🏃♀️🏃🏽♀️ Crypto market. “Sell in May and Go away”
Updated
The historical pattern known as the seasonal divergence "Sell in May, and Go away" was popularized by the Stock Trader's Almanac, which stated that investing in stocks represented by the Dow Jones Industrial Average November through April and switching to fixed income for the remaining six months "would have delivered reliable returns with reduced risk since 1950."
What is “Sell in May and Go away”?
“Sell in May and Go away” is a well-known adage in finance. It is based on the stock's historical underperformance over a six-month period from May to October.
According to Fidelity Investments, the divergence has remained most pronounced in recent years, with the S&P 500 Index (SPX) gaining an average of about 2% from May to October between 1990 and the next 30 years, compared with an average of about 7% since November to April.
The Halloween Indicator's research paper, 'Sell in May and Go Away': Everywhere and All the Time*, which examined stock markets outside the US, found the same pattern, calling the seasonal divergence trend "remarkably persistent."
Key Findings
👉 “Sell in May and Go away” is a saying that refers to the historically weaker performance of financial markets from May to October compared to the other half of the year.
👉 Investors can try to benefit from this pattern by switching to less risky assets from May to October based on historical data.
Seasonality in investment flows could continue as a result of financial industry and business year-end bonuses, possibly aided by the mid-April U.S. income tax filing deadline.
Whatever the fundamental considerations, the historical picture became more pronounced as a result of the October stock market crashes of 1987 and 2008.
Bottom Line
The only drawback of historical patterns is that they do not reliably predict the future. This is especially true for well-known historical patterns. If enough people became convinced that the “Sell in May and Go Away” pattern would continue, it would essentially begin to disappear immediately. All the early sellers would try to sell in April and bid against each other to buy back the assets before the others in October.
At the same time, certain considerations regarding the development of geopolitical events in the period from May to October 2024 give reason to think about the prospects of such a scenario for the next 6 months.
* The Halloween Indicator, 'Sell in May and Go Away': Everywhere and All the Time
Ben Jacobsen
Tilburg University - TIAS School for Business and Society; Massey University
Cherry Yi Zhang
Nottingham University Business School China; Massey University - School of Economics and Finance
What is “Sell in May and Go away”?
“Sell in May and Go away” is a well-known adage in finance. It is based on the stock's historical underperformance over a six-month period from May to October.
According to Fidelity Investments, the divergence has remained most pronounced in recent years, with the S&P 500 Index (SPX) gaining an average of about 2% from May to October between 1990 and the next 30 years, compared with an average of about 7% since November to April.
The Halloween Indicator's research paper, 'Sell in May and Go Away': Everywhere and All the Time*, which examined stock markets outside the US, found the same pattern, calling the seasonal divergence trend "remarkably persistent."
Key Findings
👉 “Sell in May and Go away” is a saying that refers to the historically weaker performance of financial markets from May to October compared to the other half of the year.
👉 Investors can try to benefit from this pattern by switching to less risky assets from May to October based on historical data.
Seasonality in investment flows could continue as a result of financial industry and business year-end bonuses, possibly aided by the mid-April U.S. income tax filing deadline.
Whatever the fundamental considerations, the historical picture became more pronounced as a result of the October stock market crashes of 1987 and 2008.
Bottom Line
The only drawback of historical patterns is that they do not reliably predict the future. This is especially true for well-known historical patterns. If enough people became convinced that the “Sell in May and Go Away” pattern would continue, it would essentially begin to disappear immediately. All the early sellers would try to sell in April and bid against each other to buy back the assets before the others in October.
At the same time, certain considerations regarding the development of geopolitical events in the period from May to October 2024 give reason to think about the prospects of such a scenario for the next 6 months.
* The Halloween Indicator, 'Sell in May and Go Away': Everywhere and All the Time
Ben Jacobsen
Tilburg University - TIAS School for Business and Society; Massey University
Cherry Yi Zhang
Nottingham University Business School China; Massey University - School of Economics and Finance
Note
May 01, 2024BTC May Day Roller Coaster
Trade active
May 15, 2024• After months of deliberation, the SEC is expected to make a final decision on VanEck and ARK's Ethereum ETF applications next week, on May 23 and 24, respectively.
• There appears to be industry consensus that these applications will be rejected by the SEC due to a lack of understanding with the issuers. However, it remains unclear what the exact reason for this refusal will be.
• The issue already has some history, and for now, presumably the SEC's position may be to understand ETH as a security (likely as a Warehouse Receipt, WHR or Warehouse Receipt Transaction System), and not as a commodity trust, the applications for registration of a spot ETH ETF of which were previously in 2024 were filed by issuers.
• More details on the issue can be found in the scientific publication of the 2nd International Conference on Mechanical Engineering, Electronics, Control and Automation (MECAE 2018) “Research and Application of Warehouse Receipt Transaction Based on Smart Contract on the Blockchain” by Yafei Chen, Zhihong Zhang and Beibei Yang.
Trade active
August 5, 2024
Bears dominate.
Trade active
September 05, 2024
👉 Summer is over and autumn has arrived, but it still does not bring any life to the ranks of crypto-crazy enthusiasts - crypto-peppers, crypto-butterflies, crypto-goddesses, or whatever you are named.
👉 Ethereum (ETHUSD) continues to gravitate towards the key 5-year simple moving average, from which the price in 2020 soared 20-fold over the next year and a half, and in 2022 - 4-fold, also over a 1 1/2 - year period of time.
👉 Whether a real crypto winter will come after autumn, following the epic breakthrough of the above-mentioned key support - time will tell.
Trade active
October 3, 2024
👉 Ether ripped. Can not get up. Uptober's unlikely to to make it up... since the historically proven indicator of the American recession inexorably signals its imminent and inevitable onset.
👉 Over all the crypto coins, less than 9 percent are positive over the past six months.
👉 Over all the crypto coins with a capitalization of $10 billion or more, only two are slightly positive over the same 6-month period of time.
Trade closed: target reached
October 31, 2024
Halloween is coming, and it means the 6-month "Sell in May and Go Away" period is coming to an end, based on the historical underperformance of stocks over the six-month period from May to October.
The discussion was really active. Before I summarize further, I must say thank you to everyone for your boosts and participation in the discussion, and to your comments, no matter how modest they were =)
📌 So, indeed, the crypto markets have been under strong bearish pressure over the past six months, since out of all cryptocurrencies, approximately 85 percent have fallen in price over this 6-month period, and only 15 percent have grown, respectively.
📌 The total capitalization of the cryptocurrency market (TOTAL) has not shown growth over the past six months, while its maximum growth over this period was up to +12%, but the decline was down to -24%.
📌 BTC (BTCUSD) , which has failed to set a single new all-time high in the last six months, jumped to 60 percent in Dominance (BTC.D), continuing its recovery for the 3rd year in a row.
It is likely that market participants continue to view Bitcoin as a safer haven compared to riskier alts.
📌 Central bank monetary policy DOES matter, especially in ultra-tight periods like now, when global bankers are still maintaining their key rates (read - the cost of borrowing liquidity) at historically high levels, significantly higher than the aggregate bond market yield (5-year government bonds yield).
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