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Post by uncleharley on Jun 11, 2023 14:21:31 GMT
This morning I have been playing with the Seasonality Tool on Stock Charts. The results seem to refute the old adage about "selling in May & going away. In fact the results strongly imply that the Q's will outperform cash in all months except Febuary and September over 5 and 10 yr periods. The Q's will also give similar outperformance against 10 yr & 5 yr treasuries. My question is, Has anyone seen evidence that would refute this finding or confirm that old saying about selling in May? stockcharts.com/freecharts/seasonality.php?symbol=QQQ&compare=%24USD |
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Post by richardsok on Jun 11, 2023 14:48:24 GMT
This morning I have been playing with the Seasonality Tool on Stock Charts. The results seem to refute the old adage about "selling in May & going away. In fact the results strongly imply that the Q's will outperform cash in all months except Febuary and September over 5 and 10 yr periods. The Q's will also give similar outperformance against 10 yr & 5 yr treasuries. My question is, Has anyone seen evidence that would refute this finding or confirm that old saying about selling in May? stockcharts.com/freecharts/seasonality.php?symbol=QQQ&compare=%24USD Sy Harding's RIDING THE BEAR (published 40 years ago) pretty well settled the matter of seasonal cycles for me with its historical record of annual trends. Even allowing for a pinch or two of salt on the notion and your surprise hiccups now and then, I've never read anything that positively refutes the theory and instead advises 'buy May 1st and sell Oct 30th'. If memory serves, no one in living memory ever knew a winter market crash until we were hit by Covid in early '20. That latest crash will probably skew your records. |
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Post by yogibearbull on Jun 11, 2023 15:14:21 GMT
Seasonality is a weak or secondary effect. It may work in better than 50% of the years, so one can point to many exceptions. It hasn't worked in several recent years due to other more important factors (elections, the Fed, Covid, Russia-Ukraine war, etc).
I generally tend to lower my tactical asset allocation (TAA) during May 1 - October 30 (so my sell list has higher priority), and increase my TAA during November 1 - April 30 (so my buy list has higher priority). Beyond that, I don't worry about it, but keep a eye on related media noises.
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Post by uncleharley on Jun 11, 2023 18:07:14 GMT
Thanks guys. Further use of the tool indicates that Sell in May and go away is far better related to Commodity cycles than stocks. Applying the idea to either stocks or commodities will give you a lot of surprises in June.
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Post by roi2020 on Jun 11, 2023 20:53:53 GMT
"'Sell in May and go away' is a stock market adage based on what the Stock Trader's Almanac calls the 'best 6 months of the year.'
Historical data reveals that the top performing 6-month rolling period, on average, has been November through April.
Hence, the saying investors should 'sell in May and go away' — and come back in November."
"But this trading theory has flaws.
More often than not, stocks tend to record gains throughout the year, on average, and thus selling in May generally doesn't make a lot of sense."
"With that said, if you are making tactical trades with some percentage of your portfolio, and calendar trends are a component of your strategy,
sector rotation may be a more appropriate takeaway from the sell in May calendar trend — according to analysis by the Center for Financial Research and Analysis (CFRA).
Rather than exit the market, you could factor in seasonal patterns that have developed in recent years to augment your decision-making process."
"According to CFRA, since 1990 there has been a clear divergence in performance among sectors between the 2 time frames —
with cyclical sectors easily outpacing defensive sectors, on average, during the 'best 6 months.'"
Link
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Post by liftlock on Jun 11, 2023 21:04:33 GMT
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Post by roi2020 on Jun 11, 2023 21:31:25 GMT
liftlock ,
I didn't realize that an ETF was created to capitalize on this strategy.
Thanks for bringing this to our attention!
SZNE (07/23/2018 inception) lagged RSP and VOO from September 2018 - May 2023.
