Sell In May And Go Away? Probably right for 2010!

“Sell in May and go away” is common saying among the professional investor in the Wall Street.

"Sell in May and go away," the belief that the period from November to April inclusive has significantly stronger growth on average than the other months.  Therefore stocks are been sold at the start of May and the proceeds held in bonds or a deposit account.

The most interesting about this effect is that it shows that stock market returns in many countries during the period May-October are systematically negative or lower than the short-term interest rate, which also goes against the efficient-market hypothesis.

In addition, there are some reasons on why we should sell in May for 2010.

1)      Inflation (CPI) has increased quite a bit over the last few months in this year thus China and Singapore will likely to tighten the policy on currency or interest rates soon.

2)      By mid of May, the announcement of GDP and all company earnings report will be completed.  Without these catalysts, stock price may fall since they are mostly far too ahead of the fundamentals especially in 2010.

3)      US markets has already rally for 8 consecutive weeks without a decent pullback. Bears are just waiting for the chance to strike.

4)      Property booms have caused concerns in both China & Singapore. Both governments are likely to implement more harsh policy to curb the property prices.

5)      Many concerns on Greece, Goldman Sachs etc are yet to solve and could develop into bigger issues as times goes.

6)      Currently STI display a “RSI divergence” on the weekly charts. The price keep rally but the momentum is failing downwards.

What do you guys think? Bullish or bearish for the 2^nd quarter of 2010?