April Fools?

March 31, 2006 · Print This Article

Another trade proved successful in our ETF extremes strategy. The proprieray model we created has really worked well so far this year with 5 winners and no losing trades. Hopefully, we can contiue to have good fortune in our portfolios. So far we are up 26.6% in our Gap Fade strategy and 16.5% in our ETF Extremes strategy. Not a bad first quarter.

Fundamentally, rising interest rates and energy prices were to blame for most of the problems past week. Technically, the bulls were working against a seasonally bearish timeframe (last week in March) as well as several other key technical factors. Surprisingly, the market has held up nicely in the face of some fairly bearish news over the last few weeks. April is historically the fourth best performing month with an average return of 1.25%. The historical performance of May and June are substantially lower at 0.16% and 0.17%, respectively. After a nice run for the bulls in the first quarter could we possibly see the old Wall Street adage “sell in May and go away”? If April happens to live up to its historical billing of being bullish, I think the old adage has a wonderful chance of ringing true this year. I just can’t see the market continuing to advance at its current pace.