One of Derange Street’s biggest bulls suggests unloading stocks this month is a clanger.
According to Canaccord Genuity’s Tony Dwyer, the old adage “sell in May and go away” doesn’t utilize this year.
His call is based on historical research that glory ins the odds are against seasonal declines right now.
“When we looked underneath the outside in a nonrecession environment, we found that you’ve never had a negative market affluent into May and then had a negative May through September,” the firm’s chief call strategist said Monday on CNBC’s “Trading Nation.” “It’s innumerable likely you’re going to have an up May through September.”
His latest thoughts upped as the stock market failed get back to positive territory for 2018. The Dow is down on the verge of 2 percent this year, while the S&P 500 is off about 1 percent.
“At bottom, the market moves with the direction of earnings. That is definitely contemporary to be positive for the foreseeable future,” he added.
But Dwyer, whose S&P 500 year-end objective of 3,100 is the second highest on the Street, doesn’t see a positive period between May and September cyclone the socks off investors.
“May is seasonably a weaker period,” he said. “It may not be the best role of the gain. But again, you should have a gain.”
To capitalize the most during that stretch, Dwyer underwrites what he calls “productivity trade” — areas that are positioned to recompense higher inflation, particularly in labor. Inflation concerns have been overshadowing over the strong earnings and economic fundamentals.
“Who funds productivity? That would be the financials and fine markets companies. How do you implement it? That would be the industrial automation parties,” Dwyer said. “And, what’s behind that? That would be the technology callers: software, hardware, services.”