EB Monthly Seasonality Report - April 2023
A Look Back At March Stocks:
One month ago, we provided a list of the Top 20 stocks that had strong historical track records during the month of March. Here are how they performed in March 2023 (through the March 31st close):
The percentages represent the returns from the February 28th close to the March 31st close. The average performance of +1.51% was well below the S&P 500 performance (+3.71%), and especially the NASDAQ, which gained 9.49%. Our Top 20 Seasonality stocks had a decent month, but the financial stocks on our list had a particularly difficult month, limiting overall returns.
LULU benefited from a very strong quarterly earnings report. Volume was off the charts and the huge gap higher neared the December high, but fell just shy:
Since LULU reported its quarterly results, it's struggled to clear resistance, but it certainly hasn't lost support either. Ultimately, clearing the 387-390 level is what the bulls will be looking for.
S&P 500 April Performance
Here's a breakdown of the annualized performance of the S&P 500 (since 1950) during the month of April:
- April 1-18: +31.47%
- April 19-24: -8.53%
- April 25-30: +10.02%
April is a very bullish month, but most of its strength is typically felt in the 2-3 weeks leading up to earnings. April has gained ground 52 of 73 years since 1950 - more than any other month other than December. Also, April's annualized return since 1950 is +18.08% and ranks 3rd among all calendar months in terms of annualized return.
Sector Performance
Before we look at individual stocks, let's get an overview of how the various sectors and industries have performed during April (and May) over the past decade (during this secular bull market):
Sector Heat Map:
The numbers reflect how much a sector, on average, outperforms or underperforms the S&P 500 over the past 10 years. The dark green-shaded areas show significant outperformance (1.0 or greater). The light green-shaded areas show solid outperformance (from 0.5 to 1.0). The yellow-shaded areas show underperformance (-0.5 to -1.0). The red-shaded areas show significant underperformance (-1.0 or greater). Where there is no shading, there tends to be more neutral performance (-0.4 to 0.4).
Leadership in April has tended to come from energy (XLE). Here's what the XLE looks like as we enter April:
The XLE has held its uptrend line and still looks poised to resume its earlier trend higher. The lows from July and September 2022, along with the low earlier in March, have formed a very nice uptrend line.
Industry Performance
Let's take a look at the industry heat map within energy (XLE) to drill down to the best seasonal strength in April and May over the past decade among the various industry groups (relative to the S&P 500):
Energy (XLE):
The strength in energy has been seen across all five of its industry groups in April, so I wouldn't be surprised to see the late-March rally in energy carry right through April.
Here are industry groups (within sectors other than energy) that tend to perform much better than the benchmark S&P 500 during April:
Technology (XLK):
- renewable energy, software
Consumer Discretionary (XLY):
- broadline retailers, automobiles, home improvement retailers, restaurants & bars, hotels
Communication Services (XLC):
- none
Industrials (XLI):
- marine transportation, railroads
Financials (XLF):
- specialty finance, life insurance, consumer finance, full line insurance
Health care (XLV):
- none
Consumer staples (XLP):
- distillers & vintners
Real Estate (XLRE):
- none
Utilities (XLU):
- none
Materials (XLB):
- nonferrous metals, gold mining, mining, aluminum, specialty chemicals, commodity chemicals
Stocks for April
We've selected our Top 20 seasonal stocks for April. Several names represent sectors and industry groups that have been discussed above. Others simply stand out in April based on their own historical track record.
The stocks this month are as follows:
A "Seasonality - April 2023" ChartList (annotated with 1 or 2 support levels to watch) has been created and will be available for viewing/download on our website tomorrow. You must be a StockCharts.com Extra or Pro member to download our ChartLists. Basic members and non-StockCharts.com members can view the charts one at a time.
Happy trading!
Tom