Keystone's April Seasonality

The largest gains in the stock market typically occur between November and April each year. We are now only four weeks away from "Sell in May and go away." With the broad indexes up 12% or more this year, who would blame traders for taking profits and running away before May? Tech and biotech sectors receive the largest gains in Q4 but they kept on running higher thru Q1 this year, thus, considering the softness that should be expected, along with the elevated prices, a pull back in these sectors would not be surprising.  The month of April typically sees gains of about 1.2% for the broad markets. April is typically the best month of the year for OTC (over-the-counter stocks).

The first couple days of a month tends to experience new money inflows which creates market buoyancy.  Markets are closed for the Good Friday holiday 4/6/12. Markets are typically bullish the two days in front of a three-day holiday weekend which would be Wednesday and Thursday, 4/4/12 and 4/5/12.  Markets are typically up on the Monday of OpEx week, 4/16/12, and up from Tuesday into Wednesday during OpEx week which is 4/17/12 into 4/18/12. The third week in April is typically the best week for stocks during Q2 (perhaps the market selling occurs due to tax deadline day of 4/15/12 with market buying occurring after tax day passes). Markets will typically move the opposite direction on 4/23/12 as compared to the direction on OpEx Friday. OpEx Friday tends to be an up day.  The FOMC two-day meeting is 4/24/12 and 4/25/12 including a press conference by Chairman Bernanke. The Fed has to announce the plan for Operation Twist since it expires in June. The Fed tries to avoid the political season so the next two meetings are very important for policy decisions whereas from July forward the Fed may be hesitant to act to avoid appearing political.

Homebuilders tend to be weak in April. Small caps typically do well in April-May. Tax refund checks tend to help consumer spending. Markets tend to move down in front of the tax deadline since fat checks to Uncle Sam must be written. The tax day of 4/15/12 is a Sunday so the due day extends to Monday, 4/16/12 this year, thus, the potential for market weakness exists for the first half of the month.  Beef tends to rally from the first of the year into mid-April so TSN and HRL are viewed as potential shorts. There is typically a large biotech conference during April so this may supply some additional go juice for the biotech sector, although, considering the large run-up the last few months, perhaps the conference may serve as a top marker.

On the esoteric side, markets are typically up moving into a full moon (4/6/12) and down into a new moon (4/21/12). Two Bradley turn dates occur during April; on Wednesday, 4/11/12, and then on Monday, 4/23/12, so watch for market turns to occur on or near these dates.