Next Area for Concern for Current Rally Is Just after Mid-May
Historically, the next area of potential concern for the current rally is just after mid-May.
As of yesterday’s close, DJIA was up 10.5% year-to-date. S&P 500 was up 10.1% and NASDAQ was at 7.0%. Compared to average post-election year historical performance since 1950 graphed in the charts above and below, DJIA, S&P 500 and NASDAQ are all still comfortably above past post-election year average performance for this point of the year.
Due to Covid-19, 2021 so far has been more volatile than the average post-election year. Aside from larger magnitude swings in performance, we have observed the return of seasonality with choppiness in February and weakness in March following monthly options expiration. Strength this April is also aligning with historical in post-election year April strength.
Historically, the next area of potential concern for the current rally is just after mid-May. This is also right around the time Q1 earnings season is beginning to wrap and focus shifts to Q2 estimates, graduations, and other early summer activities.