Old market adage 'sell in May and go away' is getting more appealing with a June pullback in sight

Key Points
  • "A bunch of things are lining up— you've got seasonals, you've got technicals, geopolitics and fundamentals — They all seem to be aligning for at least some sort of pause and pullback," said Jeffrey Hirsch, who runs Stock Trader's Almanac.
  • Hirsch said the Moving Average Convergence Divergence (MACD), a trend-following momentum indicator, triggered a sell signal on the Dow and the S&P 500 on May 13.
  • Rising U.S.-China tensions have increasingly weighed on the market.
  • June also coincides with a couple of key market events that will likely stir up the volatility, including the quarterly triple witching.
Two men wearing a masks walks pass the New York Stock Exchange (NYSE) on April 30, 2020 in New York City.
Johannes Eisele | AFP via Getty Images

The legendary "sell in May" Wall Street adage carries an ominous sign for stocks in the second half of the year. And market signals, left and right, are now making a stronger case for that simple strategy to come true once again.

The old "Best Six Months" strategy, which is the theory behind the "sell in May and go away" mantra, means investing in the Dow Jones Industrial Average between November and April and taking off risk from May to October, a period where the market is more prone to sell-offs historically.