In this final segment of my series, I will address the idea “sell in May and go away” to see if it will once again prove true.

Today, I will use one of the systems I have developed that is highly effective at giving profitable trading (buy and sell) signals. Again, nothing is 100 percent accurate. Let’s take a look at a twenty year chart of the S&P 500 and see if my system would have worked to keep you in the green.

Per the chart, my trading sell signals are hit when two conditions occur. First, the price must cross down through the blue signal line and stay under this line by the end of the next month. If this happens, and the money flow indicator is signaling money flowing out of the market then we have a system sell signal. Many wished they would have been out of the market during these huge downturns (point A) from 2000-03 and also (point B) from 2007-09.

For my system buy signals I do just the opposite and wait for the price to close and stay above the blue signal line by the end of the next month accompanied with money flowing into the market. You can see by using this system you would have had several very profitable runs.

Quiz time: Are there current sell signals (point C) for the S&P 500? Per the chart you can see the price is trading well above the blue signal line so use the previous rules to determine the answer.

I have taught many people these buy and sell systems. You can learn as well. You have heard me state many times, “It is not being in the market that is important but what you are in that is!” No matter what Wall Street says, everything does not come back.

For more information on my upcoming “Financial Friday” lecture series starting in June, go to my website thetraderseye.com for details.  I will be presenting an intro and an advanced series-there will be something for everyone.

In conclusion, in the first column we saw the very high levels of margin debt in relation to the previous market tops in 2000 and 2008. Last week we examined the chartist “Megaphone Pattern” suggesting that a possible top is near.  Finally, today we reviewed, what I think is the most important, my trading system.  While my trading system shows “no” it is not time to sell in May and go away, I am concerned with the parabolic run during the last year.  History has shown, the higher and faster a market runs the harder it CAN fall.  Please don’t take any part of this market for granted.

Plan your work, work your plan and learn to share your harvest!

DAVID O. ENGLAND is the founder of the Eye on the Market-Training Academy and retired associate professor of finance at John A. Logan College. For questions and upcoming seminar info, he can be reached at thetraderseye@gmail.com.  The information above is for educational purposes only and is not intended to be financial advice. Your decisions to buy, sell, short, or hold any stock or investment product is a direct result of your own decision, free will, and research.