) was up 15% in premarket trading after Astellas Pharma (ALPMY) and ISEE announced they entered into a definitive agreement. Under that agreement, ALPMY has agreed to acquire 100% of the outstanding shares of ISEE for $40 per share in cash, for a total equity value of approximately $5.9 billion.

 

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