Market Call: May Is Coming

Tomorrow will be May 1. We all know that April showers bring May flowers. There's also an old adage that advises stock investors to go away in May and come back in October. It worked last year, though January was the right month to go away.

The first part of this adage often worked. The problem is that the second part has been less reliable. Sometimes, when the market peaked in late April or early May, it bottomed during the summer. That's the problem with trading strategies aimed at picking peaks and troughs: You have to pick not only the tops, but also the bottoms. If you call the top right but don't get the bottom right, you might wind up getting back in to the market at the previous top or even higher.