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Typical Midterm April Volatility

Yesterday we posted on April’s
stellar track record
over the most recent 21-year period. But as we
discussed last
midterm-election volatility has tempered April’s performance in
midterm years. So, the question arose, “What does the typical April in midterm years
look like?” In the chart here we went back to 1946, the first midterm year after
WWII, to more data points and better statistical perspective as there were only
5 midterm years in the last 21 years. And we’ve compared midterm year Aprils to
all Aprils for further perspective.

As you can see after strength the first two trading days
midterm year have tended to suffer greater weakness over days 3-5. Midterm
Aprils rally along with all Aprils from the 5th trading day through
the 14th. Then midterm Aprils have sold off later in the month diverging
from the overall April pattern that exhibits strength into month-end. Volatility
and declines over the last couple of days in not unusual for a midterm April,
so headline risk aside we should expect some upside support over the next couple
of weeks.

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