The stock market is off to a flying start in 2017. We have a buy signal from the January Barometer, the 40-Week Cycle just turned bullish and most of the major U.S. indexes soaring to new all-time highs. See Figure 1.
Figure 1 – Major U.S. Average hitting new highs
(See also This May Be a Good Time to Get Crude)
With the turn of the month near, what lies ahead for March and April? Well, it’s the stock market, so of course no one really knows for sure. Still, if history is an accurate guide (and unfortunately it isn’t always – and I hate that part), the odds for a continuation of the advance in the months just ahead may be pretty good.
Figure 2 displays the growth of $1,000 invested in the Dow Jones Industrials Average ONLY during the months of March and April starting in 1946.
Figure 2 – Growth of $1,000 invested in the Dow Jones Industrials Average ONLY during the months of March and April (1946-2016)
(See also It’s Bean a Very Good Time of Year (Typically))
For the record, the months of March and April combined:
*Showed a gain 53 times (75% of the time)
*Showed a loss 18 times (25% of the time)
*The average UP year showed a gain of +5.2%
*The average DOWN year showed a loss of (-3.3%)
*The largest Mar/Apr gain was +15.9% (1999)
*The largest Mar/Apr loss was (-6.0%) (1962)
Summary
So is the stock market train sure to “roll on” during the March/April timeframe? Not at all. But with “all systems Go” at the moment and with a historically favorable period approaching – and despite a lot of overly bullish sentiment beginning to bubble up – I feel compelled to stay on board at least until the next stop..
Jay Kaeppel
Disclaimer: The data presented herein were obtained from various third-party sources. While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information. The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.
All good stuff. I wonder what the March/April track record looks like for those historical years when Jan and Feb were robust. I can’t see the year keeping up with this furious pace, and if March ends up taking a breather, that could be healthy for the market.