Stock Alert: Sell in May for Real This Year?

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – The summer marks a typically weak time for the stock market. That is why investors love to say “Sell in May and Go Away”. However, it appears that weakness started in April this year with the S&P 500 (SPY) pulling back from recent highs. At this time the focus is on inflation and likely timing of Fed rate cuts. That is why it is wise to tune into Steve Reitmeister’s update market outlook and trading plan to stay one step ahead of the market. Read on below for the full story…

We all know the famed investment theme of “Sell in May and Go Away”.

That comes from over 100 years of data where most stock market profits unfolded October through April and that May through September timeframe is quite lackluster. Well, it seems like May came a month early this year as stocks sold off from recent highs in April with no sign they are ready to reclaim those previous heights any time soon.

The clues from the May 1st Fed meeting have quite a bit to do with what comes next. So, let’s recount what Powell shared at the press conference and what that means for our stock market outlook and trading plan.

Market Commentary

We all know that inflation and the Fed rate cut decision are at the very heart of the investment discussion at this time. That is why its good to review what Powell shared at his May 1st press conference to prepare for what comes next.

The biggest surprise was that the Fed is will start curtailing their Quantitative Tightening (QT) efforts in selling fewer bonds from their ENORMOUS balance sheet. That is not as exciting as the lowering of rates, but many experts see this as a 2 step dance with the lowering of QT as the first step. So, this does pave the way for the next step…that being the eventual cutting of rates.

On that front, the message was clear. Inflation is still too high and they will be very patient in waiting for undeniable proof that is on a glidepath towards their 2% target before making the first cut. And thus, the Fed is committed to keeping rates elevated to get inflation down to size.

Another sign of good news is that they are not really considering the raising of rates. They still see current rates as restrictive and thus remaining at this level for longer is much more likely than them raising rates.

The sum total of these statements was still quite hawkish. However, it was not really surprising given the facts in hand. In many ways, investors were prepared for even more hawkish news.

Net-net investors saw it as a slight positive with bonds rates dropping and stock prices bouncing higher during the press conference. Yet by the end of the Wednesday session a lot of gains were given back with it being a fairly neutral response. Gladly Thursday was a very positive session.

The bond market sees slightly better odds of a rate cut starting at the September 18th meeting with a 60% probability.  Again, this is a very fluid concept with traders continually not appreciating just how patient the Fed is prepared to be. Whereas traders have the patience of a toddler on a sugar high.

From here we need to keep aware of some key inflation signals later in May starting with the 5/3 Government Employment Situation report where they will also share news on Wage Inflation which has been far too sticky.

Don’t focus on the year over year reading takes into account far too much historical data. The more valuable data comes from the month over month read which gives a sense of whether wage inflation is slowing towards the preferred 2% rate.

After that we get the twin inflation reports of PPI on 5/14 followed by CPI on 5/15.

Price Action & Trading Plan

Given the above, I continue to not see much of a case for serious stock upside until the certainty of a Fed rate cut is greatly increased. That points to a trading range or more market downside as the more likely outcome in the months ahead.

Moving Averages: 50 Day (yellow) @ 5,129 > 100 Day (orange) @ 4,979 > 200 Day (red) @ 4,701

5,000 for the S&P 500 (SPY) looks like pretty solid support especially as the 100 day moving average slides ever closer to that level.

On the other hand, any bad news on inflation, earnings, banks, middle east, or (fill in the blank) could easily have us breaking below to test the 200 day moving average. I suspect any such move would be fairly short lived as I don’t see anything pushing us towards recession at this time…and thus no reason to truly be bearish either.

Plain and simple, the high of 5,265 was built on too much optimism of rate cuts soon being in hand to bolster the economy > earnings growth > stock prices. But that possibility still exists once inflation is under wraps. So, there is not much of a need for stocks to press too low, for too long.

Instead, we are just sitting at a red light with full knowledge it will turn green quite soon. And thus, no reason to turn off the car. Thus, we are best served idling at the light and prepared to punch the gas once the signal is in place.

So, I am staying fully invested with a blend of my favorite POWR Rating stocks which gives me a proven edge to outpace the market in any market condition.

Read on below for more specifics on my favorite stocks to buy now…

What To Do Next?

Discover my current portfolio of 12 stocks packed to the brim with the outperforming benefits found in our exclusive POWR Ratings model. (Nearly 4X better than the S&P 500 going back to 1999)

This includes 5 under the radar small caps recently added with tremendous upside potential.

Plus I have 1 special ETF that is incredibly well positioned to outpace the market in the weeks and months ahead.

This is all based on my 44 years of investing experience seeing bull markets…bear markets…and everything between.

If you are curious to learn more, and want to see these lucky 13 hand selected trades, then please click the link below to get started now.

Steve Reitmeister’s Trading Plan & Top Picks >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, and Editor, Reitmeister Total Return

SPY shares were trading at $509.21 per share on Friday morning, up $4.18 (+0.83%). Year-to-date, SPY has gained 7.46%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPYGet RatingGet RatingGet Rating
.INXGet RatingGet RatingGet Rating
DIAGet RatingGet RatingGet Rating
IWMGet RatingGet RatingGet Rating
QQQGet RatingGet RatingGet Rating

Most Popular Stories on

These 5 Economic Reports Hold the Key for Stocks

Thanks to signs of easing inflation in May we have enjoyed a rally for stocks with the S&P 500 (SPY) making new all time highs. What happens next for stocks very much is tied to the results for these 5 upcoming economic reports. Steve Reitmeister previews these announcements with keys to what stocks do next. Read it all in the full article below...

4 Software Stocks Primed for Major Upside in 2024

The software industry is thriving, buoyed by digital transformation, soaring demand for cloud solutions, and the integration of advanced technologies like AI and ML, presenting lucrative opportunities for savvy investors. So, let’s look at tech stocks SS&C Technologies (SSNC), Informatica (INFA), Verint Systems (VRNT), and Yext (YEXT) poised for significant upside in 2024. Read on…

3 Pharma Stocks Primed for May Investment Opportunities

The pharma industry is poised for tremendous growth driven by surging healthcare needs, the introduction of groundbreaking medications, and relentless technological innovation. Hence, quality pharma stocks Collegium Pharmaceutical (COLL), Green Thumb Industries (GTBIF), and Bristol-Myers Squibb (BMY) emerge as prime investment options this month. Read more…

3 Bargain Internet Stock Buys for Savvy Investors

The increased internet penetration is reshaping various industries, driving digital transformation, connectivity, and access to services like e-commerce, remote work, and online entertainment. Thus, robust internet stocks Jamf Holding (JAMF), Upwork (UPWK), and TrueCar (TRUE), which are trading at discounts to their peers, could be ideal buys. Keep reading…

Will Stocks Continue to Rise...Or Time for Rug Pull?

It’s hard not to celebrate each new high for the S&P 500 (SPY). Yet with high inflation not dead and buried then perhaps this stock market celebration is a tad early. That is why you need to hear what 44 year investment veteran Steve Reitmeister is saying about what comes next for the stock market and how to stay on the right side of the action. Read on below for more...

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News