每日市場點評 --- May 5, 2008

The market ended the first trading day of the new week modestly lower. The loss was quite contained as the Dow, which performed the worst among the big three, posted a loss of 0.7%. The only important economic news turned out to be better than expected. The April ISM services reading came at 52.0, up 2.4 points from the previous month. Economists expected a drop to 49.1 instead. It marked the first expansion in the service sector since last December. However, a new record oil price along with pressure from the financial sector prevented the market from advancing further.

Commodities were among the biggest winners of the day. The CRB commodity index jumped 5.7 points led by energies and industrial metals. It is worth noting that oil continued to hit historical high even though the dollar has gained some ground recently. The US dollar did pull back somewhat today after gaining more than 2% in the past two weeks. Treasuries rallied modestly while the yield curve continued to steepen. As we are now in May and there is an old saying of “Sell in May and Buy in November”, so we take a look at how May has performed in all election years after WWII. There are 15 such instances ranging from a loss of 6.48% to a gain of 5.57%. The average return of those 15 instances was a positive 0.44%. Probably more interesting, the market has positive returns throughout the May-November period except for September, when the return was negative 0.7%. The total average return over the period was a rather impressive 3.70%. Will historical trend continue in the current election year? We don’t know the answer but from past experiences, it may not be a wise idea to bet against the market simply based on that old saying.