the Dow and the S&P 500 setting another string of record closing highs last week, the old Wall Street adage – “Sell in May and Go Away” – is starting to look weak.
Closing out the second week of May, the Standard & Poor’s 500 index is up 2.3 per cent for the month.
For the year, the benchmark S&P 500 gained a stunning 14.6 per cent.
Some analysts say that when the market starts off this strong, it tends to keep the upward momentum going until the end of the year.
“Instead of ‘Sell in May and Go Away’, we may be setting up for a surprise May rally,” said Ryan Detrick, senior technical analyst at Schaeffer’s Investment Research in Cincinnati, Ohio.
“What’s encouraging is that small-cap stocks have been outperforming the market recently. It’s a sign that the market is going for even the riskiest sectors.”
Both the Dow industrials and the S&P 500 topped major milestones for the first time in early May, with the Dow Jones industrial average surpassing 15,000 and the S&P 500 breaking through the 1,600 mark. Since then, the indexes have been steadily holding above the landmark levels. The Nasdaq Composite Index has climbed to the highest closing levels in over 12 years.
In a sign of the rally’s breadth, the Russell 2000 index of mid- and small-cap stocks also hit all-time highs recently.
Technical analysts say the next level to watch would be 1,660 on the S&P 500.
“The main question is whether the bulls can maintain the 1,600 level on the S&P 500 for another week,” said Ari Wald, a technical analyst at PrinceRidge Group, a New York-based investment bank. “If it does, the next level is 1,660. But with markets already this high, it won’t be easy.”