Investors should literally 'go away in May' this year: NYSE trader

Yahoo Finance’s Jared Blikre is joined by Jay Woods, CMT, DriveWealth Institutional Chief Market Strategist on this week’s ‘Getting Technical’: Taking stock of the raging bull market.

Video transcript

ZACK GUZMAN: I want to shift over, though, as we've been talking about death and taxes, let's shift to a rosier topic here, at least one that a lot of our viewers will appreciate in getting technical on the trading action we've seen play out. And for more on that, I want to bring on Yahoo Finance's chart master Jared Blikre, who has a special guest in this week's segment. Jared.

JARED BLIKRE: Yeah, I'm really excited to bring in Jay Woods, who is chief investment strategist at DriveWealth. And Jay, I know you just began at this firm here, but I got to ask you, first of all, what's it like down at the New York Stock Exchange, going back there? And we'll get into some tickers in a second.

JAY WOODS: Oh, well, it's great being back home at the New York Stock Exchange. We're still going through a COVID protocol, so it's not as lively as we'd like. We miss you and your team and Ines down here at the NYSE. But all signs are pointing to a reopen sometime soon. You know, when we get the go ahead, we can't wait. And it's been great. And the markets have been fantastic. So, what's not good to be back at the New York Stock Exchange?

JARED BLIKRE: Exactly, I can't wait to go back myself. I want to talk about the financials. We got big bank earnings this week, XLF pushing at record highs recently, as are most of the other sectors. What are you seeing in the sector action? And just throw out whatever you want to here, and I'll bring up some tickers.

JAY WOODS: Yeah, sure, I mean, it's good that we got that Easter slowdown. And we had the lowest volume week of the year last week. And then we knew the financials were reporting this week. And they kicked us off to a great start. If you look at the XLF, you go back in time right before COVID, it looked like we were going to break out of a 10-year base here. And we paused, we tried, we failed. This quarter, we broke through, and we broke through with a vengeance. And it continues today. So it's always nice to see the financials lead.

And then you mentioned the other sectors. 10 out of 11 sectors in the S&P SPDR Select Sector Index are making new highs this week. So when you say all tides lift-- the tide lifts all boats, we're seeing that right now. The only laggard is energy, which was leading us basically the first quarter of this year. So, as a bull, I don't want to see energy lead. This is fantastic that the financials are leading. Tech is coming back. We're losing that rotation trade narrative as everything is kind of running ahead at the same time. But it's exciting.

JARED BLIKRE: Yeah, and let me just ask you because this is Options Expiration Friday. We do see some activity in individual names. It doesn't necessarily reflect the indices as a whole, but there might be some seasonality aspects with respect to this particular week, but also, heading into May, because we're just coming off the best six-month period of the year. And heading into the worst six months, there's that saying, "sell in May and go away." So what are you making of the timing of everything right now?

JAY WOODS: Yeah, well, let's talk options expiration first. Yes, its Options Expiration Friday, so you'll see some volume swell towards the end of the day, which is good. And it keeps us busy down here. But we've seen in the last two months, where we've peaked kind of midmonth around options expiration and then digested the gains we had early on of that month. So hopefully, this doesn't mean we pause with the expiration. But given what we've done so far in April, it wouldn't shock me.

And then you talked about seasonality. "Sell in May and go away" was an expression I actually joked about last year. Like, where are we going to go? Well, this year, you know, people are ready to go away. I can't wait. I'm one day away from my first shot. And May seems to be the time where people will actually maybe take advantage of some of these gains. And we could see a pause in this market.

It sounds too obvious, but right now, seeing where we've gone and how strong this rally has been, a pause would be fine. And you throw in the seasonality factor, where April is the second strongest month over the last 20 years. Now we're coming into that slowdown. We didn't see it last summer, which was great. But this summer, you know, rationale would dictate that--

JARED BLIKRE: [INAUDIBLE] going to go away?

JAY WOODS: What's that?

JARED BLIKRE: We've got about 30 seconds left here. How does anybody hedge this experience if they're going to go away? Anything in the stock portfolio? What do you do?

JAY WOODS: Oh, well, you always want a diversified portfolio. That's the smartest thing. Right now, with gains across the board, you may want to lighten up if that's your prerogative. But over the long-term, these trends are phenomenal. I like to look at things from the long-term perspective, put my day trading hat aside, even though I do that for a living. I think we're on a good trajectory. But we could see a small pullback over the near term, given the run-up that we've had.

JARED BLIKRE: All right, Jay Woods, we're going to leave it there. Thank you very much for joining us.