This may not be the year to sell in May, despite the recent market drop, explains Emerging Growth’s Louis Navellier, because history does favor higher prices.

Sell in May and go away. We’re here with Louis Navellier, who is going to tell us whether that trend or old saw as it were still is valid today.

Well, there is no doubt the markets get bumpier in the summer months. But again, in the fourth year of a presidential election cycle any corrections we have tend to be short and shallow. I would tell people to stay in.

The bumpiest time is going to be August and September. But we also have the Republican convention in late August and the Democratic convention early September, and that is going to be distracting everybody. Also, corporate profits drop in the first quarter and they accelerate for the rest of the year. We should end up with about a 17% annual pace.

And the market always follows earnings higher. We learned that last time when people sold in the summer of 2011, when the market went down in August and September. Then all of a sudden you have this huge reversal in October, the best month in 24 years, because the earnings were there and they had to follow the earnings higher.

What we’ve noticed is when the market starts to correct, we exhibit relative strength. We’ve had a lot of down days here, but you’ll see in the last hour the market starts to rally. I’ve been up a lot of those down days, and especially in our blue chip stocks, the big multinationals.

What is really going on is that the strength of the market is coming from companies buying their stock back, or the dividend stocks. See, you can get out of the market, but you’ve actually got higher yield in the market than if you go to the bank, because banks pay almost nothing.

The S&P pays over 2%, but you can go in and cherry pick good growth stocks with 3% yield, or average 3% with Coke (KO), McDonalds (MCD), and things like that. Or you can get a higher yield and go to the cigarette companies, the ketchup companies, the cellphone companies, and you can get over a 4% yield.

There is really nowhere to go. I know everybody is scared about Europe and all, but there is nowhere to go. I only invest in the top 10% of the blue chip stocks; in the small caps, we only invest in the top 5%. I will admit it’s a narrow market, and you do have to pick them right.

Well, I think Art, one of our viewers here, had a question for you about whether there is going to be a rally this year, a bull-market rally.

Yeah, and Art’s worried that the rally is over. I would say this is going to be the pause that refreshes.

The next big rally would be going into July, which is the next earnings season. I think folks will be very pleased with the earnings they’ll see, and then that will carry us higher. We’ll see more evidence of buybacks.

Then of course we’ll get through the conventions…and then it will be full-court press until November. You can’t be elected President of the United States unless you are a happy, positive person so it’ll be full suck-up mode. We guys have already made up our minds—there is only like a 2% variable in men of how they’ll change their vote—but the gals apparently have more variability, and they like to be wooed, so they’ll be out wooing the women.

Obama was doing pretty good, but based on the latest CBS poll, Romney now took the lead. So, it’s going to be interesting. It’s good for consumer confidence, investor confidence, and business confidence, because they’ll all be running around sucking up to everybody.

Well, that sounds pretty good. Sounds like we might get some action towards the end of the year.

Yeah, and earnings are reaccelerating here, because the year of your comparisons are more favorable. A lot of the ebbs and flows of earnings have nothing to do with the economy; it has to do with the year over year comparisons.

We just got through the worst quarter, the first quarter. They expect earnings to be up about 2.2%, but they’re up over 8%. They’ll be accelerating about a 17% pace by the end of the year. That’s on the S&P; somebody like me, I always do better. My average large-cap stocks have about 38% earnings. I get the small caps and we’ll get over 80% or 90% earnings growth.

Then, you don’t have to pay a premium price-to-earnings ratio now. We feel very, very good where we are. Again, the high-dividend stocks are clearly an oasis. I see a lot of buying pressure on down days and also my companies are buying this stock. As I was speaking today it was little choppy, but AutoZone (AZO) was up sharply, apparently on relentless stock buybacks.

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