Sell in May During Midterm Crisis
Lots of chatter this week on Sell in May. Worst Six Months May-October are historically worst in the midterm year — but Sell in May has been up 9 of the last 10 years and 2025 was the best. Much of the May-October and midterm year Q2-Q3 weakness was pulled forward to the Q1 Iran war correction.
The market has largely moved on and clearly expects a resolution over the next few months, if not sooner. With the conflict still unresolved, expect the market to mark time and move sideways through the 4-Year Cycle Weak Spot and Sell in May as the Mideast works toward a resolution with likely setbacks and midterm election year politicking ramps up.
Trend matters far more than magnitude or level when reading these seasonal charts and historical analogs. We’ve updated the S&P 500’s performance before and after the start of crises. The quick recovery to pre-crisis levels and new all-time highs has been positive historically. But as the chart shows, after the initial shock and selloff, once the bounce back recovery is in, the market tends to mark time over the next few months as the crisis resolution plays out. This lines up with the seasonal weakness of the Worst Six Months and the 4-Year Cycle Weak Spot.