Chances are you've heard this saying before...
"Sell before May and go away."
It has to do with seasonality and the historical trends of given months.
Except here is the thing... It is a complete and utter fallacy.
Maybe it's popular because it's fun and catchy to say.
But everybody who adheres to this snappy saying is leaving a lot of money on the table.
That's because the first two weeks of May are actually two of the most active in terms of stocks moving higher due to the after-effects of April's earnings announcements.
You don't want to sell before May, because if you do, you're taking those potential gains off the table.
In actuality, you really want to look at selling during May - sometime around the second or third week.
There are still earnings announcements taking place in the first two weeks, and that is usually a positive catalyst.
After all of those announcements are done, sometime in the second half of May, that's when you should be looking to sell.
So, when you see headlines like the one below, I implore you to keep what I said above in mind...
As always, it's important to think about who's saying this and when.
Wells Fargo & Co (WFC) reported earnings today, and given the state of banks, it's not exactly a surprise that things aren't all sunshine and rainbows.
This could simply be an example of the tail wagging the dog and WFC preempting itself against "bad" news by leaning into recession talk initiated by the Fed.
That said, according to WFC, there are three main factors that will trigger the downside in equities: aggressive monetary policy, potential capital or liquidity issues catalyzed by the bank crisis, and an increasingly credit-reliant consumer.
As you know, earnings season is the single biggest catalyst for the market, and we've got some big-ticket names coming down the pike.
When trying to figure out what this means for WFC, it's imperative that we keep our eyes on the forward guidance and outlook for the market in the coming weeks.
If you just get bogged down in the numbers of these earnings announcements, you're going to drive yourself crazy and lose money.
As always, we are going to let the market come to us.
If we time it correctly for when trading the downside, we will win big in the coming months.
Don't just be a pig going to slaughter with the rest of the masses reading headlines and blindly trusting them.
The Bulls and Bears win. Pigs die
I can assure you this will be a conversation driver for weeks, and if you stick with me, I'll lead you not just to safety but prosperity.
It just comes down to the type of trading you're looking for...
If smaller trades are more your speed, my Alpha Accelerators service hones in on stocks that are at a lower price and ready to break out.
Now, my Night Trader service covers a broader spectrum of opportunities, so there will be some trades that are a little bigger.
As I said, it comes down to your situation - but I assure you I'll be dialed in regardless of which you choose.
Recession or not, there are going to be some great opportunities in the months to come.
I hope you'll join me for the ride.
The post People are About to Leave A LOT of Money on the Table appeared first on Penny Hawk.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.