Posted May 31, 2017

Rally Rolls On

“Sell in May and go away” is an old adage that harkens back to the pre-high tech era when traders would raise cash ahead of summer vacations in the Hamptons.  We still hear the saying, but that is not what happened this year.  May is traditionally a quiet month and the first 3 weeks were very quiet, with little market movement.  At the end of the month, with President Trump traveling overseas, the daily chaos in Washington died down and the S&P 500 pushed to a new all-time high for the 19th time this year.  At month end the market had gained 1.2% and is now up 7.7% year to date and 13% since the election.
The feature stories during the first week of the month were the House passage of the Healthcare bill, and the government report that a strong 211,000 jobs were created in April, sending the unemployment rate to a 10 year low.  The healthcare bill must still go to the Senate where it will be adjusted to the Senate version and then sent off to conference committee.  Despite the good jobs report and excitement over the House passing anything, the S&P 500 ended the week just .6% higher.  The second week began with news the French election had gone as most expected, but the real story of the week was Trump’s firing of FBI Director Comey that set off a political firestorm.  Most politicians seemed to want Comey gone, but the firing gave Trump opponents ammunition in their non-stop battle to undermine his administration. The last day of the week we learned retail sales were below expectations and the week ended with the S&P 500 down .3%.  The third week was a volatile one that saw the best day of the month and the worst day of the month.  Stronger oil prices on news OPEC had extended production cuts was the positive, while concern about the Trump pro-growth agenda was the negative.  Despite the volatility, good news and bad news offset each other and sent the S&P 500 to a net loss of just .1% for the week.  The final full week of the year, with Trump traveling overseas and the daily chaos from Washington quieting saw the market move higher every day and the S&P 500 gained 1.4%.
June has historically been a positive month with a 55% chance of closing higher with an average gain of .7%.  Optimism about Trump’s pro-growth, deregulated agenda has pushed stocks to rich valuations, but the recent earnings reporting season did show the economy has improved. The S&P 500 has risen 6 of the 7 months since the election, and the tech heavy NASDAQ has closed higher for 7 consecutive months.  While we are overdue for a correction, there seems to be a strong bid under the market and we see buyers on every dip.  We have taken steps to be a bit more defensive, raising cash and/or adding an inverse position, but it has thus far been unnecessary.  When we do get a tradeable decline we will look to reduce our defensive positions and become more fully invested.
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As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance.  We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also follow us on Twitter @gbergfinancial visit our website at or simply call us at (520) 544-4909.