The old adage of “go away in May” is real. The ominous part of “go away in May” actually lies in the month of June, if I might point that out to you. As a point in fact, on average, May is a mixed month. Month to date, the SPY is down 5.56%, following a -0.67% showing for April. The last time we had a negative return in April was in 2005, when the SPY traded down 1.88%.
The last time stocks did this poorly in May was in 2010. The following Month, stocks tanked by another 5.17%, leading to a fierce reflex rally in July, gaining 6.83%.
Here are the SPY returns for June, dating back to 1993.
That’s right, the market has gone in June each of the past 5 years. More than that, the SPY hasn’t posted a +2% June since 1999. In short, don’t expect the market to come out with guns blazing to save the bulls from bear market misery. If we do have a great June, it will be an anomaly, statistical oddity. In other words, don’t position for it.
The trading action this month is the second worst performance in May, dating back to 1993.
If you look back in the data, seasonality stats provided inside The PPT, big down months of more than -5% usually follow up with another dismal trading month. The momentum to the downside may have just begun, unfortunately. Of course that doesn’t mean everything will trade down. As a matter of fact, deeply oversold stocks may bounce soon and hard. But, at a minimum, I reckon traders need to be cognizant of the “Seasonality Gods” and how it portends to trading against the odds.
The most likely scenario is a June washout, followed by a kick-ass July, just in time for this fat country’s birthday festivities–similar to what we saw in 2010.
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The first few days after Memorial Day are good, end of month not be ignored. I will raise some cash for the blood bath to be in June. Cheers, to those that gave their lives, so we can enjoy a carefree holiday. There’s more to life than markets, right?
PPT is awesome, thanks for posting the seasonality stats.
thanks.
Love your av. Boss cigar.
I used to use stats in my previous job until I got bored hoodwinking even the most astute, sophisicated managers.
Speak english you fucking immigrant.
Maybe the best trades are based on a hunch, a premonition, common sense or good old fashioned luck more so than fibonacci curves or megaphone patterns on a chart.
good stuff fly, thx
Food for thought over the weekend……..
I have a gut feeling that the good Germans are going to say a very hearty NEIN! when it comes down to taking the shaft for the southern Euro countries. They are just too organically disciplined a people to say, “Awwww, what the heck” and let a few trillion Euros slide down the crapper. If Greece defaults and says, “here, stick this up your tailpipe,” please tell me why on God’s green earth the Italians and Spaniards will not do the same.
Euros are practically flying out of Greek banks and when, not if, Greece goes back to the drachma, all those euros will be in the hands of Greek citizens to do with what they want. This is a no recourse path for the Euro zone. All they can do is talk, they have no “stick” with which to beat Greece into submission/austerity or whatever you wish to call it.
So back to my premise the Germany will bail on the EU…..
Where does that leave the EU?
Will that effectively meltdown the whole enchilada?
What effect will that have on the USA?
Answer those questions correctly and you can retire within 2 years after it happens. You will also be worthy of the words, scholar and gentleman.
Count on it. Germany’s only “recourse” to preserving the wealth they have accumulated with such earnestness is to leave the EU and go back to the mark.
Watch.
I would have to disagree on the return to the DM.
As you have pointed out Germany was the largest benefactor of the EUR a move back to DM would kill their economy.
I think a likely scenario is that EZ moves toward fiscal union, whereby the Germans can control the budgetary process of the EZ. This of course will not happen until members beg for it and when the countries are at a precipice. Although it may seem like we are at the edge its still not “bad enough”.
Whether Greece or a couple of other members are part of it we will see. Just as you said if Greece flips the bird it set precedent.
Germany will have Europe, under its terms, not because Turbo Tim or Benny B. say print and to issue EUR Bonds.
A true federal union ala the USA would be the only other option. As it is though, getting all the countries in Europe to agree on that would be akin to herding cats. They all want their own way and seeking to unite and give full federal authority to some as yet unknown entity…….I just don’t see that happening unless there is a total and complete upheaval in the social, economic and governmental structure of Europe. The continent as we know it would have to disappear first. A cataclysm such as that would truly bring new meaning to the term “interesting times” for all of us.
Germany got its ass kicked in two world wars. Now they are set to finally control Europe without firing a single shot.
Progress.
They can blockade the country.
One saving grace for June could be that it’s an election year and save for the disaster in 2008 election years haven’t been all that horrible for June. Check out charts comparing overall June seasonality with election years http://ibankcoin.com/rickyroma0/2012/05/06/seasonality-update-for-lt-accounts/
Nice!
not scholarly but ricky above has my vote.
sorry about that. to clarify i meant my gut feeling reflects his post.
Seems to me that comments are way down across the site since the redesign? What’s the deal?
Also, this guy ‘Rhino’ is really annoying, what’s with all his bs posts? His posts have no relevance to financial markets or trading.
He’s getting iBC reserve notes for every post.
I disagree.
Comments are up and Rhino is doing a great job with news. You fuckers need to put your hater blazers away.
If you find Rhino’s posts that irritating I’d suggest you simply ignore them and move on.
Solution: “deselect” option. Check on or off (no homo) contributors. This way, annoying or conflicted visitors can be white noised out without further irritation.
