When Will the April Bullish Seasonality Show Up?

Hard to believe it, but April is nearly half over already. As we noted at the start of the month, April is historically one of the strongest months for the S&P 500. In fact, over the past 10 years it has been the strongest month on average, and the past 20 years it has been the second strongest month.
04-14-16 blog fig1_1

As of last night, the S&P 500 was up 1.1% for the month of April. Given it has averaged 2.7% over the past 10 years and 2.1% the past 20 years, it is potentially on pace for another solid year. Now here’s where things get very interesting. As strong as April has been in recent memory, the majority of the gains tend to happen the second half of this historically strong month.

Looking at the past 20 Aprils, the average April tends to bottom on April 14 and then rally for the remainder of the month. Looking at the numbers, the S&P 500 is up only 0.1% as of April 14 on average, but that moves to 2.1% by the end of the month. In simple terms, nearly all of April’s gains over the past 20 years have taken place in the second half of the month.
04-14-16 blog fig2_1

The chart below shows the average April going back to 1950. It looks a little different, as the latter part of the month is more of a sideways pattern, coming after a strong move in the first three weeks.
04-14-16 blog fig3_1

In conclusion, April has been strong lately, particularly in the second half of the month. Why could this be? The easiest answer is the second half of April is first quarter earnings season. If earnings season can impress again (yesterday was a good start from the bank stocks), this rally might just continue.

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