“Sell in May and go away!”: is it worth believing? Russian financiers against “sell in May” Mashkov and Budina are leaving the cinema. Where is Russian cinema heading?

XAU/USD:

Over the last three trading weeks, the precious metal has been under pressure, however, in my opinion, the downward trend is not complete, and it will only gain momentum. Why? Firstly, FOMC representatives (Dudley and Williams) who spoke last week said that investors were too pessimistic about the latest meetings of the monetary authorities. The FED is ready to raise rates even at its June meeting as it expects economic growth to strengthen in the second quarter. Positive April releases for industrial production, average earnings, retail sales, auto sales and real estate clearly confirm this trend. The monetary regulator also expects a drop in the unemployment rate, which traditionally contributes to rising inflation. Thus, to paraphrase a well-known saying, we can say: what is good for the dollar is death for gold. Against this background, during the week you should open Sell positions when quotes rise to the area of ​​1262/1275 and take profits at 1235.

During the week you should open Sell positions for two reasons. Firstly, the growth of the US currency traditionally puts pressure on black gold, since its value is denominated in dollars. The minutes of the last meeting of the US Federal Reserve, published last week, signal to us that the discount rate may be raised as early as June 15, which will help strengthen the dollar. Secondly, the US Department of Energy on Wednesday, May 18, disappointed investors with weak data on crude oil reserves: reserves increased by 1.3 million barrels. One cannot ignore the report from oil service company Baker Hughes: the number of drilling rigs in the US and Canada has not changed over the past week. This stabilization indicates that current oil price levels are beginning to suit companies. Now the bulls are deprived of this factor to continue the upward trend. However, I do not rule out a possible short-term increase in quotes to the area of ​​last week’s high of $50.13/barrel, where bears can place sell orders. Against this background, during the week you should open Sell positions when quotes rise to the area of ​​49.30/50.80 and take profits at 47.00.

In my opinion, you should sell a contract on the S&P500 if quotes rise in the coming week. The main driver for lower prices is the growing expectation of an increase in the US Federal Reserve interest rate. The yield on two-year Treasury bonds, which reflects expectations for FOMC monetary policy, rose by 13 bp last week to its highest level in the last two months. These two instruments traditionally have an inverse correlation and this is not surprising, since tightening monetary policy has a negative impact on financial indicators corporations and thereby reduces the attractiveness of investment in the stock market. In this regard, the well-known American stock exchange saying: sell in may and go away becomes even more relevant. Against this background, during the week you should open Sell positions on the growth of quotes in the area of ​​2057/2077 and take profits at the 2021 mark.

Here we are, imperceptibly, approaching May. And May is not a very comfortable month for the stock market. And how many different “bugs” there were in this last spring month. It’s not for nothing that there is even a saying “Sell in may and go away.” And the results of yesterday's trading force us to take this saying very seriously. After a seemingly positive market reaction to the decisions of the FOMC meeting on Wednesday, the market remained fairly calm on Thursday in the first half of the day. Although the indices were in the red zone, they still remained close to zero levels and at some point one could even think that we would see the typical picture again last days- failure at the beginning of the trading session with a gain at the end. However, somewhere from 19-00 Moscow time everything went awry. The indices slowly but surely went down and continued to decline until the market closed.

Ahead of the rest of the world, shares of companies in the financial sector were flying down, losing an average of 1.2%. Shares of companies in the technology sector and services sector fell almost equally sharply (-1.1% and 1.0%, respectively).

And yet, against this rather negative background, there were also pleasant moments. All of them are related to the release of quarterly reports. Of course, in first place is Facebook (NASDAQ:), whose shares, after simply brilliant reporting, immediately soared in price by more than 10%. By the end of the auction, the burden of general sales that swept through the market nevertheless tempered the ardor of buyers. But still, FB shares rose by more than 7% by the end of the day. FORD (F) also distinguished itself. Analysts predicted good reporting for this automotive giant. And so it turned out - +3.15%.

