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May
7
Jonathan Yates
What Happened to “Sell in May and Go Away?”
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So much for “Sell in May and Go Away!”

All three major indexes continue to push in record territory.  Each finished higher today.  Volume was average for all three.

There is a confluence of factors sending the averages higher.  The Federal Reserve continues its quantitative easing policy.  That results in low interest rates.  With interest rates so low, investors have few alternatives other than the equity markets, particularly stocks that pay a healthy dividend.

The low interest rates have also revitalized the housing market.  As about one-fifth of the American economy is related to housing, that has naturally been bullish for the market.  Rising property values also result in more home equity, which can be tapped to buy stocks.

Warren Buffett’s bullish remarks at the Berkshire Hathaway (NYSE: BRK-A) also helped.  Buffett again pointed out that bonds are a terrible investment.  He was bullish on Europe, highlighting the opportunities for stocks based abroad that have been battered down due to the adverse economic conditions on the continent.

As the chart below shows, the Dow Jones Industrial Average is continuing past the 15000 plateau.  There has been a strong earnings season to help it along.  The candlestick patterns show that if finished strong, which is very bullish.  Also bullish is that by a 93.2% to 6.8% mark there were stocks hitting new high as opposed to those reaching new lows.

 



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