Seasonal Odds For The Month Of April
- Posted by Frank Zorrilla
- on March 31st, 2014
The month of April is the best month for the SP500 based on percentage change for the month with an average monthly percent change of +2.09% since 1993. The month of April is only second to the month of December when it comes to average percent positive since 1993 with 71.43% of the April’s closing positive. Similar outcomes is also the case with the $IWN (Russell 2k value index), $DIA, $MDY, and the $IWM as you can see from the chart below.
The only rule when one follows seasonality blindly is to buy the underlying instrument at 9:30am the first day of the trading month and sell it at the close the last day of trading. Now that we have 2x and 3x ETF’S it makes this strategy even more worth while when it works. Using technicals can also help if you are able to pin point a safe entry point as oppose to buying an index blindly up 5 days in a row–hypothetically. You can also get a little more sophisticated with sites like marketmemory that show you the most dominant pattern of this seasonality in the last few years. As you can see in the chart below since 2009 it has been best to buy the $SPY on the 10th trading day of the month.
The Dow Jones over the last 5 years has shown a similar pattern to the $SPY, some downside action at the beginning of the month and a bottom at around the 10th day of the month. There are many different ways to skin this cat; one can allocate a certain amount on the first day of the month, and allocate more based on the most dominant pattern of the last 5 years which is to buy on the 10th trading day.
On our next post we will look at some of the stocks within the SP500 which have shown strong performance in the month of April.
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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Frank Zorrilla is the founder and chief investment officer of Zor Capital LLC.He began his Wall Street career 10 days after his 20th birthday when he became a Series 7 licensed stock broker. More »
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