JTH

Greetings

April 2024 was a stinker. Compared with the previous 63, this April 2024 ranked as 5th worst of 64 with a -4.16% loss. It was a tough month with 13 of 22 trading days closing down, and every MTD session closed in the red.

Adding to this, our 110 sessions above the 50 day simple moving average (the 3rd best over 21 years) was breached with our last 12 sessions closing below this (closely watched) SMA.

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Still, while it was a very bad month, we had just previously closed out a 5-month win streak, and 2024’s 1st Quarter 10.16% gain was an impressive start to the year.

As for projections, this is where it gets tricky, please keep in mind this is Year-to-date data (not monthly). From the previous 63 years, only 1 year had both a positive Jan/Feb/Mar YTD and a negative April YTD. That year was 2004, which closed with a 8.99% gain.

Perhaps more concerning, in the 24 years where the month of April closed down YTD, the year closed down 15 times, giving us a 37.5% yearly win ratio. As a stark contrast, of the 39 times April closed positive YTD, the year closed positive 37 times.

On a lighter note, we are still above the 63-year YTD average

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If we break down the month of May into 21-year increments, we can see the win ratios progressively get stronger as we advance forward. We do have a low 47% win ratio (when the month of April closed down) but this is limited to 17 of 63 years. We also have the 4th year of the Presidential cycle with a 87% win ratio, but this is also limited to only 15 of 63 years.

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For ranking the Month of May with the other 11 months, it’s a clear underperformer over the past 63 years:

It ranks 6 of 12 with a 60% win ratio
12 of 12 for the worst average-of-gains at 2.50%
9 of 12 with a meager .12% average monthly gain
5 of 12 for the 5th worst average-of-losses at -3.50%

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Note: From 1961 to 2023, 3 of the 6 worst months of May have been in the past 14 years.

Here’s our May averages across the past 63 years correlated with May 2024. From a historical perspective, a seller may want to protect their gains above SPX 5162 while a buyer may want to (with caution) increase their allocations below SPX 4861.

SPX 4861 is a red flag. At this level we will have both already pierced the January low and will have retraced more than 50% of the Oct-2023 to Mar-2024 Fibonacci range.

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For myself, I’ll watch for a breach (and get concerned) if we close below April’s 4953 intra-low (which is also lower than the March intra-low). Setting this aside, with a great deal of bad news potentially baked in, I’m looking for the month to close higher, but will also cautiously buy more if we go lower.

Thanks for reading, take care...Jason