Wall Street Greek: Sell in May and Go Away

Bad news emerged today on the jobs front, as Weekly Jobless Claims extended a deterioration trend. A few weeks ago, the rise above 400K new unemployment insurance filings looked like it might be associated with the threatening government shutdown. Now, it's looking like a trend, and one the market will not ignore. Add to that sluggish economic growth in the first quarter, sad consumer confidence, chaos and uncertainty globally and rising prices across the board, and perhaps that old adage, "Sell in May and Go Away," makes perfect sense today.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Sell in May and Go Away

The U.S. Department of Labor today reported a Weekly Jobless Claims count that caught everyone by surprise. New Unemployment Insurance Claim filings spiked by 25,000 in the period ending April 23, and moved comfortably above the psychological threshold of 400K, to 429K. Economists were certainly surprised by the increase, as Bloomberg noted the economists' consensus forecast at just 390K.

Just a couple of weeks ago, we speculated here that a threatening government shutdown might have driven many a rushed claim filer to get their paperwork in, or that it perhaps sped the government's processing of claims. Last week, we considered that the remnants of such action might still be at play. The increased claims count is definitely a trend now though, as the four-week moving average jumped above the dark mark, to 408,500. Thus, we have no farther to look than the economy for the culprit behind claims change.

Heading into April, all looked on the mend as far as the labor situation went. Reported unemployment had mystically improved once again, even after our adjustments which showed the real rate much higher than the reported level. Given April's trend, this month's Employment Situation Report might tell a different story, one that is better aligned with first quarter GDP data perhaps, which showed a soft gain of just 1.8%, short of the economists' consensus view for 2.0% based on Bloomberg data.

If so, then be sure that the market will not ignore such bad circumstance. Stock rise over the last several years has coincided with improved claims data, and it should likewise sink with it. The S&P 500 Index was up just fractionally Thursday, at about its 52-week high, but if the economy is indeed hitting a soft spot, that old saying, "Sell in May and Go Away," may certainly apply this year.

Since World War II, the performance of stocks in the period running from May through October has been relatively weak versus the November through April span. It would seem there are enough reasons for a superstitious investment community to buy into a continuation of trend this year. Thus, consider selling this May and going away to someplace without ticker tapes.

Article should interest investors in Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM), Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX) and Kelly Services (Nasdaq: KELYA).

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