Thursday, March 28, 2013
Traders are often advised to "sell in May and go away."
There's a reason for that. Stocks tend to perform poorly between May and October. In fact, the average return for those six months is slightly negative.
But this year, traders may not want to wait until May to go away. If stocks keep following last year's script, it's a good idea to get out before the rest of the crowd...
Take a look at the remarkable similarity between how the S&P 500 traded last year and how it's trading today...
In each year...
Finally, notice what happened at the end of the first quarter of 2012. Stocks dropped immediately and entered a correction that lasted 10 weeks and nearly wiped out all the gains for the year.
The S&P 500 is up almost 10% already this year and on the verge of making a new all-time high. But with all the warning signs we've looked at previously – and with all the similarities to last year – traders may not want to wait until May to go away. Now looks like as good a time as any.
Best regards and good trading,
Earlier this month, Jeff warned Growth Stock Wire readers about a looming pullback in stocks. From a more intermediate-term perspective, Jeff says these charts suggest investors should be wary. Read more here: A Couple Reasons to Be Cautious on Stocks Right Now.
Gold stocks are trying to "put in a bottom"... the HUI is up 5% from early-March lows.
Iron producer Cliffs Natural Resources touches its lowest level in nearly four years.
Dividend-paying small caps are quietly booming... Leggett & Platt soars 65% in the past nine months.
Ag giant Monsanto breaks out to a fresh four-year high.