On Thursday, April 28, at the St. Petersburg Exchange, 2,105 transactions were concluded in foreign securities trading for a total amount of about 2.5 million US dollars. The greatest demand was for shares of Verizon Communications (VZ) - 676 ​​transactions, as well as shares of VISA (V) - 310 transactions.

In Russia today is the last day before the long 4-day weekend in May. And therefore, everyone who did come to work (and many didn’t come!) walk around relaxed and carefree. America is trading at full speed today, and after yesterday’s serious fall, we can expect continued developments.

Macroeconomic data on income and expenses individuals are more important than ever. The release of yesterday's data, which showed a low level of GDP growth and the worst decline in business investment since the 2008 crisis, makes all analysts and economists tense. Is everything as good as Janet Yellen described on Wednesday?

In addition to macroeconomic statistics, quarterly company reports will also be released in large numbers today. The most interesting and significant reports will appear even before the start of trading from oil giants ExxonMobil (NYSE: XOM) and Chevron(NYSE: CVX). Analysts are quite expected to expect a decline in profit and revenue. But how will market participants react to this?

So far, based on the results of the first half of the day, we can say that the background is neutral. On the one hand, oil continues to climb steadily upward. On the other hand, European markets are in a slight minus and are trying to decide on the future direction of movement. At the same time, futures for American indices are still neutral and stand near zero levels. Still, they are unlikely to stay here for long and more significant movements can be expected during the main trading. Purely technically, a further approach to more low levels. At the same time, the nearest support level for the index

The whole truth about the famous belief based on statistical calculations on the US stock market! May is already upon us, with the S&P 500 up 13.5% for the year. The risks of a correction are high, but what does the empirical data say?

About May

In fact, May is not as bad as is commonly believed. Consider a sample of the S&P 500 index for the period from 1928 to 2016. The last spring month is located in the weaker half of the whole year. The worst month was September.

During the designated period in May, the S&P 500 closed up 50 times and down 39 times. The median change was +0.6%.

At the same time, the volatility turned out to be dramatic – the standard deviation was 6%. The biggest drop was in 1932 with minus 23% in May, and in 1933 it soared by a record 23% for that month. In general, the risks are high, but statistics do not give clear negative signals.

"Summer period"

If you look further, it turns out that the period from May to October is statistically weaker than the “winter” 6 months: +2% versus +5% for the S&P 500 index. This is the average temperature for the hospital, in fact, the volatility of the indicators is significant. Valuations are more suitable for long-term investors.

If we adjust for the presidential cycle, it turns out that negative 6 months, starting in May, have historically been observed in the 3rd year of the cycle. Let us remember that Donald Trump is only in his first year in power.

Source: HulbertRatings.com

Strategies

S&P Capital IQ analysts presented several seasonally adjusted strategies for the US market. The worst model over the past 15 years, although the least risky, turned out to be the model of investing in the S&P 500 index from November to April and in “cash” in the form of 3-month Treasuries from May to October (+9% per annum on average).

Investments in the S&P 500 are the most volatile year-round, with an average annual return of 10%. The most profitable investments turned out to be investments in the S&P 500 in the “winter” and shares of producers of essential goods + the healthcare sector in the “summer” (50% consumer staples and 50% health care): +13% per annum.

Source: S&P Capital IQ, S&P and Dow Jones indexes

For reference

Manufacturers of essential goods (Consumer Staples Sector)– the defensive sector, which includes companies that are less dependent on the phases of the economic cycle. Includes manufacturers and distributors of food, beverages, tobacco and personal care products.

May is ready to come into its own, and I want to update for you the version of my old article dedicated to the saying “ Sell ​​in May and go away!"("Sell in May and go for a walk"). In 2012, it was already published on the Internet, but it’s time to add new data.

RTS Index in May: the language of statistics

Due to the fact that the saying does not specify exactly when to sell shares in May - at the beginning or at the end of the month, and perhaps it is only true for those who miraculously grabbed luck by the tail and sold securities at the maximum prices of the end of spring, I will consider everything these three options are an example.

