Sell in May and go away is a long lived axiom on Wall Street that encompasses investor skepticism regarding what are typically volatile, low volume trading months of June-August. It is then understandable, especially in today's environment of deeply-rooted bearish sentiment, why investors and traders would attempt to front run such a poetic use of words in a single compact phrase.
The front running of sell in May comes just as investor sentiment according to AAII has gone from a little bullish to somewhat bearish to simply throwing up hands and shrugging shoulders in disgust, with the ultimate conclusion being that investors just don't know what will happen from here. Bearish sentiment is again spiking as neutral sentiment shoots through the roof.
It is only natural then, all things considered, that investors would be falling over one another to get a jump on the sell in May trade.
Unfortunately, markets are rarely so accommodating and not easily impressed by poetic meter. The more investors piling into this trade over the next week or two, the more the chances of a rebellion by the market to challenge the conventional wisdom.
While selling in May and going away might prove to have been the correct move given 20/20 hindsight, the trade will be a difficult one to execute with any confidence given the preponderance of bearish participants causing waves to appear due to their piling on in one direction.
June - July may ultimately prove a more suitable environment for bearish positioning, avoiding the chop to come.
