The S&P 500 surged past 7,000 in April despite oil prices hovering around $100 per barrel, consumer sentiment hitting an all-time low in April, and the ongoing conflict with Iran that has destabilized many parts of the global economy.
If you were to look solely at these factors and the other major market risks, you might agree with the market adage that says to "sell in May and go away"—particularly since stocks are entering what has historically been the weakest 6 consecutive months of the calendar. Here's what you need to know before you consider selling in May.
What is the "sell in May and go away" theory?
"Sell in May and go away" is a stock market adage based on what the Stock Trader's Almanac calls the "best 6 months of the year." Historical data reveals that the top performing 6-month rolling period, on average, has been November through April. Hence, the (antiquated) saying investors should "sell in May and go away"—and come back in November.
History shows this calendar-based trading theory has flaws. More often than not, stocks tend to record gains throughout the year, on average. Thus, selling in May generally doesn't make a lot of sense. So, why do some investors tailor a part of their strategy to this trading pattern? Well, there is some reasoning behind it.
Since 1945 through April 2026, the S&P 500 has gained an average of about 2% from May through October (more recently, the S&P 500 has lost nearly 2% during this 6-month period since 1990 and has fallen 56% of the time). That compares with a roughly 7% average gain from November through April since the end of WWII. This outperformance is seen not just in large caps, but also small-cap and global stocks (as measured by respective S&P indexes).
Rather than exit the market, you could consider sector rotation if you are making tactical trades with some percentage of your portfolio and calendar trends are a component of your strategy. According to analysis by the Center for Financial Research and Analysis (CFRA), there has been a clear divergence in performance among sectors between the 2 time frames since 1990—with cyclical sectors easily outpacing defensive sectors, on average, during the best 6 months.
Consumer discretionary, industrials, materials, and technology sectors notably outperformed the rest of the market from November through April. Alternatively, defensive sectors outpaced the market from May through October during this period.
If you do have positive gains and want to lock in some of those profits, you could also consider a "sell in May and potentially stay" strategy. In other words, consider selling only those positions in May that you don't want to be in for the long haul, have that cash on hand to adjust your investment mix as needed, and stick with your strategy for the rest of your portfolio.
It's also worth acknowledging that these types of strategies may only be suitable for active investors with shorter investment horizons, and even active investors need to consider their trading strategies within the context of a diversified portfolio that reflects their time horizon, risk tolerance, and financial situation.
Reasons not to sell in May
Despite the aforementioned risks that sent US stocks tumbling nearly 10% over a 2-month period earlier this year, the market recovered all that was lost in just over 2 weeks and is now trading near record highs. The key reasons to think stocks can maintain their recent momentum include:
- Earnings strength. Q1 2026 earnings season has thus far been encouraging as the S&P 500 Q1 and full year 2026 estimates have risen. According to FactSet, 9 of the 11 sectors have seen upward revisions to Q1 forecasts, led by financials, tech, and real estate.
- Economic resilience. Current Fed Chairman Jerome Powell recently noted that the economy and labor market look strong. Fidelity's latest economic outlook also affirms that the US economy showed solid economic activity despite some softness in the job market, and that the broader global economy remains in a solid, unsynchronized expansion with international policies underpinning growth.
- Rate cut hopes. While interest rates have not come down as quickly as previously expected and fed funds futures indicate a low probability of additional rate cuts this year, that possibility remains—especially if there is a change in leadership at the US central bank this year.
In sum, should you "sell in May and go away"? Probably not, according to the historical data, as there may be better strategies. Moreover, each market period is unique—which can certainly be said of this one.