Sell in May and go away? Not so much!

This year those that followed the old axiom, “Sell in May and go away”; missed out on big time.  Fear of a sell remains at near record lows, and it seems even the smallest selloffs attract dip, buyers.  Nothing about this year has so far has qualified as normal.  As a result, we must remain very focused on price action clues and prepared for anything.  That means don’t become complacent thinking that the market it too strong to sell off because that is a mistake that can remove all your profits for the year very quickly.  If buyers continue to show strength at these levels, we must also be ready to act.

With no major news events over the holiday, I would expect a light volume day as many traders will have planned extended vacations.

On the Calendar

Although this is a short week, the Economic Calendar is full of very big reports.  It kicks off the today with Personal Income and Outlays at 8:30 AM Eastern.  Consumer is spending is expected to see an improvement over last month, but consensus suggests personal income will remain soft.  At 9:00 AM we get the S&P Case-Shiller numbers followed by the Consumer Confidence reading at 10 AM.

Housing demand has been extremely strong this year bu the Case-Shiller number is expected to soften from 6% to 5.8%.  Consumer Confidence is also expected to retreat ever so slightly today but continues to remain very strong and near 20-year highs.  There are only 33 companies on the Earnings Calendar today, and there are none that would likely move the market.

Action Plan

Although it is likely to just a little more price action today, then we saw last Friday I am expecting much.  There were not any major new events over the holiday, and the evil doers of the world behaved.  Futures are pointing to a slightly soft open, but that should not be a surprise after last week’s breakout.  My plan is of course to manage my current positions, but I will need to see some good price action before concerning myself with new trades.  Ultimately I want to see the overall market test and hold the breakout of last week before getting too excited about adding new risk.  Historically June is a month that is flat to just slightly positive.  However, there is nothing about this year that has been normal, so we need to prepare for that fact that anything is possible.

Trade Wisely,

Doug