Sell in May and go away?
The recent pull back in the US stock market has many wondering if the old Wall Street adage of “sell in May and go away” will hold true this year. The adage is based on the actions of large institutional investors and money managers: quite simply, they go on vacation during the summer and as a result there is less market activity.
This year, however, many market watchers are wondering if that will be true. 2012 is a Presidential election year and the US economy will be the main focus of debate.
Investors looking for an indication of what the markets may do from here should look at Apple (“AAPL”). Currently 20% of the S&P 500 index is comprised of technology stocks – with Apple being the largest. Apple is also the current Wall Street darling and favorite stock among short term traders. A breakdown in Apple’s stock may mean that traders are starting to worry about the market and are reallocating their portfolio to safe haven asset groups.
Currently both Apple and the S&P 500 are in an area of support – a technical level where traders, who believe the market will continue to rise, will use as an entry point. However, if this support level is broken, then it is an early sign that the more aggressive traders and investors are getting worried about the condition of the stock market.