Sell in May and Go Away? You Might Want to Watch These Levels
The S&P 500 is coming under pressure as we enter May. The old adage “sell in May and go away,” worked last year, but this month has mostly been positive since 2013.
There are obviously much bigger issues now than typical seasonality, especially after April’s huge bounce. The bulls have priced in significant recovery for the market, which creates the risk of selling the news as social distancing ends. It also opens the door to potentially new bearish narratives, like renewed trade tensions with China.
If you’re waiting and watching to see how things play out, three potential areas could be important on the S&P 500’s chart.
First is the current level around 2820, which is near the bottom from last August.
Next is roughly 2728. This low from 11 months ago briefly provided support March 9-11 and again on April 21.
It's also near the 50-day simple moving average (SMA), which has been knifing lower. Traders may want to test that line.
If 2728 fails, the next clear support area could be much lower: between 2467 and 2480. The first line we outlined here. The second was a weekly low March 9-13.
There are obviously much bigger issues now than typical seasonality, especially after April’s huge bounce. The bulls have priced in significant recovery for the market, which creates the risk of selling the news as social distancing ends. It also opens the door to potentially new bearish narratives, like renewed trade tensions with China.
If you’re waiting and watching to see how things play out, three potential areas could be important on the S&P 500’s chart.
First is the current level around 2820, which is near the bottom from last August.
Next is roughly 2728. This low from 11 months ago briefly provided support March 9-11 and again on April 21.
It's also near the 50-day simple moving average (SMA), which has been knifing lower. Traders may want to test that line.
If 2728 fails, the next clear support area could be much lower: between 2467 and 2480. The first line we outlined here. The second was a weekly low March 9-13.
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