When the calendar nears May, investors start the annual tradition of filing through their portfolio, looking for stocks to sell. But for a minute there, it seemed like the market might be heating up heading into the fifth month of the year. The Nasdaq Composite surged past the 6,000 mark for the first time ever on Tuesday — hitting new highs for the first time since March — capping an epic gap move higher.
However, Wednesday didn’t see much follow through, not even after President Donald Trump unveiled a tax plan that would slash rates for individuals and businesses alike. The market’s rally now looks vulnerable to a reversal.
Many of the factors that have kept the rest of the market in stasis over the past two months remain in play: Weak “hard” economic data, geopolitical tension, a lack of legislative progress by President Trump and renewed weakness in the energy complex as crude oil is hit by oversupply fears.
Moreover, the last time stocks surged above their upper Bollinger Band — as they did on Tuesday — was last August, which marked a medium-term top for the market. Additionally, breadth remains extremely narrow, with just a handful of big-tech stocks driving the overall market averages higher here.
As the dreaded “Sell in May and go away” period of the year approaches, I don’t suggest you necessarily follow that advice verbatim. But you should consider lightening some positions ahead of another move to the downside.
With this in mind, here are five stocks to sell in May.