Sell in May and Go Away?

Happy Friday!

We’ve made it to the long weekend.  Here’s the plan:

We’ll have our normal chinwag today.  On Monday, I’ll send you The Rude’s Guide to the New Acronyms for your perusal and amusement.

It’s not at all exhaustive or comprehensive.  If you have some new ones you’d like us to include, feel free to send them over to asksean@paradigm.press.

Then on Tuesday, it’s back to our regular schedule, and I’ll have another month-end review.

Without further ado…

This is a Bull Market

Rough winds do shake the darling buds of May,

And summer’s lease hath all too short a date.

Billy Wigglestick, Sonnet 18, Lines 3-4

Here’s the SPX year-to-date (YTD):

Since January 4th, it’s up about 13.5%.  Yes, you could theoretically sell it today and go away for the summer.  But I don’t think that’s the best move.

According to Ryan Detrick, CMT, whose numbers slightly differ from mine, if the market is up more than 10% on day 100 of the trading year, on average, the rest of the year gains 8.6%.

Let’s hope we’ll have at least an average year!

Next, let’s look at the Nasdaq QQQ ETF:

We’ve just had a weeklong rally, turning around what looked like an imminent downtrend.  Were back up above the 50-day MA (blue line) and well above the 200-day MA (red line).  If it fails to get up above the previous highs – about 340 – then there’s cause for concern.  But right now, it looks like a hold, at least.

Next, let’s take a peek at the small caps ETF:

Again, it looked like it was about to roll over a week or so ago.  But since then, we’ve had a strong rally up above the 50-day moving average.  And like the QQQ, we’re well above the 200-day moving average.  It just doesn’t seem like a wise time to sell.

I’ll have the monthly charts for you on Tuesday so that we can zoom out for a longer-term view.

Retail Trading is Back – Take Advantage of It

Zero Hedge reports the death of retail trading is greatly exaggerated.  In fact, not only has retail trading rebounded, but retail options trading has risen significantly.

Goldman Sachs, the US investment bank, notes in a new piece discussing the “Recent performance of stocks with high levels of retail activity,” stocks with high retail trading volumes have outperformed by 5% since May 12th, with half of this outperformance occurring yesterday (Wednesday).

That, you may remember, is when AMC and GME – our favorite apes’ stocks – rallied to the moon.

Here are the stocks retail investors favor the most:

And the options they favor the most:

You may get lucky on some of these, but I’d avoid them.  Always do your research first.

But the one unequivocally good thing about retail traders getting back into the markets is that the rising tide lifts all the boats—just one more reason to stay in the markets for now.

Thanks to Zero Hedge for publishing those screenshots.

Foreign Policy Writes Some Sense

I’m no friend of the Council on Foreign Relations.  I think they do far more harm than good.  But their house magazine, Foreign Policy, printed a sensible article on agriculture.

The Watermelons (green on the outside, commie red on the inside) would have you believe that only you should grow your food.  Failing that, local food is the best.  They almost call for an abolition of the global food trade.

First, my Italian grandfather had a garden in his backyard (just like every other Italian grandfather).  He was so proud of his tomatoes, figs, and eggplants.  And they were delicious!  Every year, we’d eat all the vegetables from his garden.  It was lovely.  So I understand the pride and joy of growing your own stuff.

In fact, Mrs. Ring grows a lot of her spices in our back garden here in the Phils.

Second, as someone who has lived outside of the United States for 21 years, I can certainly tell that American fruit is bland as hell and American meat, on the whole, is pretty close to disgusting.

Before you go wild, here’s an excerpt from a Vox article explaining why:

The bottom line here with the industrial tomatoes is that tomatoes have been bred for yield, production, disease resistance,” Klee told me. “The growers are not paid for flavor — they are paid for yield. So the breeders have given them this stuff that produces a lot of fruit but that doesn’t have any flavor.

As for the meat, here’s a piece from Ecowatch:

Because the activities of Animal Pharma are so underreported, few Americans realize that most of the meat they eat is banned in other industrialized countries. One example is ractopamine, a controversial growth-promoting asthma-like drug marketed as Optaflexx for cattle, Paylean for pigs, and Topmax for turkeys and banned in the European Union, China, and more than 100 other countries. Also used in U.S. meat production is Zilmax, a Merck drug similar to ractopamine that the FDA linked to 285 cattle deaths during six years of administration. Seventy-five animals lost hooves, 94 developed pneumonia and 41 developed bloat in just two years, Reuters reported.

The European Union boycotts the U.S.’s hormone-grown beef. The routinely used synthetic hormones zeranol, trenbolone acetate, and melengestrol acetate pose “increased risks of breast cancer and prostate cancer,” says the European Commission’s Scientific Committee on Veterinary Measures. “Consumption of beef derived from Zeranol-implanted cattle may be a risk factor for breast cancer,” according to an article in the journal Anticancer Research.

I’m not trying to spoil your long weekend.  But I want to point out that while the Eco Warriors may be right to want to change U.S. policies towards food, banning Big Agriculture is a stupid way to do it.

Just to touch on some of the good points of industrial agriculture:

    1. Only 2% of the US population works in agriculture, so 98% can work in much higher value industries.  This led to a massive alleviation of poverty.
    2. Large farms in the US produce 50% of the food for 330 million people.
    3. US farms are so efficient, economically and environmentally, they are also able to produce vastly more food than Americans can consume.  This makes the country the world’s largest agricultural exporter as well.

No system is perfect, but this is a pretty good one.  The authors also point to 3 things that the US can do to improve its farming.  I encourage you to read the piece.

And with that, I wish you a fabulous weekend.

With all the hard work you put in, sit back, relax, and enjoy your cold brew.

You deserve it.

All the best,

Sean

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