Mish’s Daily: When to Buy in May
Written by Michele ‘Mish’ Schneider
The common refrain, “Sell in May…” gives this month a bad rap, but it doesn’t deserve it.
May is historically one of the least volatile months of the year as measured by its closing average return in the S&P500. Since 1970 its average return is only .49%.
Considering December, January, and April are three of the top four best performing months of the year, the market probably deserves a rest by May.
However, May doesn’t always rest, and it’s not lacking in historical volatility, as you can see from the chart above of the best and worst performing months of May in the last 50 years.
There’s also an interesting historical trend in May’s performance intra-month. It tends to be weak to start, then rally in the latter part of the month.
Interestingly, the patterns over the last 10 and 50 years are similar in that, May has tended to bottom around the same day of the month in both time frames. As you can see in the chart below, the trends of both the red line (10 years) and blue line (since 1970) both bottom out around the 13-15th trading day of the month.
The 13th trading day of the month will be May 17th.
With a Fed announcement, earnings from AAPL, and an employment report all this week, May could get off to a wild start. If history is any guide, and the market pulls back this week, look for a bounce around the 9th trading day of the month (May 11th) and then a rally into the end of the month starting after May 17th.
For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
NOT TOO LATE Click here if you’d like a complimentary copy of Mish’s 2023 Market Outlook E-Book in your inbox.
Grow Your Wealth Today and Plant Your Money Tree!
“I grew my money tree and so can you!”- Mish Schneider
Mish in the Media
TD Ameritrade Nicole Petallides 04-28-23
Business First AM Angela Miles 04-27-23
Making Money With Charles Payne 04-27-23
Stock Charts 04-21-23
Benzinga PreMarket Prep 04-20-23
Cheddar TV Closing Bell 04-19-23
The Money Show-Intro to Talk 04-19-23
Business First AM on Tax Season 04-18-23
CMC Markets 04-12-23
Yahoo Finance 04-12-23
Rosanna RoPodcast 04-07-23
May 2-5 StockChartsTV Market Outlook
S&P 500 (SPY) 23-month MA 420
Russell 2000 (IWM) 170 support – 180 resistance
Dow (DIA) Over the 23-month MA-only index
Nasdaq (QQQ) 329 the 23-month MA
Regional banks (KRE) 43 now pivotal resistance
Semiconductors (SMH) 246 the 23-month MA
Transportation (IYT) 202-240 biggest range to watch
Biotechnology (IBB) 121-135 range to watch from monthly charts
Retail (XRT) 56-75 trading range to break one way or another