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Friday, April 1, 2022

Will April’s winning streak for stocks continue?

After the worst quarter of the S&P 500 since 2020, the stocks went into what had been the best months to generate a return.



Whether that catches up this year, however, depends on how traders measure a series of risks in perspective.


The good news is that April's record is incredibly strong. Since 1950, the fourth month of the year has been the best month for stock averages, according to an analysis.

More recently, the S&P 500 has been green in April for the past 16 years, with a return rate of 3.1% (high return 12.7% return in April 2020, and low down 0.7% dip. April 2012.).


Another warning to the trend has been that by mid-year (as of 2022), April ranked the seventh month of the S&P 500 with a slightly positive return. But this year.


The S&P 500 closed up to 4,170.70 this year on March 8, down 13% on the latest high-level index record of 4,796.56 since Jan. 3. Since the end of Thursday, the S&P 500 has returned to 4,530.41, jumping in March 8.6% from its 8.6% low and returning the index just below 6% below its January high.


But for some strategists, it is because of this already powerful gain that stocks may have little space left to operate in the near future. And that is especially true as geopolitical risks remain an important point of uncertainty for investors.


The S&P 500 "is likely to continue in the next 10 days only if there is a near-term solution to the Russia-Ukraine crisis," 


Continuing to show the level of the latest program, Colas noted that the S&P 500 has already risen sharply since March 7 - the day when the CBOE Volatility Index (^ VIX), or "fear gauge," reached 36. That 36 Level is important because the two common deviations from the long-term index average and thus, the opposite “buy” signal for investors looking to buy on dips. Since 1990, the S&P 500 tends to return an average of 2.5% per month after VIX reached 36. But so far since March 7, the S&P 500 has already risen 7.8%.


Some strategists have also expressed great caution on stock in the near future, even entering the strongest month of the season.


"We are a little skeptical of the meeting we have seen so far," Stuart Kaiser, head of UBS equity derivatives research. and Fed reform policy. And then, apparently, he puts on this Ukrainian situation. ”


"It was a very serious meeting, but it happened at low volumes," he added. “And learning about institutional investment is very easy. So it looks like the rally has never been supported by a lot of people. “


And in response to the question of what could postpone the April meeting, Kaiser cited two key risks: oil prices and the Federal Reserve.


"The rapid rise in oil prices could be the first risk," “Then I think in the next second it would be a market price for how many prices we will get from the Fed. There’s a story here that if we get 50 points in May, that goes further and your walking value will be the same. But if we could start making prices, I think, a further increase in the future, that would be a second thing. ”


And, in spite of all these factors, April will also mark the start of the first quarter earnings reporting season, which many on Wall Street believe will show a slower growth rate of business profits from the fourth quarter of 2020 (although encouraging, rates have been high throughout.


So in the end, we will see if the seasonal force is effective against this year’s uncertain state of the world and the economy.

What to watch today

Economy