Heading Into A Summer Melt-Up?

June 06, 2024

Not So Scary

As the weather heats up and North America heads into summer months, we wanted to test the adage of “Sell in May and Go Away”, a Wall Street phrase that originated in 18th century England, when bankers and traders would leave London for the summer, slowing trading and market activity. What we found in our research indicates that the summer months are not as scary as you might have thought!

Since 1950 there have been 21 instances when the S&P 500 (SPX) was up more than 10% through the end of May. Out of these 21 instances, 19 (or 91%) went on to see positive performance through the remainder of the year (June – December) with average returns of 8.1%.

summer-melt-up-1Source: Goldman Sachs

Monthly gains of 4% or greater are rare, but quite bullish when they seldom occur. It just happened in May 2024 with an aggregate gain of 4.95% for the S&P 500. The average one-year return after a 4%+ May is 20.1% with 100% of instances positive!


Source: Goldman Sachs


The months of summer are also an unusual time of year for the market to top out. In fact, since 1980 the stock market has never peaked for the year during the month of June. Furthermore, it has very rarely peaked during the June through August summer stretch, only twice out of 44 total occurrences (4%).


Source: Goldman Sachs

Historically, the first 15 days of July have been the best two-week trading period of the year for equities. Furthermore, the S&P 500 (SPX) has been positive for nine straight Julys with an average return 3.7%.

summer-melt-up-4Source: Goldman Sachs

The July strength isn't exclusive to the S&P 500; the Nasdaq-100 (NDX) has posted positive returns for 16 consecutive Julys, averaging a 4.64% gain. As shown in the chart below, the first half of July marks the best two-week stretch of the year for the Nasdaq-100.

summer-melt-up-5Source: Goldman Sachs

Green Light

Although the weather is heating up and Wall Street bankers and traders are heading off on vacation, adhering to the "Sell in May" adage could result in missed opportunities. A more fitting approach might be "Hold in May, and Go Away."

Our indicators and risk metrics continue to give a green light for equity markets but, as always, we will continue to monitor any changes and adjust our strategies accordingly.


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