Don't Discount Summer Seasonality

There is enough nuance to seasonality data these days for any of us to cherry-pick a given chart to support a predetermined thesis, especially considering this is a general election year for a President seeking a second term in office amid a once-in-a-century type of pandemic.

One of the most ubiquitous Wall Street axioms, for example, is "Sell in May and go away," with the second part being to come back in October and buy 'em up. 

But within that "Sell in May" ethos, it becomes more complex. Memorial Day, approaching in less than two weeks, is the quintessential solemn, dignified patriotic holiday for our fallen warrior in battle protecting American freedoms and liberties. Typically, the market will drift into the holiday even if it is not feeling particularly bullish as volume and volatility abate--Recall that both volume and volatility tend to be friends of bears and foes of bulls. And then, of course, there is always the possibility for an outright short squeeze higher into Memorial Day Weekend. 

After Memorial Day, the final week of May spilling over into June tends to actually be the more bearish part of late-spring/early-summer trading. It is only when we inch closer to the more upbeat but also patriotic holiday of Independence Day on July 4th that we see another reprieve for bulls during rough markets. Once again, during strong markets we could simply flatten out or outright squeeze into the holiday, too. 

But an understanding of how late-spring/early-summer trading often goes can help in the current market as bears seem inept at holding this market down for anything more than a quick blip on the screen, even with financials sliding lower as I write this (See: KRE and XLF ETFs). In other words, if bears cannot get anything going this week given the weakness in banks, then they may be best served to step aside until after Memorial Day. 

In addition, we have rumors of UBER for GRUB M&A, which could also catch overeager bears in the same way the AMZN for AMC rumors did yesterday.

Finally, and speaking of M&A prospects, with biotech overall firm again keep an eye on GBT as a longtime favorite to break higher from the highlighted flag, below, as well as to garner buyout interest if M&A picks up in biotech like it should if the market avoids an outright rollover.