Let's consider what an investor will gain if he sells all shares at the beginning or end of May and, if he is lucky, locks in financial result at the peak of the month, and then will return to the market only in September. You can rightly note that you still need to be able to predict peaks, and this gift is given to rare lucky ones. But experienced traders do not strive for this; they it’s enough to catch the golden mean.

According to the data presented in Table 1, if you sell in May and leave before the first working day of September, then you could buy cheaper shares in the fall (that is, the saying is confirmed):

on sale in early May in 9 cases out of 18 (on average, in the years when the index quotes fell, the deviation was 18.78%; in 9 cases when the quotes rose, the increase was 24.2%);

when selling at maximum prices in May(peaks must also be correctly predicted) in 12 out of 18 cases (on average, in years when index quotes fell, the deviation was 16.55%; in 6 cases when quotes rose, the increase was 14.65%);

on sale at the end of May in 6 out of 18 (on average, in the years when index quotes fell, the deviation was 21.63%; in 12 cases when they rose, the increase was 14%).

Grandma said in two

So, dear friends, if you sell shares included in the RTS index in early May, then the chances that you will buy them cheaper in September are 50 to 50. But at the same time, if there is growth, it will on average be stronger than the fall. It turns out that if you sell shares at the end of May, then your chance of buying back shares in September is 1 in 2 cheaper, however, if the securities fall over the summer, then compared to the close of May, this may be a more significant movement than the summer growth. The saying “Sell in May and go away!” It’s worth trusting that if you have a magic ball that can help you predict the May high, then your probability of buying securities in September will increase to 2 to 1. The profit is small to spend on magical attributes!

This analysis is based on facts. It should be used in conjunction with other methods of market analysis to make a trading decision. Clients who receive personal support can order similar research for specific promotions. Tune in and don't miss the bright movements of late spring and early summer!

It's May now. One of the oldest rules on Wall Street says: “Sell in May and go away,” which translates as “sell in May and go away.” It is proposed to leave the market, since it is traditionally believed that the low season is coming and there is simply nothing to do in the markets. That is, in our understanding, markets stand. Based on some rough historical observations, someone decided that it might be a good idea to stay in the stock market from May, and sometimes even into the fall.

A certain Sam Roe wrote his research in Business Insider, calling it “The Truth About “Sell in May and Go Away.” The article describes a study of some figures over the past 20 years. Our view on this is that 20 years is a relatively short period of time to reveal any historical trends in markets, especially given the impact of central bank intervention for more than a quarter of that time.

However, with the help of monthly data provided by Dr. Robert Shiller, let's take a look at the seasonal pattern of strong and weak periods in the year since 1900. They are presented in the table below.

Using the data above, let's take a look at what we could expect during the month of May.

Historically, May is the fourth month with poor turnover performance for stocks with an average return of only 0.26%. However, May comes in third worst on average with a return of 0.49%.

As noted, May represents the start of a seasonal softening for stock trading. Markets in May, June and beyond until September are considered the weakest in terms of trading. That's where the "sell in May" comes from... Of course, while not every summer has been a doom and gloom, history does show that investing in the summer months is a doom and gloom game at best.

As in October, average monthly incomes in May were also distorted by sharply negative earnings during the “Great Depression.” However, in recent years returns were with only a few exceptions, at +/- 5%, as shown below.

However, before you slip into a warm bath of investing bliss, it's important to remember that just because the data suggests May is likely to be a weak month for earnings, there's also the possibility that it won't be. The graph below shows the number of positive and negative returns in the market by month.

So, based on this historical evidence, it would be wise to stay in the markets, right? Perhaps not. Problem with statistical analysis is that we measure historical odds by an event that will happen in the near future. It's like playing your strong hand in poker - your opponents always have a chance to beat it. But this does not mean that it will always be like this.

Currently, research into current price action suggests that markets are likely to make new highs in the coming days. Such actions, if they occur, will continue to support the bullish case for the stock. Portfolio allocations should remain in desired stocks.