Transcript:
Brooke Thackray: Last week the SME 500 rallied strongly on Monday and Tuesday based upon the results of the French election and seemed to settle down for the rest of the week.
So where does that leave us right now? We're really close to the all-time high that was set on March 1st on an intraday basis of 2400 and on a closing basis, 2396.
Just because we're close to the all-time high doesn't mean the market can't move above that all-time high.
In fact obviously in the past it's done that so we can see a nice strong rally.
In fact if we actually closed above 2400 and move strongly above that on with strong volume and stayed above there for a few days we have positive sign, but given that we're close to an all-time high, we have rich valuations in the market, and we're just starting the six-month unfavourable season for stocks, investors need to be a bit cautious at this time.
The academics historically had used May 1st to start this 'Sell in May' phenomenon for the next six months and they like to keep things nice and tidy with it, and they say May 1st until the end of October.
Historically, the dates that I've used have been May 6th until October 27th as being that unfavourable period, now just a matter of a few days, so it's possible we may see some strength in the market here and these are average dates, but nevertheless we have started or are starting that six-month available season for stocks.
Yes, the market can still move higher but this is when the market typically doesn't do as well as the last six months, and it tends not to have big returns in the market as well, so given all these factors in place here, this is the time for investors to be a little bit more cautious on a seasonal basis.
Thank you.
Copyright © Brooke Thackray
