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 over 10% this year (last year up about 10-12% at this time as well), who would blame traders for taking profits and running away before May? Tech and biotech sectors receive the largest gains in Q4. Tech is running out of gas and biotech appears to be topping in Q2. 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 typically up on the Monday of OpEx week, 4/15/12, and up from Tuesday into Wednesday during OpEx week which is 4/16/12 into 4/17/12. 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).  The FOMC two-day meeting is 4/30/12 and 5/1/12.

Home builders tend to be weak in April. This is interesting since the home building stocks are all at lofty heights. Small caps typically do well in April-May but they have already ran strong in Q1. Tax refund checks tend to help consumer spending. Markets tend to move down in front of the tax deadline 4/15/13 since fat checks to Uncle Sam must be written. The tax day of 4/15/12 is a Monday, so the potential for market weakness exists for the first couple weeks of the month with a recovery during OpEx week. 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 for biotech.

On the esoteric side, markets are typically up moving through the full moon on 4/25/13 and down moving through the new moon on 4/10/13, which bolsters the idea of market weakness in the first half of the month then a recovery in the back half.