The month of March was a boomer. The media has been rife with
commentary on the
“biggest comeback in
history.” However, a strong reflex rally, as we saw, is
not uncommon during
“bear market” cycles,
as short-covering fueled rallies spark sharp price increases The
problem is the sustainability of the push higher. So, as we leave
March behind and enter into the second quarter of the year there
are several things that we need to focus on:
Seasonal adjustments, which
have given a massive boost to recent economic
reportsdue to the unseasonably
warm winter cycle, will begin to revert as
temperatures realign with more normal seasonal patterns.
While earnings estimates
have been dropped markedly to allow companies to play the“beat the
estimate” game, profits and
revenues will likely show a sharper contraction that currently
expected which will push current valuations higher.
April winds up the
seasonally strong time of the year and summer months
tend to be weak particularly prior to Presidential elections.
Let’s take a look at the
statistics of April performance and particularly when it follows a
March gain.
First, if we look at the month of April going back to 1960 we find
that there is a bias for the month to end positively 66% of the
time. In other words, 2 out of every 3 April months finished in
positive territory which is why it is included in the seasonally
strong period of the entire year.
APRIL AFTER A MARCH GAIN
Posted by sbaxman111 on 6th of Apr 2016 at 01:26 am
APRIL STATS FOLLOWING MARCH GAIN
The month of March was a boomer. The media has been rife with commentary on the “biggest comeback in history.” However, a strong reflex rally, as we saw, is not uncommon during “bear market” cycles, as short-covering fueled rallies spark sharp price increases The problem is the sustainability of the push higher. So, as we leave March behind and enter into the second quarter of the year there are several things that we need to focus on:
Let’s take a look at the statistics of April performance and particularly when it follows a March gain.
First, if we look at the month of April going back to 1960 we find that there is a bias for the month to end positively 66% of the time. In other words, 2 out of every 3 April months finished in positive territory which is why it is included in the seasonally strong period of the entire year.
Unfortunately, the declines in losing months have wiped out the gains in the positive months leaving the average return for April almost a draw (+.01%)
However, a look at daily price movements during the month, on average, reveal the 5th through the 10 th trading days of the month are the weakest followed by the end of the month. It is during this middle part of the month that either the market holds support begins a deeper corrective action.
Importantly, going back to 1957, it should not be a foregone conclusion that April will end in positive territory. While the statistical odds currently favor such a scenario, it does not mean it will be the case. If we look at April performance following a March gain, a slightly different picture emerges.
April has had a positive performance 26 times following a March gain, but lost 18 times. In other words, the risk of a negative April rises to 41% when the preceding month was positive.
Thanks for the info sbaxman111. Where does this come from?
Posted by bobbob on 6th of Apr 2016 at 08:37 am
Lance Roberts
Posted by sbaxman111 on 6th of Apr 2016 at 09:38 am
Lance Roberts
Thanks
Posted by bobbob on 6th of Apr 2016 at 10:45 am
wll
Posted by benny1953 on 6th of Apr 2016 at 10:12 am
WLL triggered very nicely Thanks for the Trade Idea guys
Well done benny
Posted by steve on 6th of Apr 2016 at 10:26 am
Well done benny