If April showers bring May flowers…then May is going to be one petal-filled month. It rained for days. But the sun is finally breaking through. Spring is officially here! And those that have followed me for a long time know that April is often one of my top reasons to be bullish each time it comes around, especially on the Invesco QQQ ETF (QQQ), remarks Matthew Carr, editor of Tipping Point Profits.
Awesome April. That’s what I call it, and you should, too. That’s because it’s routinely one of the best months of the year for stocks.
In fact, looking back more than two decades, the QQQ is averaging a 1.78% gain in the month. That earns it a spot as one of the best months for tech behind October, November, and the gains' stronghold, July.
Moreover, major collapses are rare in April. The Nasdaq 100 has only experienced three bone-rattling drops in the month since the start of the millennium: 2000, 2002, and 2022. And of course, it’s worth noting, all of those were bear market years.
The rest of the time, the “Qs” are exiting the month with a gain 62.5% of the time. So, year after year after year, April is not only a sunny spot for the weather but also the markets.
There is one possible rain cloud, though: The US presidential election. It’s an interesting trend, but when we look at how the Nasdaq 100 has performed in election years, we uncover a slightly different story…
Tech stocks are still averaging a gain in April during US presidential election years. But that’s largely due to 2020’s herculean return. Remember, at that time, we were in the midst of the fastest bull market recovery on record. Overall, the QQQ has fallen in April four of the last six US presidential election years…or 66.7% of the time. And election years represent almost half of the losses big tech has suffered in April since 2000.
The biggest mistake most investors make is not understanding that stocks - just like seasons – tend to follow predictable trends. And most years, Awesome April is very much your friend. Heck, it’s one of the friendliest months around. But it’s wise to tread carefully in the month during US presidential election years. This is when Awesome April can really rain on the market’s parade…as we’ve already seen.
