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Don't Want to Sell in May? Here's What Else You Can Do

For nervous investors who choose to heed the saying “sell in May and go away,” there are several sectors and stocks that analysts recommend considering before withdrawing completely from the market.

Businessman with crystal ball
Fredrik Skold | The Image Bank | Getty Images
Businessman with crystal ball

"In the May to October period, it’s the defensive sectors that tend to perform best," said Sam Stovall, chief equity strategist at S&P Capital IQ.

In particular, utilities, health care and the insurance sectors—groups that have corrected over the past three to four months—will continue to outperform, according to RBC Capital Markets.

“We recommend using near-term pullbacks to accumulate, given our expectations for a choppy summer,” wrote the firm in its research note.

May ranks eighth in terms of index performance by month, only rising an average of 0.31 percent versus an average gain of 0.67 for all months.

“I have been saying we’ve hit the year high between March and May,” said Uri Landesman, president of Platinum Partners. “To sustain the [market] upside, we’re going to need constant good news on earnings, economy, geopolitics and Europe—the odds are that we’ll see mixed to negative news.”

Still, all three major averages kicked off the first trading day of the month with a bang, with the Dow hitting itsbest level since December 2007, further convincing bearish strategists that when the selloff happens, it will be sharper. The S&P 500 slipped a modest 0.75 percent in April, in what is historically the second-strongest month for the index.

While investors may be breathing a sigh of relief over Tuesday’s rally, Joe Bell of Schaeffer’s Investment Research noted a negative correlation between the market's performance on the first day of May versus the month overall.

And with ongoing jitters in the euro zone and worries over the pace of the recovery in the U.S. continuing to weigh on the market, strategists predict this year may be no different.

Meanwhile, Barry Sine, analyst at Drexel Hamilton said several stocks are attractive for those who are looking to “hide in for the summer.”

Sine's top picks include AIG , Ford , Metlife , Research In Motion and Valero .

“If you don’t want to take a sector approach," said Stovall, "look to the S&P High Beat Index in the November through April period and the S&P Low Volatility Index in May through October as a substitute."

Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC

Questions? Comments? Email us at marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC Senior Commodities Correspondent and Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.