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S&P 500 and DJIA Up
Last 9 Post-Election Year Mays

May officially marks the beginning of the “Worst Six Months” for the DJIA and S&P. To wit: “Sell in May and Go Away.” Our “Best Six Months Switching Strategy,” created in 1986 by Yale Hirsch, creator of the Stock Trader’s Almanac, proves that there is merit to this old trader’s tale, notes Jeff Hirsch, editor, Stock Trader's Almanac and Almanac Investor newsletter.

A hypothetical $10,000 investment in the DJIA compounded to a gain of $960,943 for November-April in 70 years compared to just $1,656 for May-October. The same hypothetical $10,000 investment in the S&P 500 compounded to $788,997 for November-April in 70 years compared to a gain of just $10,145 for May-October.

May has been a tricky month over the years, a well-deserved reputation following the May 6, 2010 “flash crash.” It used to be part of what we once called the “May/June disaster area.” From 1965 to 1984 the S&P 500 was down during May fifteen out of twenty times. Then from 1985 through 1997 May was the best month, gaining ground every single year (13 straight gains) on the S&P, up 3.3% average with the DJIA falling once and two Nasdaq losses.

In the years since 1997, May’s performance has been erratic; DJIA up twelve times in the past twenty-three years (four of the years had gains in excess of 4%). Nasdaq suffered five May losses in a row from 1998-2001, down – 11.9% in 2000, followed by thirteen sizable gains in excess of 2.5% and five losses, the worst of which was 8.3% in 2010.

Post-Election Year Mays rank near the top, registering average gains on DJIA and S&P 500 of 1.3% and 1.7% respectively. DJIA and S&P 500 have advanced in every post-election year May beginning in 1985. Russell 1000 has been up ten years straight in post-election year Mays.

Jeff Hirsch doesn’t simply “Sell in May and go away,” he employs a more nuanced approach to how they implement their Best Six Months Switching Strategy. “We ‘Reposition in May’ and we use the MACD technical timing indicator to issue our Seasonal Buy and Sell Signals, which improves the results,” says Hirsch.

“We issued our Best Six Months MACD Seasonal Sell Signal on the close of April 22 for the Dow and S&P 500. From our November 5 Buy Signal DJIA gained 19.1% and S&P advanced 17.8%. The Sell Signal looks rather timely with the MACD crossover or negative histogram occurring well above the zero line. Nasdaq’s Best Eight Months lasts until the end of June so the earliest Nasdaq’s Seasonal MACD Sell can trigger is June 1.”

Editor’s Note: Stock Trader’s Almanac newsletter, edited by Jeff Hirsch, offers subscribers a full run down of seasonal tendencies that occur throughout each month of the year in an easy-to-read calendar graphic with important economic release dates highlighted, Daily Market Probability Index bullish and bearish days, market trends around options expiration and holidays. In addition, the Monthly Vital Statistics Table combines stats for the Dow, S&P 500, Nasdaq, Russell 1000 and Russell 2000 and puts them all in a single location available at the click of a mouse.

Receive FREE the 2021 Stock Trader’s Almanac when you subscribe to the digital service, Almanac Investor. The 54th Annual Edition shows you the cycles, trends, and patterns you need to know in order to trade and/or invest with reduced risk and for maximum profit. For more information on the Stock Trader’s Almanac newsletter.

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