Seasonal Strategies

S&P 500 Up Over 10% First Four Months – Preceded Flat May to late-October

As of yesterday’s close, S&P 500 was up 11.5% year-to-date. Provided these gains hold through the end of April, this year will be just the seventeenth time since 1950 that the S&P 500 has finished the first four months of the year with a gain exceeding 10%. The best January to April span occurred in 1975, up 27.3% (S&P 500 was in the early stages of a new bull market following the bear ending 10/3/1974 in which the S&P 500 declined 48.2%). The next best year was, 1987 (most will remember what happened later that year) and the most recent year was 2019 (a solid year from beginning to end).

In the above chart we have plotted all 17 previous years in which the S&P 500 was up over 10% January through the end of April. Along side for comparison is “All Years,” “Post-Election Years,” and 2021 through yesterday. In the previous 17 years, gains tended to fizzle in early-May before gaining some additional ground from around mid-June to mid-July before once again stalling out till late September with more weakness lasting until late-October. On average, by late-October arrived, gains from the previous three months were given back and since the start of May S&P 500 gained around 2.5% on average. You don’t have to go away in May but considering the historically modest gains from early-May to late-October, it may not quite be worth sticking around.

S&P 500 Seasonal Pattern Chart: Big Starts through April