Every spring, financial Twitter resurfaces the same line. Sell in May and go away.
The 2026 version arrives with the S&P 500 up 2.7% year to date and the Russell 2000 up roughly 12%.
Investors want to know if a 70-year-old rule still belongs in a modern playbook.
Historical Performance: May Through October Versus November Through April Since 1950
The seasonal gap is real and persistent. Since 1950, the S&P 500 has averaged 7.1% from November through April.
The May to October window has averaged just 1.7%, per CFRA data cited by Fidelity.
The Stock Trader's Almanac built its "Best Six Months" framework around this pattern. November to April has been positive about 75% of the time.
The summer half has been positive closer to 66% of the time.
What the average hides
Averages flatten outliers. The 2009 summer rally added more than 18%. The 2022 summer lost double digits before recovering.
Seasonality is a base rate, not a guarantee. That is closer to how allocators actually use it.
The pattern in the last two cycles
Recent summers argue against the rule. The S&P 500 gained more than 15% from May through October 2024.
It added close to 18% over the same window in 2025. Two strong summers do not erase 75 years of data.
Why the Adage Survived: Mechanism Versus Coincidence
A pattern this old usually has a mechanism behind it. Several are plausible.
Trading desks thinned out over European summer holidays. That reduced liquidity and amplified drawdowns.
Flow-based explanations
Tax-loss selling and pension rebalancing concentrate in autumn. That sets up the November to April rally.
New-year retirement inflows add a January and February tailwind. Summer has no comparable flow catalyst.
Why mechanism matters
If the driver is liquidity, strong earnings can override it. If it is folklore, it should weaken as algos replace human positioning.
Both look partially true. The effect has weakened over the past two decades but not disappeared.
Why 2026 Might Break the Pattern: The AI Capex Cycle
The largest argument against a 2026 summer slump is hyperscaler capital expenditure.
Microsoft, Alphabet, Meta, and Amazon collectively guided to roughly $700 billion in 2026 capex. That is nearly double the 2025 figure, per Fortune and Yahoo Finance reporting.
Seasonality is a base rate. A $700 billion capex cycle from four companies is a regime. When the two collide, the regime usually wins.
Roughly 75% of that spending is AI-specific. It flows into power, data centers, networking, and accelerators. That demand does not pause for summer holidays.
The bull case
The seasonal template says lighten exposure. The capex template says the earnings engine for half the index is still accelerating.
Index-level exposure via SPY sits at that intersection.
The risk on the other side
If hyperscaler capex commentary softens during summer earnings, the seasonal trade and the regime trade align.
That is the tail risk worth pricing in, not the base case.
Sectors That Outperform in Summer Months
Not every part of the market follows the same calendar. Defensive sectors have historically held up better through the summer half.
Healthcare and utilities
Healthcare, anchored by XLV, has delivered steadier May to October returns than cyclicals.
Utilities, tracked by XLU, have shown a similar pattern. The 2026 twist is that utilities are also an AI-power play.
Cyclicals to watch carefully
Financials and industrials carry the heaviest summer drag in long-run data. Small caps tracked by IWM are mixed.
For more, see our comparison of cyclical and defensive stocks.
Tactical Adjustments Without Selling Everything
Going fully to cash for six months has been a bad trade in modern cycles. A better translation is portfolio tuning, not liquidation.
Rotation, not exit
Trimming the most extended winners and adding to defensives is the classic adjustment. A modest tilt toward healthcare and utilities preserves equity exposure.
Our primer on defensive stocks covers the criteria worth using.
Raise cash modestly
Moving from 100% invested to 90% invested gives optionality without abandoning the cycle. The 10% sits as dry powder for any summer drawdown that does materialize.
Use options instead of selling
Covered calls on extended positions monetize summer drift without realizing capital gains. Protective puts cap downside cheaply during low-volatility windows.
Conclusion
The data behind "sell in May and go away" is real. It is also a base rate that loses to stronger signals when one shows up.
The 2026 AI capex cycle is a strong signal. The smart move is rarely binary.
Lean defensive, keep a small cash buffer, and use options to manage tail risk. Discipline beats folklore.
Open a Gotrade account to build a seasonally aware US portfolio with fractional shares in one place.
FAQ
Does "sell in May and go away" still work?
The historical pattern is real. The S&P 500 has averaged 7.1% from November through April versus 1.7% from May through October since 1950. Recent summers in 2024 and 2025 broke the pattern.
What is the best sector for summer months?
Historical seasonality data favors defensives such as healthcare and utilities through the May to October window. Cyclicals like financials and industrials tend to carry the largest summer drag.
Should I sell stocks in May 2026?
Going fully to cash for six months has been a poor trade across the last two cycles. A measured rotation toward defensives plus a modest cash buffer is the more durable adjustment.
Why might 2026 break the seasonal pattern?
Hyperscalers guided to roughly $700 billion of capex in 2026, with about 75% tied to AI infrastructure. That demand is structural and does not slow for summer.
How can I hedge without selling?
Covered calls on extended winners generate income in low-volatility summer windows. Protective puts cap downside cheaply when implied volatility is muted.
