"Sell in May" Canceled? DAX Ignites the Turbo Towards 25,000 Points!
Right on time for the turn of the month, the legendary wisdom "Sell in May and go away" is circulating among stockbrokers—but the German leading index currently seems intent on brilliantly refuting this myth! Just last Thursday, market participants experienced firsthand how at lightning speed the tide can turn: The DAX, which was just staring deep into the technical abyss, staged a spectacular U-turn on the trading floor. This not only salvaged a strong April close but also laid the technical foundation for a bullish May. Historical seasonality supports this optimism: In the past ten years (all characterized by a bull market), May closed with a strong win rate of 67% and an average return of 1.79%. The crystal-clear technical target for this week is now 24,600 points, in order to launch the final attack on the historic 25,000 mark from there.
Merz Crisis and Hormuz Showdown: The Highly Dangerous Oil Price Poker!
But historical statistics are clashing mercilessly with harsh reality. Domestically, a full-blown government crisis is brewing: Chancellor Friedrich Merz is now openly revealing that dissatisfaction within his party towards the junior partner is growing massively. Even more explosive, however, is the geopolitical powder keg: In the smoldering Middle East conflict, the U.S. President has decided to forcefully break the blockade of the strategically essential Strait of Hormuz—this military operation is scheduled to launch today, Monday! Whether this will lead to a renewed hot escalation will keep the markets in suspense. The economic equation behind it is simple and brutal at the same time: The price of oil absolutely must crash from its highs. If energy prices remain at this toxic level, the specters of inflation and stagflation will become bitter reality—and the "Sell in May" credo would inevitably strike with full force.
Data Highlights: Purchasing Managers and the U.S. Labor Market in Focus
The hard macroeconomic facts become all the more important in this extremely nervous environment. Right at the start of the week today, Monday, investors are anxiously looking at the Purchasing Managers' Indices (PMI) of the European manufacturing sector. This data is considered an incorruptible leading indicator of the actual order situation and state of mind of struggling manufacturers. Later in the week, the global focus will shift entirely across the Atlantic: The upcoming U.S. labor market data will play the absolute leading role. Alongside inflation, they are the all-important factor for the central banks, dictating future monetary policy and thus the fate of the stock markets.
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