Considering the blistering speed of change at the Ibc, this should be feasible.
as an over 70 ex new yorker who found a home in texas I do love your commentaries…….at the risk of being banned,sauteed/other inventive mayhem I would like to point out that in three of the four PRES ELECTION YEARS the market was up in June as is the historic norm, actually june thru aug tends to be up historically for pres years…
not to use the axiom “this time its different”, don’t you think it is?
A buddy and I liked to speculate on whether the cave on my property would cave in while we explored it. He said that for every day that it didn’t collapse, it increased the odds that it would the next day. I said that each day it didn’t collapse proved it to be safer and safer. Who’s correct?
As the terminal state of any construct, be it natural or artificial, is a collapse due to enthropy, your friend was right.
It is very desirable to have a word to express the Availability for work of the heat in a given magazine; a term for that possession, the waste of which is called Dissipation. Unfortunately the excellent word Entropy, which Clausius has introduced in this connexion, is applied by him to the negative of the idea we most naturally wish to express. It would only confuse the student if we were to endeavour to invent another term for our purpose. But the necessity for some such term will be obvious from the beautiful examples which follow. And we take the liberty of using the term Entropy in this altered sense … The entropy of the universe tends continually to zero.
You’re both wrong; the cave doesn’t know how long it has been in existence so the probability is the same every day. Having a 100 year flood this year does not affect the probability of a 100 year flood next year. Radioactive decay is spontaneous; you can’t say a particular atom that is way past its half-life is “overdue”, or that a brand-new one is “safe”.
past as prologue vibe..got it..wtf are you doing here? you’re smart. no fair!
Have a geologist look at it for safety.
Thanks for posting this chart. Hope you had a great birthday week and weekend.
Don’t forget what this weekend is all about .
From my observations of this site I doubt
there are many heroes among the flydome.
The 50-day and 200-day on $VIX are converging. $VIX is on a path towards a golden cross. The key to making money on a $VIX golden cross is to scale into a long vol position prior to the cross. Here are the results of the last 3 $VIX golden crosses;
$VIX golden cross occurred on 7/25/11. $VIX bottomed out at 15.45 on 5/27/11, 59 calendar days before the cross. $VIX peaked at 48.00 on 8/5/11, 11 calendar days after the cross.
$VIX golden cross occurred on 5/26/10. $VIX bottomed out at 15.58 on 4/9/10, 47 calendar days before the cross. $VIX peaked at 34.54 on 6/29/11, 34 calendar days after the cross.
$VIX golden cross occurred on 9/16/08. $VIX bottomed out at 16.30 on 5/14/08, 125 calendar days before the cross. $VIX peaked at 80.86 on 11/19/08, 54 calendar days after the cross.
The moral of the story is – 1) if you wait until the golden cross actually occurs, you will have missed out on the majority of the move and 2) do not overstay your welcome as the peak occurs shortly after the cross.
The only way I can see the future working out is, for the U.S. to bring back The Glass–Steagall Act, denounce the Fed, the dollar, start over, no more bailouts. Ditch Obama, who has not a clue what he does.
Some debts will be left unpaid.Oh well, that’s what happens when you gamble.
This thing is collapsing in on itself. They will not “save” the Euro, nor will they save the dollar. The fiat money system is done in.
There is not enough money in the world to save the world. No way, no how.
The emperors cloths have been stripped, they have nothing to back up their sily paper.
The faster we do this, the better.
You all know it’s true, you just haven’t got there yet in your mind.
Agree on G/S; disagree on the fed.
Rumors are rampant that Fly will be attending the Bilderberg Group meetings in Virginia. Not sure I believe it but, there it is.
I would guess that if, and only if, this is the case, then he would be in the SA Time Machine with loaded cannons as LeFly cannot have competition in out che$$ing Ibc triumph.
Of course, this is a good time to request another donation to my Charity, which will further the development of my Island Somewhere Between Nova Scotia and Norway, filled with genetically exotic and erotic bimbos and a perpetually tax free climate region for bankers, military Generals and other related Space Aliens to fulfill Agenda 21-999-12-3.
Sounds good if you can deal with your fems wearing ‘eau de sardine’ fragrance and covered with volcanic ash answering to the name “Ice Princess”.
We are commencing indications of interest for Entrepreneurial Captains of Trade (Pirates) to facilitate the bebe and accouterments aspects of allure.
Currently, I am responsible for financing improvements and establishing a defense system.
More soon later.
I see war on the horizon, our main guy Panetta, has for the third time, sat in front of the U.S. Congress and said “The UN tells us when we go to war”
I’m pretty sure the next time he will just move, not talk.
Your Republic is history, my dear investing friends.
Catch up on a trade for that!
J.P. Morgan is throwing huge paper trades at the metals markets to stifle them into nothing. (Supposedly, they have a 3 Billion Ton short position in silver)
These big banks are doing the gov’s official bidding, to try and control this multi-headed monster we call “the market”
SIlver and gold are looking better everyday…take posession of it if you buy it, though!
I don’t agree with the June reasoning. June may drop because all markets are scared of Greece’s virus from economic condition. It drops due to fear and rise due to greed. Between 1994 and 2000, many were getting jobs, and bank stocks were growing like weeds. From 2007, some smart money saw the problem coming, and others followed to sell.