Link
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Post by archer on Jun 11, 2023 22:32:31 GMT
In this video Tom Bowley presents a thorough history on seasonality for the market and also the areas that outperform May-Aug. It starts 4 minutes into the vid to save you some time. Basically the charts as uncleharley, has posted show selling in May isn't such a great idea. |
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sam
Lieutenant
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Post by sam on Jun 11, 2023 22:36:49 GMT
I will more focus on Months rather than whole sell in May or summer months sitting idle in CASH. Actually QQQ has better performance during summer months either absolute or relative to SPY. If you trade a lot then it is quite helpful to know which part is year historically more volatile. uncleharley, In you chart link why did you use $USD as comparison? |
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Post by steelpony10 on Jun 11, 2023 23:48:46 GMT
uncleharley , Not many spend the time many posters seem to spend year around looking for reasons why an unknown moves in an unknown manner against unknowable future unknown events. As explained already (bankers and aristocrats) and commoners like me need a rest to clear our heads of 8 months of debris and conflict. It takes a special person to enjoy year round suffering, like monks. No matter the reason my experience is what better time in the middle of the northern hemisphere worldwide where civilization (your trading partners) has thrived for centuries to head out from May-August. I always figured Nov-April are the times for cap gains for those that care after the debacle of Sept-Oct brought on by the returning trunk slammers that just can’t take it any more and are desperately in need of an adrenaline rush. So maybe selling in May to preempt Sept-Oct is a market timers low risk move?
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Post by anitya on Jun 11, 2023 23:51:29 GMT
Thought, except sugar and precious metals, most commodities are already hit hard - (remember my complaining about house insurance premium hikes?!)
One year change of some commodities (snipped from Charlie Bilello) -
Copper: -14%
Coffee: -19%
Soybeans: -22%
Corn: -22%
Zinc: -37%
Lumber: -39%
Brent Crude: -39%
Wheat: -41%
Gasoline: -42%
WTI Crude: -42%
Cotton: -44%
Heating Oil: -45%
Natural Gas: -75%
Fertilizers - 65%
If China comes online, commodities can catch a bid. I would think short term worse for China is behind us, especially given they are targeting monetary and fiscal easing. (With those changes in commodity prices, food inflation ought to come down!)
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Post by yogibearbull on Jun 12, 2023 0:39:02 GMT
I regret that Barron's has dropped the Commodities column (also, the EM and European columns). The Commodities column used to have a chart of commodities index along with the best and worst performing sectors. That now appears without any comments or notes below the Trader column.  |
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Post by uncleharley on Jun 12, 2023 11:37:35 GMT
In this video Tom Bowley presents a thorough history on seasonality for the market and also the areas that outperform May-Aug. It starts 4 minutes into the vid to save you some time. Basically the charts as uncleharley , has posted show selling in May isn't such a great idea. While my sunday entertainment with the Seasonality Tool should absolutely not be confused with a definative study, I am convinced that selling stocks and/or other income producing vehicles in May will almost always bring that investor a case of sellers remorse in June. The strategy probably has some value when trading Commodities or Commodity related securities. |
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Post by liftlock on Jun 23, 2023 1:58:14 GMT
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Post by steelpony10 on Jun 24, 2023 10:29:36 GMT
If anyone wants to market time choose Sept-Oct. That period is usually a pretty consistent circus. Amateurs coming back from vacations creating herd mentality at the exits and professionals locking in any profits in a “difficult year” to get those shiny pamphlets out to show how well they did under “tough” circumstances. Remember the prime rate should be higher also. The FED watchers should be out in force even though this was forecast to be a long tightening period.
The same time period in 2024 should be a doozy and any new bad news (which it always is real or speculated) will just add to the frenzy.
Personally I dump any unspent money back into income (or VTI) by November. Of course after taxes in April I do the same thing.
