For those who may have been late in following the ‘ol “Sell in May and go away” adage, June may make for a good time to reconsider going away for the summer. As of today’s close, at 1,625.13, the S&P 500 is now down 3.62 percent from its all-time high of 1,687.18 which was reached on May 22nd. The key now will be to watch to see if the price breaks down below its 50-Day Moving Average which is currently situated around the 1,610 level.
Today, the VIX (a.k.a. the Fear Gauge) moved 1.63 higher to close at 17.07. Though still situated at a fairly comfortable level, since March of this year the indicator has given some indications of investors’ nervousness.
As can be seen in the above chart, the VIX, for the last four months, has been vacillating between a low of 11.05 to a high of 19.28, which indicates some uncertainty in the minds of market participants.
Though summer price declines often offer great buying opportunities, now may be a good time to sit back and allow the dust to settle before jumping into stocks. Many equities appear a bit rich at these levels and a pull-back from current prices would be healthy.
