• Seasonal Analysis shows us what direction, and to what degree, a market tends to move over the course of a pre-determined time frame. 

• In the case of US stock indexes, particularly the S&P 500, the period between late March and late August tends to show solid gains. 

• This puts a question mark on the old market cliche of, “Sell in May and walk (go) away”. 

The month of May brings with it a number of old (tired?) market cliches. Those hedging/investing/trading in the Grains sector are familiar with, “Rain makes grain”, tied to the age-old “April showers bring May flowers”. And there’s the lesser-known take on the famous Tennyson poem Locksley Hall, “In the spring, a young man’s fancy lightly turns to thoughts of ‘gas’”. While not as romantic as Tennyson’s “love”, from a seasonal point of view both RBOB gasoline and natural gas post strong rallies this last month of meteorological spring with the former gaining (on average) between 10% (5-year seasonal study) and 15% (10-year) while the latter adds between 11% (5-year) and 17% (10-year). If we bring the natural gas market’s well-earned nickname “The Widow Maker” into the discussion, then it fits with Tennyson’s original wording, in an ill-suited sort of way.

But what about the most famous market related May cliché of them all, “Sell in May and walk (go) away”? As you likely recall, this is associated with US stock markets, the Big 3 being the S&P 500, the Dow Jones Industrial Average, and the Nasdaq. For this discussion, I’ll focus on the S&P 500 Index based on: 

• The Nasdaq ($NASX), the Index for high-tech stocks, is the equities sector’s version of natural gas. That being said, it does tend to lead the other two major indexes when it comes to long-term turns in trend.
• The Dow Jones Industrial Average ($DOWI) is our granddad’s version of stock indexes. Or maybe their granddad’s. Despite being old and stodgy, it can still get frisky at times.
• The S&P 500 ($INX) is the more heavily watched because, as its name suggests, it is made up of the 500 most active stocks (a search tells me 503 stocks, to be exact) in the sector.

A look at the seasonal studies for the S&P 500 show little merit to the old cliché. In fact, from the last weekly close of March through the last weekly close of August the Index has shown impressive gains:

• The 30-year seasonal index shows an average gain of 5%
• The 20-year seasonal index shows an average gain of 6%
• The 10-year seasonal index shows an average gain of 8%
• And the 5-year seasonal index shows an average gain of 10%

As for the May through October timeframe associated with the original cliché (Selling in early May, Buying in early November), from the first weekly close of May through the last weekly close of October: 

• The 30-year seasonal index shows an average gain of 3%
• The 20-year seasonal index shows an average gain of 4%
• The 10-year seasonal index shows an average gain of 5%
• And the 5-year seasonal index shows an average gain of 7%

Based on seasonal analysis alone, the May cliché doesn’t seem like a sound investment strategy. 

What about the meltdown registered from late February through late April? In case you blanked this from your memory the S&P 500 closed the third week of February at 6,114.63 and finished the third week of April at 5,282.70, a drop of roughly 832 points or 13.6%. Though dramatic, it could still be considered a seasonal move given from the third weekly close of February through the fourth weekly close of March:

• The 30-year index shows an average wash
• The 20-year index shows an average loss of 1%
• The 10-year index shows an average loss of 2%
• And the 5-year index shows an average loss of 4%

That’s the thing with averages, it leaves the door open to both larger and smaller moves. When we see a larger than average change over a set period of time, it usually has to do with an unusual outside influence. I think any rational person knows what has been “unusual” through the early part of 2025. 

What happens next? Your guess is as good as mine, but if the S&P 500 Index follows the cliché in May, we see it would actually be a contra-seasonal move. Contra-seasonal trends tend to occur when the underlying fundamentals of a market are different than what is normally seen. Again, one doesn’t have to be a rocket scientist to understand what could be a fundamental divergence from the norm in 2025.