End of April Run-Up In Stocks: Big Deal?

Was the end of April run-up in the stock market a big deal? Does it signal a resumption of the fledgling restoration of a Bull Market (a restoration claimed by some)?

Emotions "tell us" it was a big deal. The numbers don't agree. You'll see that below when we provide a copy of our end-of-month review of various indices and indicators that we follow.

As for a restoration of a Bull Market, well, if the numbers are accurate (and they are), it's hard to make that argument - unless you want to say that two big days in a row are based on some sort of sudden, brilliant insight on the part of investors - as opposed to an "enhancement" of the numbers by the HFT machines (which, by the way, apparently account for 80% of daily trading volume).

Maybe it was just the expected April bullishness playing out. 

But wait. If April was supposed to be bullish, the numbers don't really back that up (again, see below). Indeed, it could be nothing more than end of month window-dressing by big investment managers needing to show good end-of-month numbers to their skittish institutional investors - something they'll do each and every time it's possible to do.

So if it took this big spike up to "save" a bullish April - and in fact it was barely bullish as (again, below) the numbers will tell us - then we might say that April was a bust, relative to expectations.

Oh, and there's the "Sell in May" thing that's on the agenda next. 

Well, numbers do help balance emotions. That's why we do our end-of-month review. And if you decide to peruse it, know this: None of the comments re "divergences" between various indices (signs of weakness, bearishness) changed one whit from last month. Even we were surprised.

So with all that as a preface, here are the numbers, as we recorded them. (Take it or leave it, as you prefer.):

 

Monthly Asset Updates (as of 4/30/23)

 

-   4/30/23: SPY UP 1.59% - Both TS and AS remain out of SPY

-   4/30/23: BONDS - 3-month 5.18, UP from 4.74, last month - 2-yr 4.07 UP from 4.06 last month -10-year yield 3.53 UP from 3.48 last month - 30-year 3.76 UP from 3.67 last month

-   4/30/23: GLD UP 0.08% for the month. GDX UP 3.80% - GDXJ UP 0.08%

-   4/30/23: SLV UP 3.98%

-   4/30/23: DXY 101.65 DOWN from 102.59 last month.

 

 

Important Indicators (as of 4/30/23)

-   Advance-Decline Line: Mirrors S&P – But below recent high vs. S&P – Divergence?

-   Fed Funds Target Rate – Below 10-year bearish (5.00 vs. 3.53) – no.

-   10-year minus 2-year TSY negative?:  (3.53 – 4.07 = -54) – Yes - Inverted

-   10-year minus 3-mo TSY negative?: No (3.53– 5.18. = -1.65) – Yes - Inverted

-   Russel 2000 Index (IWM): Much lower than S&P – No higher high – Big Divergence

-   DT Industrials/Transports: Transports lower than Industrials - Divergence

-   S&P 500 (SPY) vs. Financial Select Sector SPDR Fund (XLF): much lower than SPY - Divergence.

-   S&P 500 (SPY) vs. S&P Equal Weight (RSP): Lower than S&P - Diivergence

-   S&P 500 (SPY) vs. Value Line Geometric Index (VALUG): VALUG a broader index than S&P or Dow. Mirrors S&P – Lower high vs. S&P - Divergence

-   Hi-Yield Credit Spread – 4.48 DOWN from 4.74 - Spread between below-investment grade bonds and similar duration Treasuries: When high, indicates increasing defaults. Has been trending up.

-   Shiller PE/10 – 29.73 – UP from 29.35 – still historically high (even after the quick, steep fall in stock prices, it remained elevated). [This Index highest value as long-term indicator of initial level or withdrawals (% TAV) for Retirement Investments: Higher P/Es indicate lower withdrawal % and vice-versa. Less value as guide to stock allocations shorter-term.]

-   Gold Futures: In contango