MarketMap-2021 Annual Scenario Planner Issue #9
May 3, 2021
May 3, 2021
Too many laugh when they read ” Sell in May and Walk Away.”
One of my LinkedIn connections shared some history regarding the above proverb, which has more than a touch of reality. He pointed out as a proud Brit that one aspect that the stock market tended to exhibit lower returns in the summertime. This tendency led to a saying emanating from the London Stock Exchange in the 1700s, “Sell in May and go away, come back on Saint Leger Day.” He points out that “Saint-Leger Day refers to the Saint Leger Stakes horse race run in Britain in mid-September since 1776.”
My Dow data only goes back 100 years and shows that, well, hell yes, there is the same affinity for investors here in the states- liquidity – to go on holiday with the kids from the time school lets out until it returns in September.
The first chart is the Monthly Dow going back 100 years and showing that this simple formula has a 72% accuracy rate. The blue arrows on the chart show the buys, and the white arrows are the exits. The chart also reveals that the method is nicely long, and the Dow has advanced nicely into the Long-Term (L-T) resistance zone. On that basis alone, it is extended and in the time window to be “off-risk.”
The supply zone runs from 31,173 to 35,631. A move below 31,173 would be a long-term negative. But there will be signals before that level is hit. Keep reading. Also, the risk area’s high side is 17,800, down to 13,400. These price levels are good for 2021.
Back to the system, by itself, compared to a long-term – 100 year – buy and hold method, it has a greater return and lower risk. Yes, it lacks the efficacy of buy near the low or selling at the top with a 5% time variance (+/- 6 months.) But with a reasonable “panic” entry and fine tunning the exits with MarketMap’s “Time Factors,” is “the ticket.”
Previous issues of MarketMap have pointed out the Juglar cycle. A mundane cycle based on