April: Mostly sunny

March 31, 2016 09:00 AM

April has been the best performing month for the Dow Jones Industrial Average since 1950 and a strong month for U.S. equities in general according to the Stock Trader’s Almanac. The Dow’s average gain since 1950 has been 1.90%, with April 1999 the first ever 1,000-point gain month. 

The early part of the month tends to be very firm on upbeat corporate quarterly earnings report anticipation, and then top out some time after they are released. Hence the adage, “Sell in May and go away.” 

This year will test that theory as expectations for some sectors show diminished earnings due to weak global economic growth that might affect U.S. markets. There is also the challenging strength of the U.S. dollar for U.S. based multinationals.

While the Nasdaq’s track record since 1971 tends to lag the performance of the Dow and S&P 500, its April performance compares very well. While not quite as strong as the others, it is still significantly positive. 

Unfortunately, this is an election year, which tends to underperform. Which major party is going to take the White House? The market dislikes uncertainty and often it is not even clear who the respective nominees will be by April. And this year there is a pretty wide diversity of options.

About the Author

Alan Rohrbach is Lead Analyst and President of Rohr International, Inc.  He is an international equity index, interest rate and foreign exchange trend advisor. His forte is ‘macro-technical’ analysis of how fundamental influences blend with technical aspects to drive trend psychology. Clients include international banks, hedge funds, other portfolio managers and individual traders.