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Saturday, September 3, 2011

Sell in May and Go Away...Time to Come Back?

Earlier this year I thought I would for once follow the rest of the "big money" adage of "Sell in May and go away".  As it turned out, this wound up being a wise move. Take a look at the weekly chart of SPX from the 3/2/09 low of ~666 to the breaking of the uptrend ~1300 on 5/31/11.  Note that in May of 2010, a sell off occurred then too, but did not break the upward trend. We made a couple of attempts to re-establish the upward bias in late June 2011 and early July only to fall off considerably for most of August.  Now that September has arrived, we've seen additional selling, giving back a good portion of some late August portfolio manager "window dressing". The technical picture certainly reveals a broken market. Question is, will the slide continue?  The macro fundamentals are certainly worrisome...stubbornly high US unemployment, the euro mess, China slowing, etc. Yet most companies continue to deliver on earnings and grow their markets in spite of all the world's problems. Many think this is about to change, as the macro picture will eventually dim company prospects going forward. Growing concern over what Merkel and Van Rompuy will say on Monday regarding the euro-zone debacle has many believing this will really put our global markets in a tailspin. Don't forget to throw in President Obama's job speech on Thursday for good measure.  Doom and gloom pundits are certainly coming out in droves, and why not, given the continued rise in gold and silver prices while our currencies weaken. The world as we know it may indeed be coming to an end very soon. But another part of me continues to think about what the "big money" guys and gals are going to do. After all they should be returning from the Hampton's next week! I would not be surprised that the markets take a dive this coming week, while the "big money" is quietly waiting to "pull the trigger" for some spectacular buys.  We shall see. 


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