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Dow Jones Index has worst May since 1940

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By Paul Hodges on 31-May-2010

DJI May10.png‘Sell in May and go away’ seemed a good tactic to the blog at the beginning of the month.

It worried that we might now be approaching the ‘drawn-out fundamental downtrend’ phase of the current cycle. And in spite of several major ‘relief’ and ‘short-covering’ rallies, financial markets have continued to suffer.

The US Dow Jones Index has been one of the worst affected. As the chart from the Wall Street Journal shows, it is down 8%. That’s the worst May performance since 1940.

And its not alone. China, supposedly the current growth engine for the global economy, has seen the Shanghai market fall 6%. It is now down 18% since the start of the year.

The chemical industry, as I note in my ICIS interview below, is a very good leading indicator for the world economy. Equally, stock markets seem to be taking a more cautious view of the general economic outlook.