April marks the end of the “Best Six Months” for DJIA and the S&P 500. The window for our seasonal MACD sell signal opens on April 1st. From our Seasonal MACD Buy Signal on October 8, 2021, through today’s close, DJIA is down 0.11% while S&P 500 is up 2.93%. This is below historical average performance due largely to surging inflation, a tightening Fed and Russia’s invasion of Ukraine. But before the “Worst Months” arrive, April’s solid historical track record could keep the current rally intact.
![[Seasonal April Market Chart]](/UploadedImage/AIN_0422_20220324_April_Seasonal.jpg)
As you can see in the above chart of the recent 21-year market performance in April, the month has been nearly perfect with gains steadily building from the first trading day to the last with only the occasional and minor blip along the way. April 1999 was the first month ever 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 sixteen years in a row with an average gain of 2.9% to reclaim its position as the best DJIA month since 1950. April is the best month for S&P 500 and third best for NASDAQ (since 1971).
The first trading day of April and the second quarter, has enjoyed notable strength over the past 27 years, advancing 19 times with an average gain of 0.28% in all 27 years for DJIA. However, five of the eight declines have occurred in the last nine years. The largest decline was in 2020 when DJIA declined 4.44% (973.65 points). Other declines were in 2001, 2002 and 2005. S&P 500’s record on April’s first trading day matches DJIA, 19 advances in 27 years. NASDAQ recent performance is slightly weaker than DJIA and S&P 500, but the day is still bullish for technology stocks in general with more advances than declines during the same period.
The first half of April used to outperform the second half, but since 1994 that has no longer been the case. The effect of April 15 Tax Deadline (April 18 for 2022) appears to be diminished with numerous bullish days present on either side of the day. Traders and investors are clearly focused on first quarter earnings and guidance during April. With conflict in eastern Europe and the Fed raising rates, companies may lean conservative with guidance during this upcoming earnings season.
Typical midterm-election year woes have tempered April’s performance since 1950. April is DJIA’s and S&P 500’s seventh best month in midterm-election years, up 12 of the last 18. Russell 2000 ranks highest at fifth best in midterm-year Aprils. Sizable losses exceeding 4% on DJIA and S&P 500 occurred in 1962, 1970 and 2002.
Monthly options expiration week frequently impacts the market positively in April and DJIA has the best track record since 1991, with an average gain of 1.40% for the week with just five declines in 31 years. The first trading day of expiration week has a slightly better record (average gain) than expiration day and the week as a whole is generally marked by respectable gains across the board. The week after has a softer long-term record, but still has a bullish leaning record.
Good Friday (as well as Passover and Easter) lands in the middle of April this year. Historically the longer-term track record of Good Friday (page 100 of STA 2022) is bullish with notable average gains by DJIA, S&P 500, NASDAQ, and Russell 2000 on the trading day before. NASDAQ has advanced 20 of the last 21 days before Good Friday. Monday, the day after Easter has exactly the opposite record since 1980 and is in the running for the worst day after of any holiday. Since 2004 the day after has been improving with S&P 500 up 12 of the last 18.