Markman Capital Insight

Sticking to the script

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Stocks are following the script of a typical May so far, according to an analysis by Bespoke Investment Group. The chart below shows the historical intraday performance of the S&P 500 during the month of May going back to 1983, and throughout the current bull market. Equities have generally fared poorly at this time of year. The black line on the chart shows the current year; the green line is the average intraday path of the market benchmark of the current bull market (2009 to present); the blue line is all years (1983-20015).

After starting off this month higher, the S&P 500 sold off for the remainder of the first week of May and then rallied back for a few days. From there, however, it has been all downhill as equities have slumped, just like they normally do in the middle of the month, the Bespoke analysts point out.

On an average basis, from 2009 through 2015, the S&P 500’s intra-month high has occurred at 4PM on 5/10. This year, the high for the month occurred two minutes earlier at 3:58 PM. You can’t get much closer than that, they note. Since that intra-month peak on 5/10, the S&P 500 has declined by 2.8%, which is not much more than the typical mid-month decline of 2.5%.

So where to go from here? Since 1983 and even during the current bull market, May has historically closed the month on a positive note with the S&P 500 bottoming out right as we enter the last week of the month on Monday. On an average basis going back to 1983, the S&P 500 has finished off the last week of May strongly, averaging a gain of 0.81%, the data shows.

So while there hasn’t been much to write home about for bulls so far this month, Bespoke argues, history suggests a finish with a flourish. Something to look forward to next week, with any luck.

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