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Post by Fearchar on Jun 24, 2023 11:15:04 GMT
If anyone wants to market time choose Sept-Oct. That period is usually a pretty consistent circus. Amateurs coming back from vacations creating herd mentality at the exits and professionals locking in any profits in a “difficult year” to get those shiny pamphlets out to show how well they did under “tough” circumstances. Remember the prime rate should be higher also. The FED watchers should be out in force even though this was forecast to be a long tightening period. The same time period in 2024 should be a doozy and any new bad news (which it always is real or speculated) will just add to the frenzy. Personally I dump any unspent money back into income (or VTI) by November. Of course after taxes in April I do the same thing. It's not so much timing the market, as it would be so much more encouraging to be able to find a reasonable premium for assuming more risk. For example, Vanguard High-Yield Corporate Admiral fund, VWEAX is yielding 5.60%. At auction, it will probably be possible to buy a 17 week Treasury bill yielding 5.44% or a 6 month at 5.41% 10 year treasury yielding 3.74% also looks sweeter to me that the S&P right now. |
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Post by steelpony10 on Jun 24, 2023 12:30:58 GMT
Fearchar , As a buy and holder anything I switch out is for more immediate income or higher quality, damn the torpedos. I guess after considering current facts that’s all I need to do. I understand why spend down investors have to be more careful but trying to game an unknown consistently and with success seems really risky and tiring to me. At least I’ve known for years about what’s going to be delivered to my accounts each month and quarter with little headache until I pass. I also think investing in government paper directly encourages deficit spending. I’d rather encourage added employment and R&D by taking more risk with actual well managed businesses. When the Feds establish a balanced budget (🙏🏼🤞🏼🍀) government paper will be sound and a great way to go for some.
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Post by retiredat48 on Jun 24, 2023 16:01:22 GMT
If anyone wants to market time choose Sept-Oct. That period is usually a pretty consistent circus. Amateurs coming back from vacations creating herd mentality at the exits and professionals locking in any profits in a “difficult year” to get those shiny pamphlets out to show how well they did under “tough” circumstances. Remember the prime rate should be higher also. The FED watchers should be out in force even though this was forecast to be a long tightening period. The same time period in 2024 should be a doozy and any new bad news (which it always is real or speculated) will just add to the frenzy. Personally I dump any unspent money back into income (or VTI) by November. Of course after taxes in April I do the same thing. It's not so much timing the market, as it would be so much more encouraging to be able to find a reasonable premium for assuming more risk. For example, Vanguard High-Yield Corporate Admiral fund, VWEAX is yielding 5.60%. At auction, it will probably be possible to buy a 17 week Treasury bill yielding 5.44% or a 6 month at 5.41% 10 year treasury yielding 3.74% also looks sweeter to me that the S&P right now. --Comparing a short term bond fund or MM fund to a stock, one needs to realize the stock dividend may be forever...and rising typically. The bond yield can be fleeting. --Many companies today have stock BUYBACKS, which can be considered another form of an annual dividend. So earnings yield is perhaps a better parameter to consider. --And stock valuations in the long run are favored/account for inflation (via pricing power); fixed income is worsened by inflation. R48 |
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Post by steadyeddy on Jun 24, 2023 16:30:35 GMT
It's not so much timing the market, as it would be so much more encouraging to be able to find a reasonable premium for assuming more risk. For example, Vanguard High-Yield Corporate Admiral fund, VWEAX is yielding 5.60%. At auction, it will probably be possible to buy a 17 week Treasury bill yielding 5.44% or a 6 month at 5.41% 10 year treasury yielding 3.74% also looks sweeter to me that the S&P right now. --Comparing a short term bond fund or MM fund to a stock, one needs to realize the stock dividend may be forever...and rising typically. The bond yield can be fleeting. --Many companies today have stock BUYBACKS, which can be considered another form of an annual dividend. So earnings yield is perhaps a better parameter to consider. --And stock valuations in the long run are favored/account for inflation (via pricing power); fixed income is worsened by inflation. R48 The reason many shun high equity % in their portfolios (in/around retirement) is the volatility it brings to the portfolio. There are many such folks on this forum, including myself. A paper penny kept is probably five pennies earned. |
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