Summary
- The Wall Street adage “sell in May and go away” is a seasonal trend where investors believe May is the month to sell stocks and stay away from the market until October.
- While this anomaly may not offer the best strategy, as fear of a “mild recession” draws near, avoiding stocks with strong sell quant ratings may help limit your downside risk.
- Market volatility exposes poor-performing stocks.
- I want to share three stocks with poor growth and momentum, limited profitability prospects, and downward analyst revisions that may continue their downward trend this summer.
- Using the Seeking Alpha Quant System and Factor Grades, you can see why these stocks have a rough road ahead and are rated “Strong Sells.”
What is sell in May and go away?
Timing the market is virtually impossible. But analyzing the performance of stocks and indexes for months that perform better in an effort to exploit trading patterns and season strength has given way to the investing adage “sell in May and go away.”
Some investors believe May is the month to sell and stay away from the market until October, rooted in a seasonal performance highlighting that the market tends to experience its weakest months over summer based on low trade volume, which undergoes a pronounced uptick during winter months known as the Santa Claus rally. Others believe the saying is a trading anomaly with little statistical merit. Whatever your stance, earnings season is underway, and companies’ year-over-year growth figures are significantly more skewed than we’ve seen, impacted by the fallout of COVID-19 and the Russia-Ukraine War. As I mentioned during a Wall Street Breakfast podcast,
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