Sell in May and go away is more than an investment adage to Stifel Managing Director and Chief Equity Strategist Barry Banister. For him, it’s a warning. “Sometime between May and October, May 1, October 31, we see a 10% correction,” he told Yahoo Finance Live.
Bannister predicts the S&P 500 (^GSPC) will hit 3,750 at the end of October, down 437 points from Monday’s close of 4,187. In a recent note to clients, Bannister wrote that the “S&P 500 P/E is now in the bubble zone last seen in 1998-99 and 1928-29 (only 4 of past 100 years) and we see the P/E declining in 2H21 due to a rising real 10Y yield, even with only modest GDP reflation.”
The yield on the 10-year Treasury note hit 1.57% Monday, down from the six month high of 1.74% it reached at the end of March. But Bannister expects yields to rise again over the coming months putting downward pressure on stocks.
“And typically the bond market comes in waves, sort of like COVID. It’s not going to just be all at once.