Riding the Bull – So much for Sell In May and Go Away!

There continues to be a lot of noise in the financial system and the most recent commentary is focused on a potential trade war settlement.  For those with a technical background to determine their level of market engagement, the trend watchers will comment that we are now back to a positive primary market trend with confirmed buy signals, aka the Bulls are back in charge.

One of the readings crossing our screens over the weekend provides some insight with regards to actually riding a bull:

One of the most adrenaline charged and dangerous sports in America lasts a total of eight seconds – bull riding.

In bull riding, a rider must stay on top of a bucking bull while holding onto the bull rope with just one hand for a total of eight seconds.  They also must not touch the bull or himself with his other free hand.  If he manages that feat, it is a qualified ride.  If he gets bucked off before eight seconds, it is a no score.

For investors, the difference between success and failure in “riding the bull,” often comes down to knowing when to “hang on” and when to “dismount” the bull market. The worst outcome is getting “bucked off” and facing a really “p*ssed off” bull looking to stomp or gore whoever is closest to it.

Now, this last phrase is a bit of drama, yet in reality, this is what actually happens in real bull riding.  

In the financial world, the outcome is somewhat different.

So, what NOW?

Are we out of the woods so to speak? Is the market block party back on? It would be easy to say yes, but there are still some warning signs (red flags) to pay attention to.  One such red flag that came to light over the weekend was from Ed Yardeni a noted economic think tank author.  His reflection was on the analysts and their parabolic earnings expectations. His own expectations were for earnings to grow at a reasonable 17% this year and 7.1% next year. The analyst community, as a whole, has upped the ante and are collectively looking for 21.5% earnings growth this year and 9.6% for next year.  So, Mr. Yardeni asked the question which seems somewhat Canadian (legislative) centric. See below:

Source:Thomson Reuters

Maybe the street is getting just a bit too optimistic at this juncture and this somewhat of a contrast to a market that was in a bit of a standstill through this most recent earnings season.

As it stands today May 22, 2018, if the month concluded, the positive results would surprise some.  Over the past 10 years, the month of May has produced gains of just 0.06% for the S&P 500.  Currently, the S&P 500 is enjoying its best monthly result in the past 4 months, with gains of more than 3% since the start of the month.   The TSX is up more than 3.50%, yet is still a tad negative on the year.

The video below is a bit graphic from a bull riding perspective (hint turn down your volume) maybe some of the riders should have just sold in May and gone away?

But that’s bull riding I guess...

Worst Bull Riding Wrecks of 2017

Thanks for reading.


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