“Sell in May and go away”? Not so fast…

For those of you that have been investing in the markets for some time, you have undoubtedly heard the old adage “Sell in May” and go away. This premise is based on that most of the money  made in the markets typically occur from November through April and that the summer months are generally lower in volume, hence more volatility can occur. Well this summer may not hold true to form. After a blistering April where the Dow (chart) surged almost 4% for the month, the S&P 500 (chart) rose almost 3%, the Nasdaq (chart) climbed over 3% and the benchmark for small-caps, the Russell 2000(chart) closed at all time highs. Could this current momentum carry over into May and possiibly throughout the summer?

The bullish case for the continuation of this incessant rally is as simple as how strong corporate earnings are and that the Fed is showing no signs of hiking interest rates anytime soon. This is a one-two punch for the bulls. The bearish case is that the markets are technically overbought and that the underlying fundamentals of the economy do not justify multi-year highs in a variety of asset classes.

This upcoming week promises to be filled with more transparency pertaining to the health of the economy and corporate America. A slew of economic reports are due to come out from construction spending to factory orders as well as the closely watched non-farm payroll report due out on Friday. Also, earnings from Visa (NYSE: V) and Mastercard (NYSE: MA) should shed some light on the health of the consumer.

Have a safe and prosperus week.