Stocks are entering the time of year when market gains are historically the lowest and volatility can be the highest.
When traders talk about the "sell in May, go away" phenomenon, they are actually talking about the six months from May to October when the market's performance on average lags the other six months. Over the past 50 years, the S&P 500 has averaged a smallish 0.9 percent gain in the period versus the 6.3 percent average gain of November through April, according to Bespoke. As for May itself, the Dow has been virtually flat, up 0.1 percent on average over the past 100 years, and even flatter, up just an average 0.05 percent, over the past 20 years.
The challenges for the period this year include potential Fed rate hikes, the softish economy and the added intrigue of political risk — both from the U.S. presidential election and the U.K. referendum vote on whether to remain in the European union. As for the coming week, stocks face the April employment report on Friday, earnings reports from about a fifth of the S&P 500 companies and speeches from at least a half dozen Fed officials.