May Is A Good Month To Own Stocks - Pay Attention To Technology And Healthcare

Historically April has been the strongest month of the year, with the S&P 500 moving higher in 16 of the last 20 years (80%) and averaging a gain of 2.4% over that time. 

While April isn't quite finished, the S&P 500 is up about 0.7% on the month, with one more trading day to go.

May is also typically a good month for stocks. The S&P 500 has moved higher in 15 out of the last 20 years (75%). May has produced an average return of 0.7% over that time.

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Over the last 10 years, the S&P 500 has moved up in nine of those years (90%) with an average gain of 1.1%.

Looking at the other indices for confirmation, the NYSE Composite has moved higher in 15 of the last 20 years (75%), but the average May return is only 0.1%. Over the last 10 years, nine years have moved higher, with an average May return of 0.3%.

The Nasdaq 100 index moved up in 13 of the last 20 years (65%), producing an average return of 1.6%. The average return over the last 10 years is 2%, and the index has moved up in seven (70%) of those years.

The Russel 2000 index, which focuses on small-cap stocks, has also performed well in May.

Coming into May, Technology has been the hottest sector over the last three months, followed by Communication Services. Combined with good seasonality for the month ahead, these are sectors to keep an eye on. The stock market has also been performing well this year. As of the April 27 close, the SPDR S&P 500 Trust (SPY) is up 7.70% year to date. 

Over the last month, Healthcare was a top-performing sector. Keep an eye on trade setups in healthcare stocks to take advantage of the uptrending sector. Healthcare indices also have a strong seasonal tendency to rally in May.

Following May, June is basically a coin flip. Returns tend to be slightly negative with the major indices moving up only 45% (NYSE Comp.) to 60% (S&P 500) of the time over the last 20 years.