During the first week of May every year, the maxim “Sell in May and Go Away” gets taken out, dusted off and powered up as a reason to sell stocks. The rhyme is more than just a catchy urban legend: June, July, August and September have historically been the weakest months of the year for the S&P 500 Index.
Yet even if seasons trigger certain events, when the snow falls in Minnesota in May, Midwesterners need to throw on their winter gear and roll out snowblowers, not lawnmowers.
Consider this encouraging research: The S&P 500 has been rallying for six months in a row, which has happened 48 times since 1950. Following these six-month winning streaks, stocks have historically continued rising. Sixty percent of the time, the S&P 500 climbed 0.79% over the next month; 84% of the time, stocks increased 3.50%, 7.77% and 11.77% the next three, six and 12 months following the streak, respectively.
In addition, 165,000 jobs were added to payrolls in April, helping the unemployment rate fall to 7.5%. This is the lowest level since December 2008.