Sell in May and go away….

Hmm….why?

Oh yeah, it’s summer holiday in western countries.

I’ve experienced a few times of such holiday period in KLSE.

Does holiday really matters?

Obviously yes!

No one wishes to work during holiday, right?

So trading activity will be equally low during holiday period.

My observation is that although exception does exist, broader market normally will trend down during this period.

And in KLSE, there is a similar saying borrowed from HSI known as 五穷六绝七翻身.

Coincidentally, this year Hari Raya was on July and coupled with this ‘urban legend’, market did seemed a bit dull during May and June.

So everyone is expecting to have a slightly vibrant market sentiment in July.

But does market really get better from July onwards?

KLCI rose on the first trading day after this year Hari Raya,

A check on the market participation on 11 July 2016 will find that foreign fund was net buyer.

But does this really solely depend on the end of holiday mood?

Come on, things are not that straightforward.

Have a look at all positive news reported last week, US job data, Japanese election, Australian election and even the rumor on possible BNM rate cut.

The synergistic effects from other factors are often overlooked.

In fact, for the last 2 years, KLCI dropped after July due to negative news.

The anticipation on a better market sentiment after long holiday did not happen.

Interestingly, if we look at a more localized condition, KLCI went up after Chinese New Year holiday and went down after Hari Raya holiday for the last 2 years…..

Does this have something to do with the composition of local market participation?

Honestly, I don’t know.

But, I personally think that holiday only affect trading volume.

Whether KLCI or a stock moves North or South, news have higher weightage.

~Previous article~

P/S: To sharpen my skill, I do share some stock watch in Invest for Life and facebook https://www.facebook.com/investforlife.com.my/.