STTG Market Recap Apr 11, 2013

Melt up 2013 continued Thursday, as good same store sales data from quite a few retailers helped lift the indexes up for the 4th (and a half) day.  It has been a straight up rally since Friday morning's jobs data.  The S&P 500 gained 0.36% while the NASDAQ struggled with a 0.09% gain.  The latter had issues as a report yesterday after the close showed PC sales slumped to their worst loss ever.  Ironically this happened just as names like Microsoft (MSFT) broke out.  Sometimes you just cannot avoid fundamentals, even in a QEforever market.  The only other major news item of the day was a drop in weekly jobless claims, reversing some of last week's big jump.

Let's take a look at some longer term charts today for the indexes - both the S&P 500 and NASDAQ are firmly in their third major channel of the past year and a half, this one being by far the longest and now steepest.

The PC sector was hit by this news:

Shipments of PCs dropped 14 percent worldwide in the first three months of this year compared with last year. That's the deepest quarterly drop since International Data Corp. started tracking the industry in 1994.

This hit the usual suspects such as Microsoft (MSFT) and Hewlett-Packard (HPQ).  The move in the former was especially vicious considering it had just broken out in a move not seen in a long time for such a quiet stock, and gave back all that in one session.

The retail sector benefited from generally good same store sales - some examples are Ross Stores (ROST) and The Limited (LTD).

This also seemed to help the domestic auto makers as both General Motors (GM) and Ford (F) surged over an intermediate line of resistance, on very good volume.

SentimenTrader posted some interesting data after yesterday's move concering the prospects 6 months from now due to the fact it is April.  Of course other time periods were not under the watchful eye of the Federal Reserve who has targeted stock prices:

More than a +1% gain in one of the most widely-watched indexes in the world, closing at a new 10-year high.  Despite that good news, one of the hesitations that traders have had is seasonality - that we're about to head into the "worst six months."  It doesn't help that stocks have formed an intermediate-term peak during April or early May every year for the past three years.
The table below shows how the S&P performed going forward when it surged at least +1% to at least a 10-year high during April.  For the most part, its performance wasn't too far from any other month when it surged to a new high.  An exception is that six-month time frame, though.  Other than in 1954 and 1983, the S&P tended to struggle a bit, as shown in the charts above (the blue dot is the date the S&P surged; the red dot indicates the end of the "trade" six months later).

The most that the S&P lost at its worst point over the next six months averaged -5.7%, versus a maximum gain at its best point that averaged +6.2%. When this kind of surge occurred in a month other than April, then the S&P's maximum decline over the next six months averaged -4.7% and its maximum gain averaged +10.3%.  Quite a bit better than April. We can see below that surges to new highs led to negative six-month returns only in April and August.  Most other months, stocks did quite well in that time frame, particularly if the surge occurred from December through February.