ASX performance on Monday May 5 caught some by surprise as the local bourse dipped into the red right out of the gate – contrary to futures pointing green.

More surprising to Australian market-watchers was that Wall Street didn’t have a particularly bad night on Friday. Generally, what Wall Street does on a Friday session informs which direction the ASX goes on Monday.

(That correlation isn’t always the case, but it’s so reliable that it may as well be considered a rule of thumb.)

So what’s going on?

The first thing to note is that the financial sector is selling off on Monday, partially on the back of Westpac’s results which missed expectations in key areas.

Westpac shares were down -3.35% to $32.33/sh at 1.50pm AEST reflecting $123.4M in shares (5.15M) changing hands. (For context, Westpac has 3.4B on issue.)

It’s probable that effect has also rattled confidence – and/or prompted profit taking – among the other majors.

As at 1.50pm AEST:

• Commonwealth Bank (CBA) down -1.99% ($166.29/sh)
• National Australia Bank (NAB) down -2./06% ($35.74/sh)
• ANZ Group Holdings (ANZ) down -0.79% ($30.12/sh)

But there’s another factor that could also be informing the sway of the ASX on Monday.

“Sell in May and go away”

This is a saying that investors cling to – at least those who like to inform their trading strategies on the ebbs and flows of historical data – and it’s not entirely superstitious.

The fact of the matter is the best ASX gains come in later in the year (think the Santa Rally) and then peter out around halfway through CYQ2.

Between May and October, historically, returns are less tasty than they are leading up to April. That isn’t an absolutely steadfast rule, but much like the ASX taking its cues from Wall Street performance, the rule is basically considered a rule of thumb.

(Worth noting is this isn’t just an ASX rule of thumb – this seasonal pattern applies to the US markets too.)

Perhaps unsurprising (especially if you’re already looking at Wall Street performance before making investment decisions down under,) the correlation between the seasonality of Wall Street, and the ASX, is pretty clear to see.

How can we confirm that “sell in May and go away?” is why the ASX is red on Monday?

We can’t. Not for sure.

Or at least, not without interviewing every single person who’s made a trade on the market today and asking them what’s motivating them. I hate to break it to the reader, but not even HotCopper is that well connected.

But as a general rule of thumb – or in other words, a fixed seasonal pattern that recurs most years – it’s worth remembering in navigating the ASX this month.

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