Sell in May — But the Market Is Rising?
Mid-May 2026 and markets know only one direction: up. The DAX has gained over 4% since the start of the month, the S&P 500 around 3%. Anyone who sold at the beginning of May — as the famous "Sell in May" rule recommends — is now sitting on the sidelines watching.
What happened? The rapprochement between the US and China in the trade dispute triggered a broad rally. Tariffs were reduced, markets reacted euphorically. Seasonal patterns suddenly seem irrelevant — or do they?
What Seasonality Actually Says
A common misconception: "Sell in May" does not mean the month always falls. The statistics merely show that the months from May to October are on average significantly weaker than November to April.
Concretely for the S&P 500 over 130 years:
| Period | Avg. Return p.a. | Share of positive years |
|---|---|---|
| Nov – Apr | +7.1 % | 72 % |
| May – Oct | +1.8 % | 61 % |
May itself is not even the weakest month — those are September and June. May ends in positive territory in roughly 58% of years. 2026 clearly belongs to that group so far.
Why 2026 Breaks the Pattern
Seasonal patterns are averages across decades. They describe a tendency, not a law of nature. There are three typical reasons why individual years deviate strongly:
- Exogenous shocks — A trade agreement, a rate cut, or a geopolitical event can override seasonal weakness at any time. That is exactly what we are seeing now.
- Positioning — When too many investors play "Sell in May", selling pressure builds at the start of May. Once that is absorbed, the counter-move follows.
- Macro regime — In phases of rising corporate earnings and falling interest rates, trend dominates over seasonality.
The anomaly radar on SeasonAlpha makes this measurable: the current decade deviates significantly from the historical path — the Z-scores of the past 10 trading days are well above the expected value.
DAX: Strongest May First Half in Years
The DAX benefits particularly. German export industry reacts directly to trade agreements, and the valuation of European stocks was favorable compared to US equities.
Historically, such May strength in the DAX is rare but not without precedent. In 2003, 2009, and 2020 — all recovery phases after crises — the DAX rose similarly strongly in May. What these years have in common: the market had corrected sharply beforehand and the news flow turned abruptly positive.
Anyone looking at the seasonal annual cycle for the DAX on SeasonAlpha can see the deviation immediately: the red line (2026) has detached from the blue average path since early May and moved upward.
What Do the Data Say for the Rest of Summer?
This is where it gets interesting — because despite the current deviation, seasonality still carries an important message:
Even strong May months do not protect against a weak June–August. We filtered all years in which the S&P 500 ended the first half of May with +2% or more. The result:
- In 64% of those years, the market fell in June
- The average June return in those years: −0.8%
- Only from October did performance stabilize again
This does not mean the market will certainly fall. It means: euphoria after a strong May start has historically often been the precursor to consolidation.
Practical Conclusion: What Investors Can Do Now
Blindly following "Sell in May" was wrong in 2026 so far. But writing off the strategy as disproved would be equally premature.
Three concrete steps:
- Check the anomaly radar — On the decade cycle you can see in real time how far the current trajectory deviates from the historical path. Large positive deviations in May have historically often corrected in summer.
- Monitor the crash early warning — The crash early warning aggregates several risk indicators. As long as the signal is green, momentum prevails. If it shifts to yellow, the probability of consolidation rises.
- Use sector rotation — In typical summer weakness phases, defensive sectors (utilities, healthcare, consumer staples) outperform cyclicals. The sector rotation shows current sector trends.
Frequently Asked Questions
Does Sell in May still work in 2026?
At the halftime of May 2026: no, the effect is not showing. DAX and S&P 500 are rising strongly. But that does not contradict the long-term statistics — individual strong years are normal. The decisive period will be June through October.
Why are markets rising in May 2026?
The main driver is the rapprochement in the US-China trade conflict. Falling tariffs improve the earnings outlook for globally operating companies and triggered a broad rally that overlays seasonal patterns.
Should I still get in or wait?
This cannot and should not constitute investment advice. Historically: strong first halves of May led to weaker June months in 64% of cases. Anyone acting data-driven monitors the indicators on SeasonAlpha and responds to signals rather than gut feeling.
Does Sell in May apply to the DAX too?
Yes — the effect is even more pronounced in the DAX than in the S&P 500. The average May–October return in the DAX is only +0.4% p.a. compared to +7.8% in the winter months (XETRA data, 35 years).