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Semis Show Strong Seasonal Tendencies for April

David Becker
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Semis Show Strong Seasonal Tendencies for April

The semi-conductor index is making a push higher and investors should be interested as this sector is generally a strong driver of stocks during April. The statistics of seasonal trading show that the broader markets usually perform very well in April, as the opening of spring is generally very positive for stocks. One of the biggest drivers during this period is the Semi, which outperform the broader markets the majority of the time.

April usually sees strong stock returns. Over the past 20-years, the S&P 500 has shown positive returns 75% of the time with an average gain of 1.6%. The semi’s show an even stronger seasonal tendency in April, boasting solid return. The SMH has outperformed the benchmark S&P 500 70% of the time with an average return over the S&P 500 index of 2.1%.

This reflects that a pair trade of long the semis against the S&P 500 would be profitable, but given the strong results in April for the broader markets, a long Semi’s position would likely generate the best returns.

From a technical standpoint the SMH has broken out on strong volume and generated a new 52-week high on Tuesday. Momentum on the ETF is solid as the MACD recently generated a buy signal. The MACD is pointing higher with an upward sloping trajectory foreshadowing future higher prices.

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