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For Stocks, April Is The Least Cruel Month

Tyler Durden's picture




 

Both the entire month of March, and its last full week, particularly for biotech investors and especially hedge funds, is a time that many would rather forget and continue pretending that the saying "as January goes, so goes the year" is no longer applicable. Luckily, for all those bulls who have forgotten that in a normal market there is both return and risk, at least in pre-New Normal times, there may be some good news. As Bank of America's chief technician MacNeil Curry reminds us, April is the least cruel month for stocks, posting the highest monthly average return since 1950, returning just over 2.0%.

From Curry, whose latest track record in market calls has hardly been successful:

We believe NOW ITS TIME TO DO AN ABOUT FACE and turn bullish risk assets for the next several weeks. From both a price and seasonal perspective, evidence says that the consolidation in the S&P500 is nearing completion and the larger bull trend is about to resume. Treasury yields should also participate as the week long consolidation in 5yr yields is drawing to a close.

That said, even the BofA analysts is starting to hedge quite aggressively: "Bigger picture, we are growing concerned that this equity rally is VERY mature and that US Treasury Vol is setting up for a significant breakout. But, to be clear, those are bigger picture concerns and NOT FOR THE HERE AND NOW."

Maybe. Maybe not. Either way, here is what the historical data says.

April is the strongest month of the year for the S&P500. Since 1950 it has averaged OVER 2.00% for the month with the 3rd highest monthly probability of an advance at 64%

 

Of course, such Old Normal historical patterns are, as the name implies, not part of the New Normal. Because nowhere in the past 64 years of chart data did the market have to deal with an unprecedented increase in the reduction (yes, second derivatives) of the growth of the Fed's balance sheet. And never before has the entire global economy's massive carry trade driven purely by several trillion in central bank liquidity injections been on the verge of unwinding, which as we have seen on two occasions already, had very adverse and dramatic consequences for the world's emerging markets.

So while one should prepare to hear a litany of how April is historically the best month for stocks ahead of the just as infamous "Sell in May and go away" which has not been the case for the past 4 years, the reality is that this historic patterns such as this, or any others, have zero bearing on the current experiment in "confidence boosting" central planning. In other words, the only thing that continues to "matter" for risk, is what the Chairwoman may have had for dinner.

 

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Sun, 03/30/2014 - 17:26 | 4608494 disabledvet
disabledvet's picture

I think I'll wait for "Putins Move" first.

"Then we'll know if we're in a crisis" since that will be the word that all the newspapers will start using.

Sun, 03/30/2014 - 17:29 | 4608501 buzzsaw99
buzzsaw99's picture

Pity the chair.

Sun, 03/30/2014 - 17:31 | 4608508 Sudden Debt
Sudden Debt's picture

Wonder what the 60 minutes show will show about the stockmarket manipulation through HFT

Sun, 03/30/2014 - 18:01 | 4608569 ebworthen
ebworthen's picture

Rogue traders, devious unpatriotic individuals; certainly not a coordinated fleecing of the American populace by Wall Street.

But, we can hope and dream I suppose.

Sun, 03/30/2014 - 20:02 | 4608887 mummster
mummster's picture

I wonder also but in the Caribbean, the signal was strangely lost right after the  end of the basketball game.

Sun, 03/30/2014 - 21:36 | 4609158 Clockwork Orange
Clockwork Orange's picture

Goldman Sachs wants to invest in the new exchange.  That's all you need to know.

Sun, 03/30/2014 - 17:34 | 4608518 yogibear
yogibear's picture

It seems like everyone is counting on a very bullish April. So far it's going as planned.

Sun, 03/30/2014 - 17:46 | 4608534 adr
adr's picture

Yes just because it is a certain month means that the market will go up. 

Like saying that nobody in my family has ever died on a tuesday, so there is no possible way I can die on a Tuesday. So I drive that car right off the cliff expecting something is going to save me.

Sun, 03/30/2014 - 17:59 | 4608563 ebworthen
ebworthen's picture

BTFATH!

Stocks going up is not good news; it means wages and employment are going down while income disparity and the bleeding to death of the middle class are going up.

C'mon Janet, taper to zero QE and put the prime rate at 6%, I dare you to do the right thing.

Sun, 03/30/2014 - 22:59 | 4609390 TruthTalker
TruthTalker's picture

If only but she will never do it - she believes in money priting and she will not allow the market to fall - the only thing they can point to to say see, everything is just fine!

