🏃♀️🏃🏽♀️ Crypto market. “Sell in May and Go away”
The historical pattern known as the seasonal divergence "Sell in May, and Go away" was popularized by the Stock Trader's Almanac, which stated that investing in stocks represented by the Dow Jones Industrial Average November through April and switching to fixed income for the remaining six months "would have delivered reliable returns with reduced risk since 1950."
What is “Sell in May and Go away”?
“Sell in May and Go away” is a well-known adage in finance. It is based on the stock's historical underperformance over a six-month period from May to October.
According to Fidelity Investments, the divergence has remained most pronounced in recent years, with the S&P 500 Index (SPX) gaining an average of about 2% from May to October between 1990 and the next 30 years, compared with an average of about 7% since November to April.
The Halloween Indicator's research paper, 'Sell in May and Go Away': Everywhere and All the Time*, which examined stock markets outside the US, found the same pattern, calling the seasonal divergence trend "remarkably persistent."
Key Findings
👉 “Sell in May and Go away” is a saying that refers to the historically weaker performance of financial markets from May to October compared to the other half of the year.
👉 Investors can try to benefit from this pattern by switching to less risky assets from May to October based on historical data.
Seasonality in investment flows could continue as a result of financial industry and business year-end bonuses, possibly aided by the mid-April U.S. income tax filing deadline.
Whatever the fundamental considerations, the historical picture became more pronounced as a result of the October stock market crashes of 1987 and 2008.
Bottom Line
The only drawback of historical patterns is that they do not reliably predict the future. This is especially true for well-known historical patterns. If enough people became convinced that the “Sell in May and Go Away” pattern would continue, it would essentially begin to disappear immediately. All the early sellers would try to sell in April and bid against each other to buy back the assets before the others in October.
At the same time, certain considerations regarding the development of geopolitical events in the period from May to October 2024 give reason to think about the prospects of such a scenario for the next 6 months.
* The Halloween Indicator, 'Sell in May and Go Away': Everywhere and All the Time
Ben Jacobsen
Tilburg University - TIAS School for Business and Society; Massey University
Cherry Yi Zhang
Nottingham University Business School China; Massey University - School of Economics and Finance
What is “Sell in May and Go away”?
“Sell in May and Go away” is a well-known adage in finance. It is based on the stock's historical underperformance over a six-month period from May to October.
According to Fidelity Investments, the divergence has remained most pronounced in recent years, with the S&P 500 Index (SPX) gaining an average of about 2% from May to October between 1990 and the next 30 years, compared with an average of about 7% since November to April.
The Halloween Indicator's research paper, 'Sell in May and Go Away': Everywhere and All the Time*, which examined stock markets outside the US, found the same pattern, calling the seasonal divergence trend "remarkably persistent."
Key Findings
👉 “Sell in May and Go away” is a saying that refers to the historically weaker performance of financial markets from May to October compared to the other half of the year.
👉 Investors can try to benefit from this pattern by switching to less risky assets from May to October based on historical data.
Seasonality in investment flows could continue as a result of financial industry and business year-end bonuses, possibly aided by the mid-April U.S. income tax filing deadline.
Whatever the fundamental considerations, the historical picture became more pronounced as a result of the October stock market crashes of 1987 and 2008.
Bottom Line
The only drawback of historical patterns is that they do not reliably predict the future. This is especially true for well-known historical patterns. If enough people became convinced that the “Sell in May and Go Away” pattern would continue, it would essentially begin to disappear immediately. All the early sellers would try to sell in April and bid against each other to buy back the assets before the others in October.
At the same time, certain considerations regarding the development of geopolitical events in the period from May to October 2024 give reason to think about the prospects of such a scenario for the next 6 months.
* The Halloween Indicator, 'Sell in May and Go Away': Everywhere and All the Time
Ben Jacobsen
Tilburg University - TIAS School for Business and Society; Massey University
Cherry Yi Zhang
Nottingham University Business School China; Massey University - School of Economics and Finance
Trade active:
May 15, 2024
• After months of deliberation, the SEC is expected to make a final decision on VanEck and ARK's Ethereum ETF applications next week, on May 23 and 24, respectively.
• There appears to be industry consensus that these applications will be rejected by the SEC due to a lack of understanding with the issuers. However, it remains unclear what the exact reason for this refusal will be.
• The issue already has some history, and for now, presumably the SEC's position may be to understand ETH as a security (likely as a Warehouse Receipt, WHR or Warehouse Receipt Transaction System), and not as a commodity trust, the applications for registration of a spot ETH ETF of which were previously in 2024 were filed by issuers.
• More details on the issue can be found in the scientific publication of the 2nd International Conference on Mechanical Engineering, Electronics, Control and Automation (MECAE 2018) “Research and Application of Warehouse Receipt Transaction Based on Smart Contract on the Blockchain” by Yafei Chen, Zhihong Zhang and Beibei Yang.
• After months of deliberation, the SEC is expected to make a final decision on VanEck and ARK's Ethereum ETF applications next week, on May 23 and 24, respectively.
• There appears to be industry consensus that these applications will be rejected by the SEC due to a lack of understanding with the issuers. However, it remains unclear what the exact reason for this refusal will be.
• The issue already has some history, and for now, presumably the SEC's position may be to understand ETH as a security (likely as a Warehouse Receipt, WHR or Warehouse Receipt Transaction System), and not as a commodity trust, the applications for registration of a spot ETH ETF of which were previously in 2024 were filed by issuers.
• More details on the issue can be found in the scientific publication of the 2nd International Conference on Mechanical Engineering, Electronics, Control and Automation (MECAE 2018) “Research and Application of Warehouse Receipt Transaction Based on Smart Contract on the Blockchain” by Yafei Chen, Zhihong Zhang and Beibei Yang.
BTC May Day Roller Coaster