Keystone's April Seasonality for Trading Markets

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." Tech and biotech sectors receive the largest gains in Q4. The broad indexes typically gain about +1.2% for the month of April. 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. April 1 is typically an up day about 70% of the time and was again this year. Markets are typically up on the Monday of OpEx week, 4/14/14, and up from Tuesday into Wednesday during OpEx week which is 4/15/14 into 4/16/14. The third week in April is typically the best week for stocks during Q2. Traders sell stock in early April to pay Uncle Sam's tax bill but typically rebound after the tax deadline day on 4/15/14 passes; so the potential for market weakness exists for the first couple weeks of the month with a recovery during OpEx week heading into the Easter holiday. The FOMC two-day meeting is 4/29/14 and 4/30/14.

Home builders tend to be weak in April. Small caps typically do well in April-May. Beef tends to rally from the first of the year into mid-April so TSN and HRL are viewed as potential shorts. Right on cue, both stocks peak four days ago and begin selling off. There is typically a large biotech conference during April so this may supply go juice for the biotech sector which has been beaten down in recent weeks.

On the esoteric side, markets are typically down moving through the new moon which was 3/30/14 but markets rallied instead this month. The next new moon is 4/28/14 during the last week of the month so market weakness may appear 4/25/14 through 4/29/14. Markets are typically bullish moving through the full moon on 4/15/14 which bolsters the idea of market weakness in the first half of the month then a recovery after tax day. A Bradley turn occurs 4/6/14 and another on 4/27/14. Market trend changes or acceleration moves in the existing direction typically occur at these dates give or take a few days. Bradley turns do not predict direction only that a trend change is likely. Considering the big sell off on Friday, 4/4/14, the Bradley trend change may be down but the early week needs to play out this week to confirm the potential move lower.

Markets are closed for Good Friday on 4/18/14. Easter Sunday is 4/20/14. Markets tend to be bullish moving into a three-day holiday weekend so markets may target bullishness from 4/15/14 through 4/17/14. The EOM is Wednesday, 4/30/14. AA kicks off Q1 earnings season on Tuesday, 4/8/14.