Image Source: Pixabay

Chances are you've heard this saying before: "Sell before May and go away." It has to do with seasonality and the historical trends of given months.  Except here's the thing; it is a complete and utter fallacy. 

Maybe it's popular because it's fun and catchy to say, but anyone who adheres to this snappy saying is leaving a lot of money on the table. That's because the first two weeks of May are actually two of the most active in terms of stocks moving higher due to the after-effects of April's earnings announcements. 

You don't want to sell before May, because if you do, you're taking those potential gains off the table. In actuality, you really want to look at selling during May - sometime around the second or third week. There are still earnings announcements taking place in the first two weeks, and that is usually a positive catalyst. 

After all of those announcements are done, sometime in the second half of May, that's when you should be looking to sell. So, when you see headlines like the one below, I implore you to keep what I said above in mind.

As always, it's important to think about who's saying this and when. Wells Fargo & Co (WFC) reported earnings recently, and given the state of banks, it's not exactly a surprise that things aren't all sunshine and rainbows. 

This could simply be an example of the tail wagging the dog, and WFC preempting itself against "bad" news by leaning into recession talk initiated by the Fed. That said, according to WFC, there are three main factors that will trigger the downside in equities: aggressive monetary policy, potential capital or liquidity issues catalyzed by the bank crisis, and an increasingly credit-reliant consumer. 

As you know, earnings season is the single biggest catalyst for the market, and we've got some big-ticket names coming down the pike. When trying to figure out what this means for WFC, it's imperative that we keep our eyes on the forward guidance and outlook for the market in the coming weeks. If you just get bogged down in the numbers of these earnings announcements, you're going to drive yourself mad and lose money. 

As always, we are going to let the market come to us. If we time it correctly for when trading the downside, we will win big in the coming months.

More By This Author: