![]() My performance-auditing firm has been tracking Hirsch’s jump-the-gun strategy since 2002. Hirsch does the opposite in the fall: “Starting on the first trading day of October, we look to catch the market’s first hint of an up-trend.” (To determine if the time is right to jump the gun, Hirsch relies on a trend-following indicator known as MACD, which stands for moving average convergence divergence.) “Beginning on the first day of April, we prepare to exit these seasonal positions as soon as the market falters,” Hirsch writes in the latest edition of the Almanac. One prominent “jump the gun” proponent is Jeffrey Hirsch, editor of the Stock Traders Almanac. Other followers believe that you can do better by sometimes jumping the gun. Investors who mechanically follow this seasonal strategy therefore wait until the close of the last trading day of April to sell and to the close of the last trading day of October to buy. 31 and May 1, and out of the market the other half of the year. The “Sell in May and Go Away” strategy, which also goes by the “Halloween Indicator,” calls for being in the stock market for the six months between Oct. Here’s why.Followers of the “Sell In May and Go Away” market-timing strategy may want to consider selling stocks before the end of April. He can be reached at Apple, Amazon, ARKK, and other big names indicate a market correction is coming, strategist says. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. Mark Hulbert is a regular contributor to MarketWatch. The missing piece was market divergences. To be sure, Martin concluded, stocks have been overvalued for some time now, and bullish sentiment has been at or close to extremes. As contrarians remind us, such sentiment extremes mean that the path of least resistance for the market is down. This means that, when the market does decline, it’s likely to fall more than it would otherwise.Īdding fuel to the fire, he continued, is the too-bullish investor sentiment that prevails right now. Martin added that these severe divergences are occurring as equities are severely overvalued - with some stocks in bubble territory. Except for that sector, he says that the “stock market’s current internals are some of the worst I’ve seen in decades.” ![]() Martin reports that the only area of the market not showing dangerous divergences right now is the large-cap dominated S&P 500. In all three cases, three months later both the S&P 500 and Russell 2000 were at least 10% lower. In Martin’s data for the Russell 2000’s new highs and new lows, which extends back to June 2000, what happened this week has happened only three other times - in September 2014, July 2015 and October 2018. On July 13 there were more new lows than new highs within that index for the second consecutive day. This was particularly evident in the small- and mid-cap sectors, as represented by the Russell 2000 index. Indexes were hitting new highs, many sectors were registering a plurality of new lows. On Wednesday of this week, for example, even as the Nasdaq 100 One indicator of these divergences is the growing number of stocks hitting new lows, for example. market, as indicated by fewer and fewer stocks participating in the headline-grabbing strength of the leading indices. Martin bases his sobering forecast on the increasing divergences within the U.S. As for timing, he says that the decline could begin at any time, but he anticipates that it will begin no later than mid-August. This time around, he is forecasting a decline of 10% or more for the leading U.S. Martin hastened to add that the market’s internal health is not as bad today as it was in 2018. Plus: We’re looking at stocks as money pots, and that’s just not in the cards Read: If you think stocks and housing are in a bubble, check out bonds (Martin anticipated that decline as well see my Oct. That was the beginning of a 20% decline in the S&P 500Īnd a 26% decline in the small-cap Russell 2000 Index In fact, he said, the market’s internal health is now worse than at any time since October 2018. stock market today is most definitely not firing on all cylinders. In an interview on July 14, Martin said the U.S. ![]() In May 2020, I concluded that “ the stock market… is stronger than even the most bullish investors believe.” In January of this year, I wrote that the market was still “ firing on all cylinders.” I devoted two columns to Martin’s forecasts over the past year, and both proved prescient.
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