The "Sell in May, and go Away" strategy is great for investors who follow seasonality, and are not willing to put their feet on the edge of a cliff. That being said, the market will probably put on a decent performance going into the 3rd quarter. The question for investors and traders is this: 1) Do they continue to bet on a final rally that could fizzle out by mid August, or 2) Do they play defense now and not worry about it.
What could cause the next leg up? How about a pullback in oil prices? The Fed has made it clear that rates will continue to march higher at least 1 or 2 more times. My guess is oil will once again bounce below the $50/bbl mark, and may even go below $45/bbl which will fuel optimism among traders.
Even with increased concern over a real estate bubble, home building stocks continue to march higher. I'm convinced the day of reckoning is coming for real estate speculators, but that day may come later rather that sooner.
Today, we are selling our position in Hershey Foods (HSY), and will be making more changes in the days and weeks ahead.
