Sell In May And Go Away

Summary

  • Stocks reached a marginal new high on May 1.
  • The trade dispute weighed on equities in May.
  • Late June could be a moment of truth for the stock market as the clue will come from Osaka, Japan.
  • The Middle East could provide turbulence.
  • VIXY for volatility.
  • Looking for more? I update all of my investing ideas and strategies to members of Hecht Commodity Report. Get started today »

Now that the Memorial Day holiday weekend has come and gone, and the end of May will come to an end on Friday, the old adage for the stock market, "sell in May and go away," could have special meaning in 2019.

A relaxing summer without excessive risk could be a good idea considering all of the issues facing markets. School is now ending for the kids, and it will not be long before the weather starts heating up.

While it is looking like the stock market is going to suffer another correction, time will tell if a move to the downside is milder, similar, or worse than the price action during the final three months of 2018. However, if history is a guide, stocks will eventually find a bottom, and it could be ugly, from which they will rise from the ashes to higher highs. Meanwhile, it is starting to look like selling on the first day of May and going away would have been the optimal approach to the stock market.

If we are heading for a rough period of downside turbulence in the stock market, the VIX index is likely to rise which could make the ProShares VIX Short-Term Futures ETF product (BATS:VIXY) a valuable trading tool over the coming weeks and perhaps months.

Stocks reached a high on May 1

The E-Mini S&P 500 June futures contract moved to a new all-time peak on May 1, but on the same day, it put in a pair of ominous trading patterns on the daily chart.

Source: CQG

As the daily chart highlights, on May 1, the E-Mini rose to the same high as on September 21, 2018, on the June futures contract at 2961.25 which was a higher high than the previous session. The E-Mini then closed below the prior day's low, putting

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This article was written by

Andrew Hecht profile picture
28.23K Followers
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website about.com and blogs on his own site dynamiccommodities.com. He is a frequent contributor on Stock News- https://stocknews.com/authors/?author=andrew-hecht

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

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