Sell in May and Go Away Is it a Good Idea? Active Trend Trading: Dennis W. Wilborn

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1 Sell in May and Go Away Is it a Good Idea? Active Trend Trading: Dennis W. Wilborn Observe things how they are; See things how they can be!

2 Disclaimer U.S. Government Required Disclaimer Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don t trade with money you can t afford to lose. This is neither a solicitation nor an offer to Buy/Sell stocks, futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this training. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. All Materials presented are for training purposes only. Traders should paper trade any new method prior to risk of personal capital. Copyright ATTS

Our Motto: Clarify, Simplify & Multiply - Founder & Lead Technical Analyst for Active Trend Trading - Certified Candlestick Technician - Affiliate of Market Technician Associations - Guest Speaker on

3 Our Motto: Clarify, Simplify & Multiply - Founder & Lead Technical Analyst for Active Trend Trading - Certified Candlestick Technician - Affiliate of Market Technician Associations - Guest Speaker on IBD How to Make Money in Stocks Radio Show - Highlighted in the book How to Make Money in Stocks-Success Stories - Publish Art & Science of Active Trend Trading Trader s Report Weekly - Host How to Make Money Trading Stocks Show Weekly - Systems Researcher - Former Forbes Contributor - Retired US Navy, Commander - Civil Engineer - Adjunct Professor MBA Program Chaminade University, Oahu, Hawaii - Started Trading in Started Trading For a Living in Research Colleague Mike Trager, Dallas, Texas

4 Sell in May & Go Away? Is this still a valid perspective? It depends! 1. Historical Perspective 2. Is it a Valid Theory? It depends! 3. Trading Objectives 4. Adjusted Expectations Copyright ATTS

5 Sell in May & Go Away? What does 'Sell In May And Go Away' mean Sell in May and go away is a well-known trading adage that warns investors to sell their stock holdings in May to avoid a seasonal decline in equity markets. The sell-in-may-and-go-away strategy is where an investor sells his stock holdings in May and gets back into the equity market in November, thereby avoiding the typically volatile May-October period. Some investors find this strategy more rewarding than staying in the equity markets throughout the year. (Halloween Effect by: Ben Jacobsen) Origination of the Phrase "Sell in May and Go Away" The phrase sell in May and go away is likely a take on an old English saying, "Sell in May and go away, and come on back on St. Leger's Day." This phrase refers to the custom of aristocrats, merchants and bankers who liked to leave the city of London and go to the country to escape the heat during the summer months. St. Leger's Day refers to the St. Leger's Stakes, a thoroughbred horse race in mid-september and the last leg of the British Triple Crown. American traders who are likely to spend more time on vacation between Memorial Day and Labor Day mimic this trend and have adopted the phrase as an investing adage. However, the numbers also support this bit of folk wisdom. Read more: Sell In May And Go Away Copyright ATTS

6 Sell in May & Go Away? Do the Markets Drop in May? Since DJI Average Return - May-October 0.3% - November-April 7.5% Why? Exact reasons unknown, but contributors are: Lower Spring & Summer Volumes; Higher Investment Flow in the winter through April 15 th (IRAs & 401Ks) Disadvantages of Sell It in May and Go Away - Transaction Cost - Tax Implication - Market Timing of Seasonal Alternatives to Sell in May and Go Away - Trade Leveraged ETFs - Learn to Sell Option Premium - Reduce Expectations Copyright ATTS Focus on the Index that Performs the best historically

7 Sell in May & Go Away? Copyright ATTS

8 Sell in May & Go Away? What about Crashes? October: Drop 24% in 2 days (Black Friday) Drop 22% in 1 day Drop 22% in 8 days Worst & Best Months In spite of the history of October crashes, the worst month has been September. Since Worst = September Average Return -0.65% - Best = December Average Return +1.59% OK, how do we make this knowledge actionable? Copyright ATTS

9 Sell in May & Go Away? What to do! Is this still a valid perspective? It depends! 3. Trading Objectives Does the Adage hold up for each index? Copyright ATTS

10 SPX Seasonality

11 NDX Seasonality

12 RUT Seasonality

13 TNA-Daily 57% 23 Days 38% 14 Days 55% 25 Days

14 Sell in May & Go Away? What to do! Is this still a valid perspective? It depends! 4. Adjusted Expectations Sell in May and Go Away, but don t forget to come back in September! Remember these are tendencies & affect each Index differently Tighter Profit and Stop Losses Look for Reversal Signals on Growth Stocks or ETFs Look at other Commodities or Sectors Learn to do Income Trades! Copyright ATTS

15 NDX Seasonality

16 Sell in May & Go Away? What to do! NVDA Weekly Chart Week of May 9 th Copyright ATTS

17 Gold Seasonality

18 NUGT 150% 52 Days 310% 46 Days

19 Biotech Seasonality

20 LABU 115% 38 Days

21 Sell in May & Go Away? What are you going to do? 1. There is validity to the Historical data 2. Have a Plan 3. Be Patient, Be Ready when Opportunity presents Questions? Copyright ATTS

22 Sell in May & Go Away? Copyright ATTS

With Leveraged ETFs. With Leveraged ETFs STOCKS? We Don t Need No Stinking Stocks! Observe things how they are; See things how they can be!

With Leveraged ETFs. With Leveraged ETFs STOCKS? We Don t Need No Stinking Stocks! Observe things how they are; See things how they can be! With Leveraged ETFs Active Trend Trading: Dennis W. Wilborn With Leveraged ETFs STOCKS? We Don t Need No Stinking Stocks! Observe things how they are; See things how they can be! Disclaimer U.S. Government