Sun, 03/30/2014 - 18:01 | 4608572 DOGGONE
DOGGONE's picture

This April, will "The Public Be Suckered" be made well-apparent to the people?!
http://patrick.net/forum/?p=1230886
or not

Sun, 03/30/2014 - 18:20 | 4608628 derek_vineyard
derek_vineyard's picture

the only risk is the risk of missing out

Sun, 03/30/2014 - 18:54 | 4608686 TheRideNeverEnds
TheRideNeverEnds's picture

Those numbers are wrong, the probability of us closing April higher is 100%, 1900+ is a given.  

 

Buy the dip now because soon you will be back to buying the fucking all time highs again.

Sun, 03/30/2014 - 18:44 | 4608687 ben_bernanke
ben_bernanke's picture

"Of course, such Old Normal historical patterns are, as the name implies, not part of the New Normal. Because nowhere in the past 64 years of chart data did the market have to deal with an unprecedented increase in the reduction (yes, second derivatives) of the growth of the Fed's balance sheet."

Anyone who claims this website is not bearish and has not been bearish since...well, forever...better re-read that line again. That is a BEARISH tone. Even when this website promotes a long position like BTFATH, it is said with sarcasm. This website has perpetually been wrong about the tone of the market and the direction of the market for at least five years. Yet, people are still addicted to con-doomerism. The bull market has years and years left to go, for sure.

Oh, nice gap up in the futures. Not mentioned by Tyler. Big surprise.

Sun, 03/30/2014 - 21:29 | 4609146 toys for tits
toys for tits's picture

Ben, you continued Greenspan's second bubble.

Why should we believe you now?

Sun, 03/30/2014 - 19:16 | 4608760 Goldilocks
Goldilocks's picture

Heart - These Dreams
http://www.youtube.com/watch?v=41P8UxneDJE (3:48)

Sun, 03/30/2014 - 19:28 | 4608799 Remington IV
Remington IV's picture

I'd better go 100% cash then

Sun, 03/30/2014 - 20:26 | 4608963 dragoneyes74
dragoneyes74's picture

This week has the potential to be the exhaustion selling bottom for gold and silver.  Thursday's Draghi day is one possiblity for that to happen.  If he remains tight and the Euro breaks to new highs, it opens the door for a sustained bullish run in the metals.  But I'm not ignoring the fact that the recent weakness is more than it should have been.  I'm looking for an obvious reversal day where gold is down $20 and gets bought up all day and closes up $20.  At the very least we'll get a bounce soon.  Whether this is the bottom for a sustained run will likely depend on the reaction of the dollar to ECB and NFP.  

The NQ acted how I expected the last couple weeks, but the ES and YM stayed strong as bull.  I guess you can attribute that to the more extreme NQ positioning compared to the other two.  I was thinking the NQ would bottom around 3480/3500 and then make one last spring run.  I think the best case scenario for the NQ bulls is a double top.  But that means it's possible the ES and YM could make temporary new highs because they didn't selloff to the same degree.  Obviously, the reaction to ECB day and NFP day will be very interesting, but the biggest day might be Tuesday April 8th when the BOJ meets.  If they double down on their insanity, or disappoint, it could be the decider of whether we get this last spring run or not.  It certainly makes sense it could happen, but you can't ignore the seemingly increasing number of buyers turning sellers.  The time is ticking.  This bull has a leash.    

There's been aggressive selling at every approach of the highs this year, we've gone green to red more times than I can count, the Nasdaq leaders are bleeding out back, the Fed is tapering, there's potential trouble brewing with Russia, China makes our bubble look like child's play, Japan has an unsolvable debt/demographic problem, nothing is fixed in Europe, our labor participation rate is at 40 year lows, and the US has a 17.5 Trillion dollar debt with deficits for as far as the eye can see, not to mention an unrecoverable loss of jobs overseas.  I think the belief that we've entered a secular bull market is delusional.  When you have a bullish bias you always think the market will go higher than it does.  When you have a bearish bias you always think the market will go lower than it does.  To whatever degree it's possible, the challenge is to maintain a neutral mind and view the price action from the perspective of how both the bears and the bulls are perceiving it, and not ignore when the market acts in a way that it shouldn't have.

Sun, 03/30/2014 - 20:30 | 4608977 Son of Captain Nemo
Son of Captain Nemo's picture

Here Spring this....

The DOW hits an all-time record on April 27, 2014 closing the day at 18,052 and the S&P at 1,995... 

Oh wait a minute this just in....  Blank Screens

 

Sun, 03/30/2014 - 22:31 | 4609321 teslaberry
teslaberry's picture

april fools bitchez. from who else? zero hedge.

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