Random Thoughts: Sell in May and Go Away?

By Todd Harrison  MAY 02, 2011 12:45 PM

The market enters a seasonally trying stretch.


On Friday we offered that while there were pockets of action -- Gold, Research in Motion (RIMM), Microsoft (MSFT) -- the overall tenor was nestled between digestive and contemplative.

Through it all, despite concerning signs of complacency, Hoofy held his head high and entered the weekend, and by extension this week, with S&P 1345 and Gold $1500 firmly underfoot. Until either of those levels is breached, market declines will continue to be viewed as healthy and natural corrections.

We understand the difference between a rally and a recovery -- but despite trillions of dollars of artificial sweetener, our Fed Chairman insists that the US economy "needs more time." What remains to be seen, of course, is whether he's talking Japanese in terms of duration.

Let’s look at it another way. When you put that much juice to work in the marketplace and the economy grows at a 1.8% annual rate -- and "employment" is 8.8% (underemployment is closer to 20%) -- what does that say about the true zeal of an organic recovery?

Simple, we've transferred risk from one perception to another, and while credit markets remain firm -- and suggest that equities have viable upside -- we must remember that they're not a predictive panacea, and that stocks were down 25% before credit blinked heading into the first phase of the financial crisis.

Food for thought, which doesn’t make it right. Below are some random vibes as we edge through the first fifth of our freaky week:


Position in silver