On the heels of our timely and trenchant Best Six Months Seasonal Sell Signal last week, I visited Brian Sullivan early this morning on the set of CNBC’s Worldwide Exchange at the crack of dawn to discuss the implications of the “Sell in May” pattern in this volatile midterm election year.
As many of you know our Best Six Months Tactical Seasonal Switching Strategy is a much more sophisticated version of the overly simplistic “Sell in May.” We don’t sell in May carte blanche and we don’t go away.
Once we get our sell signal we begin shifting to a more defensive, risk-off posture. We limit new buying, sell losers, tighten stops, cut equity exposure, buy some bond vehicles and implement some downside protection strategies and just hang on to some cash until the perennial fatter pitch comes around later in Q2-Q3.
The nature of our 4-year election cycle compels incumbent presidents to shift toward their less savory and more disruptive policy initiatives in the midterm year before they relinquish at least some of the control they have in Congress that came in on the wave of their election victory. We are seeing this now with the tariffs and Iran deal as well is with the pressure from the opposition to call out the incumbent’s shortcomings.
This makes the Worst Six Months May-October worse in the midterm year….
So have a look at my CNBC video from this morning and then check out our current advice at https://www.stocktradersalmanac.com/ or click on the Ad to the right of this blog for a great deal on a subscription to my newsletter. With each annual subscription you’ll get the current 2018 Almanac FREE as well as next year’s edition and get the new one annually when you are an active subscriber.
As always, please use protective buy and sell stops when trading futures and options.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.