Time for S&P 500 buyers? [Video]

US President Biden has said that 90% of the US should be vaccinated by April 19. This fast rollout of the vaccine in the US is a strong tailwind for the US. On top of this President Biden has plans for a $3 trillion stimulus package which should further underpin stocks.

The S&P500 is entering into a strong time of year where it tends to see seasonal gains. Over the last 25 years the S&P500 has risen 19 times between April 01 and May 01. The average return over the last 25 years has been +2.41%. The maximum profit was +14.58% in 2020. There have been 6 losses in the last 15 years. The largest drop was in 2002 with a -5.24% fall.

This seasonal period is one of the strongest patterns for the S&P500 and is only to be surpassed by the November to December period over the last 25 years.

Trade risks

• There is a growing risk that investors consider equity markets overbought and that could see a correction. It is hard to know when that correction will come, but investors need to be aware of the potential risk.

• There is also a risk that another break out of COVID-19 could slow down the US recovery.

• Finally, any new strong COVID-19 variant could invalidate this outlook and cause S&P500 selling.

• If the US stimulus bills find roadblocks then that could invalidate this positive outlook for US stocks.

• Also, be aware that market conditions are not ‘normal’ due to COVID-19 fallout.

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