Here are my thoughts on Sell in May and go Away.
There is an old and often used adage in the markets that says; " Sell in May and go Away"
This adage is both a warning and a trap.
Those who follow this advice are guaranteed not to achieve best cost basis on stocks later to perform.
Investing requires focus on risks and an understanding of the Systems hand within any period of times causative action toward risk assessment by influencing price.
May through July is an index rebalancing period which by itself should increase market volatility. While this volatility is being baked into stock prices, rotations with particular outcomes are being sought.
As supply is a relative constant, we look to future demand to guide and steer our hands toward the securities which are Most likely to impact positively our economy. What a better time than May through July for the System to assert its hand on the markets for the purposes of gathering together the right mix of stocks for the coming year.
It is clear to me in the here and now, that some of Next years best performers are those being Obfuscated most....they are esentially being knocked down to get them out of an index freeing up their supply shares for those who have spotted and are alert too, forward demand trends.
Therefore it is imperative to understand that a stocks current state is a message about its future state only to the extent that we as investors understand forward demand.
Forward Demand is one of the most sought after characteristic of any investment. When we can identify forward demand we can reasonably project that weakness in the present; is Price obfuscation.
On this thread we talk a lot about Naked Shorting & Short open interest as they relate to Supply Demand metrics. These are components of Intent. Some or all of which may be active in particular stocks at particular times.
Market Makers are exempt from rules governing Naked Shortng, so on any given day we can monitor the buying or selling of a security with a full understanding that the Intent of the trade will prevail as it relates to price.
We see many examples of this within the SIP today. While its painful to be on the wrong side of price, those of us who recognize that the trade is going the opposite way of projected future demand, we need to BUY during these times.
In buying with the trades directional moves we are capturing for ourselves the best possible metrics for forward performance.
Obfuscation is a Conditional state, no less than Accumulation, Distribution or Neutral within Supply and Demand.
This fact is, the SIP edge, because without Obfuscation as a legitimate current state, an investor cannot know what is possible and instead is left with ratios and numbers which are by design sending off false and misleading information regarding INTENT.
Within this context we can see the effect of Public buying, as investors accumulate, the stock price will go down. We see this phenomena every day.
In our Portfolio rules, they say in the absence of news, buy when a stocks red. We stalk the bear market in stocks which we have determined have positive forward demand relating to business potential. We understand that all the action is happening against a float which is a relative constant, and is subject to one of four possible current states.
Accumulation, Distribution, Neutral & Obfuscation.
Without Obfuscation.....Sell and May and Go away would keep us out of the market during those times when Mr Market is most aggressive in Recalibrating its portfolios to where Forward value is most likely to appear.
Stalk the system, because the systems stalking You. |
