Stock Markets: Sell Before May and Go Away?
Tuesday, 24 Apr 2012 | 12:29 AM ET
By: Antonia Oprita
Deputy News Editor, CNBC.com
An old superstition says stock market investors should sell in May and go away, as returns in the period between May and September are typically weak. So is Monday's sharp drop in the main indexes a sign that this year, the selling begins even before May?
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A chart showing the average performance for each month in the markets since 1970 supports the theory of seasonality in stock prices, "aligning nicely with selling during May and not buying back until the start of October," they wrote.
"Preposterous as it may be and inexplicable with a rational interpretation of fundamentals, markets do seem to exhibit some seasonality. Weak returns do seem to coincide with the summer," the BNP Paribas analysts said.
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But other market experts say that rather than marking the beginning of a correction, what is currently happening in the markets is only a consolidation after the risk-on rally between last October and February, and that stocks can still go up over the summer.
"In our strategy, we have been very bullish since the start of the year. We have trimmed positions in March but … we believe the rally will continue," Philipp Baertschi, an equity strategist at Swiss private bank Sarasin, told CNBC.com. "There's upside [potential] but it's less obvious than at the start of the year."
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The Federal Open Market Committee (FOMC) meets on Wednesday and Fed Chairman Ben Bernanke will hold a press conference but analysts do not expect the Fed or Bernanke to show more readiness to ease policy further. However, some soothing noises may be forthcoming from the Fed, according to Lenhoff.
"Although no further steps to stimulate the economy are likely either, the renewed phase of turmoil in Europe and the risk of more market upheaval are likely to mean that the extended period message behind the Fed’s efforts to reflate the economy will be reinforced," he wrote.
http://www.cnbc.com/id/47143804
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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