Sell in May?

There is an old stock market adage that you should "sell in May then go away". Frankly, it hasn't had great form as a trading tip.

But this year it has struck with fury and might. This from MarketWatch:

The Dow Jones Industrial Average tumbled 358.41 points, or 3%, to 11,453.42, leaving it down nearly 1,200 points, or 9.4%, for the month, with two trading days yet to go. As things stand, the month is the worst June so far since 1930 when the index declined 17.72%.

For those who just can't bear it, consider the following chart of the DJIA:

Click to enlarge

Notice that spikes through the bollinger bands, particularly downside ones, have a fair chance of setting up at least a tradeable situation: bounce from bottom spike, dip from top spike. The Chaikin Indicator is also at extreme, adding volume (Accummulation/Distribution) confirmation of a possible bounce. This does not combine to make an infallible indication (doubtfully none would be public or available through off-the-shelf software), but this has better form than the sell in May adage.

This is purely observation and not in any way investment or trading advice. They have not repealed either the business cycle nor caveat emptor.