FLASH INTRADAY: Since 1945, 2 positive consecutive closes 3/31 to 4/1 portends stronger than normal April gains vs other years, +2.4% vs +1.3%
REMINDER: We are not publishing a COVID-19 BLAST tomorrow, because Friday is a market holiday
STRATEGY: Since 1945, 2 positive consecutive closes 3/31 to 4/1 portends stronger than normal April gains vs other years, +2.4% vs +1.3%
For the past few weeks, the S&P 500 has been choppy, as a few transitory factors roiled investor confidence and markets:
- rate-mageddon (known issue)
- quad-witching (known headwind)
- massive leverage unwind by 6 prime brokers (past week)
As these headwinds faded, earlier this week, we postulated that a "face ripper" rally could happen. And the S&P 500 has managed to produce gains for the past 2 consecutive days, 3 consecutive days for small-caps:
Russell
S&P 500 2000
- 3/30 -0.1% +1.7%
- 3/31 +0.4% +1.1%
- 4/1 +0.7% +0.9%
Since 1945, this portends stronger than usual gains for April. As many are aware, April is seasonally the strongest month of the year. There is a great chart by Ryan Detrick of LPL Financial that shows this data.
And as shown below, when 3/31 and 4/1 are both positive price dates, the follow-through for the rest of April is very good.
- 2 consecutive positive --> +2.4% gains 4/2 to month-end
- not the case --> +1.3%
So you can see, even as April is seasonally strong, gains are even stronger if we are positive both on 3/31 and on 4/1. That is the case today.
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