The stock market's most favorable six-month period is coming to an end, and unfortunately, there's not much to show for it. The six-month pattern, known by both the "Halloween Indicator" and the market mantra to "Sell in May and Go Away", is based on the historical tendency of the market to produce its highest returns during the predominantly winter months and lower average returns during the summer months. Further, in summers following losing winter periods, the returns are not just lower but, on average, negative. In presidential election years (like 2020), the effect isn’t very pronounced, yet still slightly negative. The chart below, from Mark Hulbert via Marketwatch.com, illustrates the phenomenon.
Sell in May and Go Away
| April 20, 2020