Despite Monday's Retest, April Should be a Strong Month

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April 3, 2018 - by Louis Navellier

 

The S&P 500 has now retested its lows three times and bounced back, but NASDAQ had yet to test its February 8 lows - until yesterday. I know yesterday felt like a stomach-churning roller-coast ride, but all that's happening is that NASDAQ is retesting its February 8 low of 6,777. Several of the leading tech stocks are being hit hard, including most of the FAANG stocks, as well as the "driverless car" problem hitting Tesla and Nvidia (which I'll discuss later on). As a result, NASDAQ may continue to test its lows later this week, but many tech stocks are also set to post strong first-quarter earnings in the upcoming weeks. Until then, the market is not always liquid, so these "air pockets" can emerge. 

One encouraging point is that the market picked up in the last two hours on Monday - that's the opposite of the past two weeks, when the market tended to fall off sharply in the last two hours of the trading day. Yesterday, the Dow was down 750 points around 2:00 pm, but it rallied nearly 300 points in the last two hours.

Looking forward, April is seasonally a very strong month. According to Bespoke Investment Group, April is the strongest month over the last 50 years, with an average 2.04% gain. Over the last 20 years, April has done even better, averaging +2.39%, but in those years April ranks #2 to October, which averaged 2.49%. 

Looking backward, the first quarter was volatile but essentially flat, with the S&P 500 down 1.2% and NASDAQ up 1.0%, but April should look better. As trading volume perks up in April, I expect stocks to surge due to an onslaught of stunning first-quarter sales and earnings announcements, beginning soon!