Buy in May dip, not go away: AMZN, FB, LNKD, MNST

Buy in May dip, not go away: AMZN, FB, LNKD, MNST 

Wall Street's wisdom says " sell in May and go away". Every year this time, this old sayings seems to be a self-fulfilling prophecy, creating huge market panics.

However, since the end of Great Recession in 2009, last 7 years, Sell-in- May worked well 4 out 7 times: S&P500 dropped 17% in 2010; -21.5%  in 2011;-10.5% in 2012; -12.5% in 2015. Unlike 2016, these 4 times have no meaningful corrections prior to May-October market chaos. From this market internal mechanism, Sell-in May and Go-Away may not work well in 2016.

Also leading stock firms reported solid earnings so far: Amazon, Facebook, LinkedIn, Monster beverage, Baidu, among others, with these stock prices having been reacted well to earnings reports. As long as there are such leading stocks leading market parade, the chance for big market drop should look dim, but not guarantee.   

Granted,  Q1 GDP(+0.5%) growth looks much better than 2011 Q1's -1.5%, so market may not happen 20% drop correction like year 2011. For 10% market correction, buy-dip makes good sense. But this depends on what stocks you will buy. 

Currently, markets may bounce from 3-5% pull back as said in last blogger. Growth investors can consider buying following stocks in weakness: AMZN, LNKD, FB, MNST, TYL, etc.

Gunning Ju

Market Analyst

4/30/2016 from New York