Sell in May (Chart)

The adage "sell in May and go away" has some statistical support. This chart from The Big Picture shows monthly returns back to 1928. BTW, why isn't the adage "always remember to sell before September?" 

Comments

[marketman]

Hey Mamma Boom Boom,

How is that DEFLATIONARY scenario working out that you've been posting about???

You must be getting absolutely "killed" being short the energy, mining, and commodity sectors!

[Mamma Boom Boom]

>How is that DEFLATIONARY scenario working out that you've been posting about???<

It seems to be coming along just fine. CRB down 5% in the past couple of weeks, probably putting in a right shoulder. But, thanks for asking.

[Harry]

Neely has been stopped out again. I have been trading for a long time, and I really can't remember anyone having a period as dismal as he's had over the last 13 or so months. Absolutely nothing is working for him, NeoWave, MOAT or his "revolutionary" River Trading Technology.

[DG]

Harry,

Yep, it's been one stop out after another. In the last 8 months, he's only had 4 winning trades on the Hourly timeframe out of 20 total, for 58.25 points, while his losing trades have lost 233.25 points.

On the Daily, only 2 winning trades out of 14 total, for 51.75 points, with the losers totaling -266.25 points.

Ugly all around.

He keeps insisting that it isn't safe to go long in this kind of environment, but there are ways to manage entries and risk that make it as safe as going short. As always, the market will do what it is going to do, but there are features of this current market that make for logical long entries, risk management and exits, provided one doesn't let a bearish bigger-picture view stop you from taking them, or, at least, recognizing them as being there if you want to take them.

[yelnick]

Mamma, think the commodities bubble echo has peaked?

[Michael]

Here's a better question . . .

Perhaps Mamma can tell us what commodities (or commodity related stocks) that he's been SHORT for the past couple of weeks and why he feels that the CRB is an accurate reflection of inflationary/deflationary forces?

[Harry]

As always, the market will do what it is going to do, but there are features of this current market that make for logical long entries, risk management and exits, provided one doesn't let a bearish bigger-picture view stop you from taking them, or, at least, recognizing them as being there if you want to take them.

Yes, in a way, this reminds me of Prechter after the 87 crash. He insisted that we were in a wave 2 the whole way up, and that Grand Supercycle 3 was imminent. It wasn't until the 87 top was exceeded that he was forced to change his count.

[DG]

"Yes, in a way, this reminds me of Prechter after the 87 crash. He insisted that we were in a wave 2 the whole way up, and that Grand Supercycle 3 was imminent. It wasn't until the 87 top was exceeded that he was forced to change his count."

I think Neely's right in the bigger picture wave structure, but he is completely one-sided in his trading of that wave structure on the shorter-term. I realize that he believed a reversal was always "right around the corner" and last spring, when he first started trying to catch it, he would say that it sometimes takes 5-6 tries before you can (it's now been over 20 tries!), but what you need to be able to do is to logically take advantage of trades in the market's current overall direction, as well as try to catch major reversals.

[Hank Wernicki]

We rally into the summer ................

Is Precther still 200 % short ?

They are grasping straws at this point, I think

Fractals are all unfolding to the upside

[JT]

The market internals since the February 8th low have been strong. People that have traded with the TREND have made a small fortune since then. How Prechter and Hochberg (and other E-Wavers) could continue to conveniently IGNORE the following internal indicator is absolutely beyond me...

http://stockcharts.com/h-sc/ui

[DG]

" People that have traded with the TREND have made a small fortune since then. "

There has been opportunity on both sides, actually. Almost every day we get a drop off the opening pop to the upside.

If you look at the entire price move in the SPY from the February low, more than the entire move was made in the top 20 Hourly bars with upward price movements. So, being long those 20 specific hours would have gotten all of the move and then some. If you'd been short the bottom 20 Hourly bars, i.e. the ones with the largest drops, you'd have made about the same as someone who was long the top 20 bars.

Opportunity both ways.

[JT]

I disagree.

The amount of time that the market has spent declining ( even on an intra-day basis ) has been downright miniscule compared to the amount of time that there has been a strong "bid" in the market.

Yes, there have been some pullbacks but they have been extremely short and by the time you got up from your desk and walked down the hall to grab another cup of coffee, those pullbacks were done.

There have also been rallies that have started around the 2-2:30 PM time frame and have gone all the way into the close, with the proverbial push of index-buying and short-covering that occurs in the last 15 minutes of the session.

The commodities sector ( Energy, Drilling, Coal, Mining ) continues to be on fire. Huge money-making opportunities. Anyone that has traded CLF is well aware of this.

[JT]

"It seems to be coming along just fine. CRB down 5% in the past couple of weeks, probably putting in a right shoulder. But, thanks for asking." - Mamma

For some reason I get the feeling that you don't fully understand how the CRB changes over time, is weighted, and calculated.

Far be it from me to think that a 5% decline in this index is a harbinger of a DEFLATIONARY turn. Good luck with that!

[DG]

"I disagree.

The amount of time that the market has spent declining ( even on an intra-day basis ) has been downright miniscule compared to the amount of time that there has been a strong "bid" in the market.

Yes, there have been some pullbacks but they have been extremely short and by the time you got up from your desk and walked down the hall to grab another cup of coffee, those pullbacks were done."

Sure, which is exactly why you automate your entries and have your assistant get you your coffee.

[Mamma Boom Boom]

>Mamma, think the commodities bubble echo has peaked?<

Yes!

[Mamma Boom Boom]

Michael, as much as I dislike you, I will have to say one thing: ah ... ah .... I can't think of it.

[JT]

"Sure, which is exactly why you automate your entries and have your assistant get you your coffee."

Posted by: DG | Saturday, April 24, 2010 at 09:15 AM

Now that's something that I find truly unbelievable...DG.

Someone that uses Elliott Wave Theory (and all of the alternate counts that come with it) to short and take advantage of INTRA-DAY "sell-offs" in the market that haven't lasted more than 20 minutes, on average. . . . and doing so on an automated basis, successfully.

Truly remarkable.
And truly unbelievable!

[DG]

JT,

Am I to take it from your comment that you don't believe that anything you can't believe is true could possibly be true?

Interesting perspective on life.

[DG]

There's a short trade setting up, if SPY reaches 121.25 by 12:38 ET, along with the QQQQ reaching 50.09 and the IWM reaching 74.09.

That's how you automate it. Will those prices get hit? I dunno. If they get hit, will the trades work? Dunno that either. What I do know is that if we decline to those levels, it will be the "largest and fastest" decline since Thursday's bottom and that's enough to make shorting at least a potentially winning trade.

[DG]

Heh, now the market triggers a long trade after looking like it would trigger the short.