Market at a Glance

Dow 42299.70 | S&P 5693.31 | NASDAQ 17804.03 | Russell 2K 2065.70 | NYSE 19534.72 | Value Line Arith 10661.44

Seasonal: Bullish. April is the #2 month for DJIA and S&P 500 (since 1950), and #4 NASDAQ month (since 1971). In post-election years, April is also second best for DJIA and S&P 500 but improves to third best for NASDAQ. Average gains also improve in post-election years. Tax deadline impact has faded. April historically firm start to finish over last 21 years. April is the final month of the “Best Six Months” for DJIA and S&P 500. Remain attentive as our Seasonal MACD Sell signal can occur on or after April 1. 

Fundamental: Mixed. Q4 GDP was revised 0.1% higher to 2.4%, but the Atlanta Fed’s GDPNow model is estimating Q1 growth could decline 1.8% as of their March 26 release. The unemployment rate remains reasonably solid at 4.1%, a modest improvement from its recent peak, but the pace of monthly net job gains appears to be slowing. Inflation appears to have resumed its slow retreat but still remains above the Fed’s stated 2% target. Slowing growth and elevated inflation are raising concerns about possible stagflation. Beyond the mixed data, tariffs are the greatest uncertainty the market is currently facing. More tariff related announcements are expected.

Technical: Bounce fading? After finding support around last September’s lows, DJIA, S&P 500 and NASDAQ all bounced back. At the peak of the bounce, DJIA and S&P 500 had reclaimed their respective 200-day moving averages. With the bounce-back losing steam, the next best technical setup would be for the indexes to trace out a “W” bottom pattern. This would entail a test of the recent lows before rebounding higher once again. Should the retest fail, the levels to watch are around DJIA 40250, S&P 500 5390, and NASDAQ 16700.

Monetary: 4.25 – 4.50%. The Fed is in “wait and see” mode. They acknowledged the economy has continued to expand at a solid pace and inflation remains somewhat elevated. Two additional 0.25% interest rate reductions later this year remain on the table (perhaps as early as June for the first). But more progress reducing inflation is still needed and that is likely to take more time. Perhaps the biggest change in policy in March was the announcement that the Fed is going to slow the pace of quantitative tightening. Beginning in April, its monthly redemption cap on Treasury securities will decline from $25 billion to just $5 billion. This could modestly lower interest rates.

Sentiment: Improving. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 30.5%. Correction advisors are at 40.7% and Bearish advisors were at 28.8% as of their March 26 release. Following three straight weeks where bears outnumbered bulls, the bulls have reclaimed a slim lead. However, correction advisors are up to 40.7%. With the overall majority of advisors anticipating weakness now, the contrarian view would likely begin to see current weakness as an opportunity. Until tariff uncertainty eases, volatility is likely to remain.