April and the Market
Brian Trumbore
President/Editor, StocksandNews.com

Since 1950, April has been the best month for equities, as measured by the Dow Jones, up 1.9%, while it is number three in S&P 500 terms, up 1.4% on average.

In the last 59 years, April has been up 37 times and down 22 in the Dow, while up 40 and down 19 for the S&P.

Either way, April has been followed by miserable Mays and Junes over the same period;  up just 0.3% and 0.2%, respectively, for the S&P, and up 0.1% and down 0.1% for the Dow Jones.

As you know, April marks the end of the “best six month strategy,” November thru April, with an average gain of 7.6% for the Dow Jones since 1950, while May thru October yielded only an average gain of 0.6% thru April 2008, meaning when you add in May 2008 thru October 2008, the number, 1950-2008, turns significantly into the red, overall, because the market was off about 30% during that period.

April has been volatile.  Returns since 1997 as measured by the S&P 500.

1997…+5.8%
1998…+0.9%
1999…+3.8%
2000…-3.1%
2001…+7.7%
2002…-6.1%
2003…+8.0%
2004…-1.7%
2005…-2.0%
2006…+1.2%
2007…+4.3%
2008…+4.8%

Nasdaq, incidentally, is a totally different game.  For the period January 1971 (introduction of the index) to April 2008, April is tied for 4th best, up 1.2%.  November thru January yield spectacular returns on balance…+1.9%, +1.9% and +3.3%.  And May and June aren’t nearly as poor, +1.1% and +1.2%, respectively, as opposed to the performance for the Dow and S&P.

And in terms of volatility, the tech-heavy Nasdaq (sorry for the cliché) is about twice that of the S&P.  For example, Nasdaq was +11.1% in 1997, and +9.0% in 2003, but off 11.9% in 2000 and 6.2% in 2006.

Source: 2009 Stock Trader’s Almanac, edited by Jeffrey A. Hirsch & Yale Hirsch

Brian Trumbore