April Almanac: Rarely a Challenging Month By: Jeffrey A. Hirsch & Christopher Mistal | March 28, 2017 | Email | Print

 

April marks the end of our “Best Six Months” for DJIA and the S&P 500. On April 3rd, we will begin looking for our Seasonal MACD Sell Signal and corresponding early signs of seasonal weakness. We will use this signal to begin to take a more defensive posture in the Stock and ETF Portfolios.

 

April 1999 was the first month to gain 1000 DJIA points. However, from 2000 to 2005, “Tax” month was hit, declining in four of six years. Since 2006, April has been up eleven years in a row with an average gain of 2.6% to reclaim its position as the best DJIA month since 1950. April is second best for S&P and fourth best for NASDAQ (since 1971).

 

The first half of April used to outperform the second half, but since 1994 that has no longer been the case. The effect of mid-April Tax Deadline appears to be diminished. Traders and investors are clearly focused on first quarter earnings during April. Exceptional Q1 earnings and positive surprises tend to be anticipated with stocks and the market moving up in advance of the announcements and consolidating or correcting afterwards.

 

Typical post-election blues have done little to damper April’s performance since 1953. April is DJIA’s second best month in post-election years, gaining 1.9% on average. April is fourth best for S&P 500 and NASDAQ. Although post-election year 2005 did suffer a 3% DJIA decline.

 

 

Options expiration week frequently impacts the market positively in April and DJIA stocks have the best track record since 1990, with an average gain of 1.3% for the week with just six declines in 27 years. The first trading day of expiration week has a slightly better record than expiration day and the week as a whole is generally marked by respectable gains across the board. The week after has a slightly softer long term-record and in 2017, the day after Easter, which has been the S&P 500’s worst post-holiday trading session (page 88 Stock Trader’s Almanac 2017) lands in this week which could further dampen performance.