Bitcoin & Best/Worst Sectors of “Worst Months” By: Christopher Mistal | May 08, 2025 | Email | Print

Following a rocky April, the market has continued to rebound nicely in the first six trading days of May. As of today’s close, NASDAQ is up 2.76% and Russell 2000 is up 3.17%. DJIA and S&P 500 are moderately lagging, up 1.72% and 1.70% respectively. Whether or not this rally continues will likely depend on how quickly new tariff deals can be made. Today’s announcement of a deal with the United Kingdom is encouraging but at the same time not all that exciting. After all, we reportedly have a goods trade surplus with the United Kingdom. Progress with China and/or Europe is what is really needed for uncertainty to meaningfully dissipate. 

 

 

We have updated the above chart of S&P 500 post-election-year seasonal patterns through today’s close. The bounce and rally that we had anticipated just after mid-April has continued but the pace of gains has begun to slow. Bullishly, volatility measured by CBOE’s VIX index has retreated and DJIA, S&P 500 and NASDAQ have all reclaimed their respective 50-day moving averages. The next hurdle will likely be their respective 200-day moving averages currently around DJIA 42230, S&P 500 5750, and NASDAQ 18300. Should the market track the more bullish post-election-year May seasonal patterns, the major indexes could be pushing through their respective 200-day moving averages sometime after mid-month.

 

   

 

 

In the following table, the performance of the S&P 500 and NASDAQ during the “Worst Six Months” May to October is compared to fourteen select sector indices or sub-indices, gold, Bitcoin, and the 30-year Treasury bond. Nine of the fourteen indices chosen are S&P Sector indices. Gold and 30-year bond are continuously-linked, non-adjusted front-month futures contracts. Except for two indices (Natural Gas & Biotech) and Bitcoin, 1990-2024, a full 35 years of data was selected. This selection represents a reasonably balanced number of bull and bear years for each and a long enough timeframe to be statistically significant while still representing current trends. To make an apples-to-apples comparison, dividends are not included in this study.

 

 

Using the S&P 500 as the baseline by which all others were compared, five indices and Bitcoin outperformed during the “Worst Six Months” while ten others, gold and the 30-year Treasury bond underperformed based upon “AVG %” return. Bitcoin’s nearly 53% average return during the May-October period is an eye-popping figure but it is based upon just 14 years of data and its price was under $5 in May 2011 compared to over $100,000 today. If we start with data in 2018, the first full year after Bitcoin futures began trading, its average May to October gain is 12.98% with five positive periods and two negative. Interestingly, three out of four negative periods were also midterm election years (2014, 2018 & 2022, shaded).

 

 

Next on the list are Biotech and Information Technology with average gains of 7.15% and 5.51% during the “Worst Months.” Before jumping into Biotech positions, consider that only 30 years of data was available and, in those years, Biotech was up just 56.7% of the time from May through October. Some years, like 2014, gains were massive while in down years losses were frequently nearly as large.

 

 

In third place, Information Technology with 35 years of data and a 71.4% success rate is possibly a less risky choice than Biotech. Its 5.51% AVG % performance comes by way of three fewer losses in five additional years of data. However, five of the nine losses were double digit. The worst loss was 30.88% in 2008. Other double-digit losses were in 1990 and 2000-2002. After declining in 2012, Information Technology has been positive in 11 of the last 12 “Worst Six Months” periods. Holding existing tech-related positions with a trailing stop loss is one option to consider.

 

 

Other “Worst Six” top performers consisted mostly of the usual suspects when defensive sectors are considered. Healthcare and Consumer Staples have bested the S&P 500. Not surprisingly NASDAQ has also performed well, advancing 74.3% of the time with an average gain of 4.96%. NASDAQ’s Best Eight Months include May and June, so it does have an advantage. Although not the best sector by AVG %, Consumer Staples advancing 77.1% of the time is the closest thing to a sure bet for a gain during the “Worst Months.” However, should interest rates rise, Consumer Staples is susceptible to declines. Utilities also merit attention with a second best % Up at 74.3%, matching NASDAQ.

 

 

At the other end of the performance spectrum, we have the sectors to consider shorting or to avoid altogether. The S&P 500 Materials sector was the worst over the past 35 years, shedding an average 1.35% during the “Worst Six.” PHLX Gold/Silver was third worst by average percent. However, based solely upon the percentage of time up, the stocks only, PHLX Gold/Silver index is the most consistent loser of the “Worst Six” advancing just 40.0% of the time. Aside from solid gains in 2012, 2019, 2020, and 2024, PHLX Gold/Silver has declined in nine of the last twelve “Worst Six Months.” NYSE ARCA Natural Gas is the last sector to record a loss, off 0.58%.

 

 

Also interesting to note is every sector, gold, 30-year bonds, and Bitcoin are all positive in May, on average. It’s not until June when things begin to fall apart for many sectors of the market and the market itself. July tends to see a broad bounce, but it tends to be short-lived as August and September tend to be downright ugly on average. It is this window of poor performance that has tended to give October a lift in the past 35 years. Only Biotech, 30-year bonds and gold (futures and gold & silver stocks) manage to post gains in both August and September.

 

Based upon “% Up” Consumer Staples is the top sector of the “Worst Six Months” while Gold/Silver mining stocks are the worst. Historically speaking, May looks like a great time to consider rebalancing a portfolio as you will likely be closing out long positions into strength. Short trade ideas are also worth considering given June’s nearly across-the-board poor performance.

 

 

Despite the relatively limited number of years of data for Bitcoin, we are going to look to add a new position in iShares Bitcoin (IBIT) on dips to the Sector Rotation ETF Portfolio. IBIT can be considered on dips below $55.25. SPDR Consumer Staples (XLP) and SPDR Utilities (XLU) can also still be considered on dips.