“Sell in May” Is Broken for 2025 BY LUCAS DOWNEY, EDITOR, TRADESMITH’S ALPHA SIGNALS Markets continue to defy the bears… From the depths of the tariff panic sell-off, stocks are now less than 4% away from new highs. Not only that, they just capped off a powerful gain of 6.2% in May. This is especially impressive given the endless headline “tape bombs” with tariffs. It’s clear. Investors are looking through the trade war and onto greener pastures. Price action has trumped noise yet again. But this past month really was special. Big gains in May don’t come around often. In fact, May is best known as the month to “sell and go away.” So when they do, we should pay close attention. That’s because power-thrust Mays historically come before market-beating gains in June and July. If you’ve stayed constructive on equities throughout the crazy volatility of April, congrats! Go ahead and take that victory lap, and then get ready for the next race. Because history says more gains are ahead. Today, we’ll unpack one under-the-radar signal study that caught my eye for the summer months ahead. Then I’ll offer up a seasonally strong company to ride for upside. | Recommended Link | | | | “Most people won’t know what to do when their savings run out… Or when the stocks in their portfolios fall by half,” says Wall Street icon Louis Navellier. “It’s going to affect everything about our normal way of life: Our money, the value of our homes, our ability to retire.” When it makes landfall, its impact will be more violent and more severe than any financial crisis we’ve ever seen… Click here for details. |  | | S&P 500 Records Strongest May Since 1990 We’ve all heard of “Sell in May and go away.” That’s historically a solid signal, as May often kicks off a six-month weak stretch through October. You’ve heard me say to remember to buy in November as seasonal bullishness begins and lasts through April. Here’s the signal study from last November about this repeating pattern. Note how May–October is lackluster for just about all major indices: 
“Sell in May” historically has been the way to go… that is, until 2025. Here you can see how the S&P 500 gained a whopping 6.2% in May… the strongest month of May gains spanning decades: 
Given this is such an outlier event, I did some digging and found something interesting. Since 1990, a monthly May gain of 4% or greater has only occurred six times out of the 36-year period! And when you analyze the exact periods when these jumbo rips occurred, you notice a pattern. Big Mays occurred in the years of 1990, 1997, 2003, 2009, 2020, and 2024. If your memory is hazy on these years, let me refresh you: - 1997 was smack in the middle of the dot-com boom, but well before the bust. The S&P 500 returned 33.5% that year
- 2003, coming out of the dot-com crash, was a huge year for stocks, with the S&P 500 vaulting 26.4%
- 2009 saw stocks jump 23.5% post the Great Financial Crisis
- 2020 was a powerful ramp of 16.3% for the S&P 500 as stocks surged post the COVID-19 crash
- 2024 saw a 24.2% rally for the S&P 500 as investors finally realized the economy wasn’t headed for a recession
1990 is the outlier in this list – a year where an eight-month recession coincided with a bear market in stocks. The S&P 500 lost -6.56% in 1990. But overall, big May returns of 4% or more for the S&P 500 occur during some of the largest macro events in recent history. Given the 2025 tariff crash, a powerful May effect shouldn’t be surprising. But let’s answer the burning question on your mind – what comes next for stocks? Turns out… more gains in the months ahead. I tallied all May performances since 1990 and found that the average return is 1.1%. May 2025’s 6% rally is a mega outlier. But here’s why this is an important signal. When May gains 4% or more, the following June and July average gains of 5.8% vs. the normal 1.4% you typically see in a given year. Below shows this beautifully. On the left is May 2025’s outlier performance vs. the average year. Look to the right and you find that big May gains signal more thrust in the following two months: 
So don’t expect some big market unwind like the bears keep growling about. You should be preparing for more gains as this bull keeps roaring from the April depths. A wonderful way to play this signal is with e-commerce king Amazon.com (AMZN). (Disclosure: I hold a long position in AMZN.) Amazon, best known for the brown boxes constantly hitting your doorstep, is really a technology play. With warehouses all over the country, this retail giant has over 750,000 robots that lift and sort packages throughout the shipping and packing process. I’ve been very vocal about my passion for the robot growth trajectory ahead. Additionally, Amazon commands the leading cloud platform, Amazon Web Services (AWS), which has been one of the biggest Wall Street themes for years. Out of Amazon’s $637 billion in revenue in 2024, $107 billion came from AWS… nearly 17% of the pie. That’s up from 11.8% in 2020. But here’s what’s unique about Amazon as June kicks off. From 1997–2024, the average gains for AMZN during the months of June and July shake out to 9.44%. And if we only look at years where the S&P 500 gained 4% or more in May, the average June–July return jumps to 24.25%! Now, these returns are heavily skewed by 1997’s gains of 59.7%. But even still, you’re staring at big market-beating gains, and it’s always been positive. Here’s a review of June and July back in 2020 (+29.6%) and 2024 (+5.97%): 
It looks like a good bet from this vantage. But let’s make it a great bet. Using TradeSmith’s Seasonality tool, we can observe a very supportive signal. Looking back at the past 15 years, AMZN shares are clearly in a green zone: 
This means that Amazon shares tend to feel seasonal tailwinds with high-probability gains. Let’s drive this home. Below lists the discrete gains for Amazon during June–July the last 15 years. Notably, the average gain is 9.4% with an accuracy rate of 86.7%. Look at the biggest return year… 2020, which jives with the earlier study: 
In short, don’t be fearful given May’s big rip… These power-thrust months occur during big macro event years. And big May returns for the S&P 500 precede big gains for June and July. Use this rising tide to bet on best-of-breed companies. I’ve showcased behemoth AMZN… But there are many more smaller companies ready for liftoff too. Over at InvestorPlace, for example, Louis Navellier is finding the same thing with his Stock Grader system… Louis has used this system for nearly 50 years to help uncover stocks with the potential to soar 100% or more. Some of them even gained 1,000% or more since he recommended them early, when they were still small. The Navellier Stock Grader originally birthed a billion-dollar hedge fund that delivered hundreds of millions in profits for both himself and private clients… And over the last few years, Louis has used this system to deliver hundreds of four- and five-figure payouts to his paid subscribers over at InvestorPlace. To learn more about the Navellier Stock Grader system – and see his three-pronged strategy to prepare for President Donald Trump’s “Liberation Day 2.0” – click here now for more details. Regards, 
Lucas Downey
Editor, TradeSmith’s Alpha Signals | 
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