As the saying goes, “April showers bring May flowers.” But that begs the question: Will it rain on the bulls this April?
First things first, the S&P 500 Index found support right on its upward trending 200-day moving average. That’s a step in the right direction for markets looking to form some type of bottom.
But bottoms don’t form overnight, and they can be a frustrating process. In fact, in August 2015 (the last time we saw volatility similar to the recent action), the ultimate low took nearly six months to form.
However, there may be some good news. April is a month that rarely sees a large dip. In fact, according to Ryan Detrick, Senior Market Strategist, “April has only showered gains lately, as the S&P 500 has posted positive returns in 9 of the past 10 years”.
As we described in this Weekly Market Commentary, we believe that positive U.S. economic growth and strong earnings should outweigh trade policy and midterm election concerns. In the end, we still expect double-digit S&P 500 returns in 2018 with cyclicals outperforming defensive, value outperforming growth, and small caps outperforming large caps.
The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The 200-day moving average (MA) is a popular technical indicator which investors use to analyze price trends. It is the security or index’s average closing price over the last 200 days.
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