Back to top
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Invesco QQQ (QQQ) - free report >>
We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Invesco QQQ (QQQ) - free report >>
Image: Bigstock
May Flowers? 3 Reasons to be Bullish Equities in May
For whatever reason, some of the most devastating market corrections have occurred in the month of May. One of the oldest and most popular sayings in Wall Street circles is, “Sell in May go away.” Is there truth to the adage, or is there more to it than meets the eye? What is likely to happen this time around?
Seasonality: Though May has seen some nasty drawdowns in the past, recently, the month has been one of the most bullish. In 9 of the past 10 years, the S&P 500 Index has gained ground in May.
Federal Reserve Action: Though Federal Reserve Chair Jerome Powell said the U.S. Central Bank would “make decisions meeting by meeting based on data”, he also hinted that a pause in interest rate hikes might be on the way. In his statement on Wednesday, Powell said that the Fed’s interest rate policy is “Perhaps not far off from a sufficiently restrictive level”. Since equities are forward-looking, they may begin to discount a future rate hike pause based on Powell’s positioning.
Technical Action: Despite the dichotomy between the Nasdaq 100 ETF ((QQQ - Free Report) ) and the Russell 2000 Index ETF ((IWM - Free Report) ), some positive developments occurred Wednesday. Firstly, QQQ held its breakout level and is basing in a bullish manner above its 50-day moving average.
Image Source: Zacks Investment Research
Secondly, though the SPDR S&P Regional Banking ETF ((KRE - Free Report) ) has weighed on the IWM recently, IWM showed resilience on Wednesday by gaining more than 1.5% intraday and making no new lows.
Image Source: Zacks Investment Research
Furthermore, in his statement earlier, Jerome Powell did his best to calm markets by saying that “the U.S banking system is sound and resilient.”
Conclusion
Equities markets have a lot of potential roadblocks to contend with, including the regional banking crisis, higher interest rates, and the looming debt ceiling deadline. However, equities markets tend to climb a wall of worry. Strong seasonality, technical action, and a potential Fed “pivot” bode well for stocks in the month of May.