photo-1432836431433-925d3cc0a5cd.jpgYes, you’re right, April showers usually bring May flowers, but as another adage goes — “Sell in May and go away” is more in alignment with the showers that we, in fact, have seen.

In April the S&P 500 actually didn’t flower at all to be fair — returns were down under one-half of one percent. Flat, basically.  So for May to not be flowering is, well, disappointing — but not unexpected.

And the forecast is, unfortunately, calling for more rain.  I’m not going to add lightening or thunderstorms at this point — but I’ll go out on a limb with 60% chance of rain for the next few weeks, and most likely through the end of the quarter. Why?

Thursday, the S&P 500 Index (SPX) gave some negative downside guidance — yes, that sounds gloomy, but it’s not a call to run for the hills.  This is the first time since February that we have gotten a rainy forecast, yet look what March had in store — good things. So don’t batten down the hatches just yet — simply watch less of the nightly news until we see the sun peaking out from behind the clouds (I suspect this will be after the Fed raises rates in June).

Our beloved Bullish Percent for NYSE ^BPNYSE is confirming the rain with a move on Wednesday to defensive mode, so I am not counting the S&P’s negative signals as noise.
Bullish Percent Refresher: with the BPNYSE at 60%, this means that 60% of the stocks on the S&P 500 are on a “buy signal.”  That’s GOOD.
What’s not so good is that a 6% shift in this indicator is usually a significant enough move to consider — becoming a bit defensive in your portfolios.  And that’s just what happened on Wednesday.
NEWSFLASH:  Alphavest has been defensive all year.
PERSPECTIVE:  We’re still in a Bull Market.
FWEH.
I’d like to have a little fun with you on the previously mentioned “buy signal.”  What exactly does a stock or an index on a buy signal look like?  It looks like this:
  Screen_Shot_2016-05-23_at_3.50.28_PM.png
And, the chart below is one you’d want to take caution with, as it is a stock on a sell signal.  You’d take caution, unless of course you’re Warren Buffett, with money to burn drinking the the Coca-Cola fountain of youth.  Seriously, Mr. Buffett just took a large position in this one — and while the stock will most likely do fine, in time, now it appears to be forecasting its own May, June, and July showers.
Screen_Shot_2016-05-23_at_3.53.02_PM.png
You may now have guessed that the above is Apple.  Today, at $96 off quite a bit from its shining price of $135 last year this time.  Apple, like the S&P on Thursday, gave a significant sell signal on May 6th at $93.
An umbrella to keep off some of the forecasted rain, like utility stocks, may provide just the shelter that you’re looking for.   WEC, the chart before Apple’s is an electric utility up 14% YTD — Not sexy, but umbrellas do come in all shapes and sizes.  At the end of the day, it’s an umbrella.
Only time can tell if the Apple and S&P 500 forecast is a short-lived afternoon shower or a full blown storm. But remember, one can always pack an umbrella. #WeveGotYouManaged