We are now in the worst seasonal period for stocks.
The old adage “sell in May and go away” does have some merit. According to the Ned Davis (NDR) database, had you invested $10,000 in the S&P 500 every May 1st starting in 1950 and sold October 31 of the same year, your initial position would only be worth $10,026 as of 2008. Put another way, by investing only from May through October, a $10,000 stake invested in 1950 would have only made $26 in 57 years.
In contrast, $10,000 invested in the S&P 500 on November 1st and sold April 30th over the same time period would have grown to $372,890. Out of 58 years, you would have had 45 positive and only 13 negative.
Now consider that stocks failed to produce new highs during this recent rally. Despite being manipulated higher by someone determined to get stocks to 2,100, we’ve slammed into resistance.
Moreover, the Russell 2000, which usually leads the S&P 500 is lagging far behind: not a good sign if this rally is meant to be the start of something more.
Looking at the long-term S&P 500 chart, we could easily see the market plunge to 1,600: its long-term bull market trendline.
The whole situation feels incerasingly like late 2007/ early 2008: stocks are holding up on hope of more Central bank action, while the economy is rapidly contracting. Time and again the data is coming out "the worst since 2009" but the market is only 2% off its all time highs.
This is going to be VERY badly.
On that note, we are already preparing our clients for this with a 21-page investment report titled Stock Market Crash Survival Guide.
In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.
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