The Bottom Line
Optimal opportunities to introduce new equity and ETF positions with favourable seasonal characteristics have now passed. Exceptions exist (e.g. the biotech sector). However, additional intermediate upside potential remains in most markets and sectors until at least the beginning of May and perhaps longer. Stick with favoured equity and ETF positions for now.
The month of April historically has been one of the strongest months for equity market performance on both sides of the border. Strength during the past 10 years has been notable in the first half of the month. Investors anticipate good news when first quarter earnings reports are released (usually at annual meetings). Look for a record number of dividend increases and share buy back programs to be announced when first quarter earnings reports are released.
Jeffrey Hirsch, chief of the Stock Trader’s Almanac offers a slightly different perspective on seasonality based on studies over the past 50 years. Over the weekend he released a comment on www.marketwatch.com that summarizes his expectations. The comment is entitled, “April strength makes for a great market exit”. Following is a link to his report HERE
Economic and earning news is not expected to have a significant impact on equity markets this week.
Short and intermediate technical indicators currently are overbought, but have yet to show signs of rolling over. Recent breakouts by key North American equity market indices and sector indices are attracting more cash from the sidelines.
International events are unlikely to help equity markets this week. Indeed, the news became worse over the weekend: Nuclear waste continues to spill into the ocean in Japan, Gadhaffi rejected a truce offer and Spain’s prime minister confirmed that he would not seek re-election next year.
…..read much more and view 50 charts HERE