Time To Sell Tech Stocks Based On Seasonality?

Last Tuesday night, Jim Cramer told his Mad Money viewers that they should sell tech based on the calendar. His recommendation was based on the premise that historically speaking, the sector is entering its weakest part of the year. As the chart below shows, he has a point.

Based on the last five years of trading (green line), from now (red dot) until August the sector generally doesn't do well. However, if we take a longer time horizon going back to 1990 (blue line), the first half of the year hasn't been so bad.

click to enlarge

Editor's note: ETFs covering the tech sector include iShares Dow Jones U.S. Technology Index (IYW), iShares Goldman Sachs Technology Index (IGM), PowerShares Dynamic Technology (PTF), Technology Select Sector SPDR (XLK) and Rydex S&P Equal Weight Technology (RYT).