May, or May Not, Day

 | May 01, 2012 | 1:20 PM EDT
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As I contemplate today's action, the question on my mind is whether this is just a calendar play or a real buying spike that will gain momentum. The first day of a new month has a positive bias, but the first day of May has typically been a particularly strong day. We have been up on the first day of May 14 of the last 17 years, which is an impressive batting average.

But what is also interesting is that the old saying about selling in May has a very good record.  May has been down five of the last six years. In both 2010 and 2011, May marked major turning points.

Seasonality is an inclination and not a certainty, so I wouldn't give too much weight to these statistics, but the important point is that strength on May 1 is not an indication that a strong rally is likely to follow.

Apple (AAPL) is already losing steam as things slow down, although breadth remains strong. I'm not heavily long but I have been a net seller in my managed accounts today, and I have reduced positions in Tangoe (TNGO), Flotek (FTK) and Amarin (AMRN). I have only a token hedge in the form of an index short, and I have no immediate plans to add to it, but it is on my radar for an addition later this week.

The buyers need to show conviction and deliver a strong close. Worry about the monthly jobs news on Friday is likely, and that may be enough to keep any building momentum in check today. 

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