April Fool’s may be no joke for stock indices

Although April 1st is April Fool’s day, April 2nd is not!

Uptrend 1

With March month-end and Q1 quarter-end over and done with, positions have been rebalanced and window dressing has made all the big hedge funds look pretty.   April 1st is the beginning of the new month and the beginning of a new quarter, as well as, April Fool’s day.  However, don’t be fooled by any of the price action that occurs in stock indices.  Traditionally, new money comes into the markets at the beginning of each month.  For example, the Nasdaq 100 has been positive on the first trading day of the month for 5 of the last 6 months (the only exception was January 4th, 2021).  If the price action continues as such on April 1st,  the NASDAQ 100 may break the neckline of an inverse head and shoulders pattern, which would target new highs.  The current high is 13900.50, however the target would be near 14,384!

Source: Tradingview, City Index

The S&P 500 is currently putting in new all-time highs.  As of the time of this writing, price is near 3980.  The index has been in an ascending wedge since early November and is approaching the apex!  With today’s new highs above 3980, could we possibly see a move above 4,000 tomorrow?  Along with the psychological round number resistance, the top, upward sloping trendline of the ascending wedge crosses near 4010. 

Source: Tradingview, City Index

The German DAX is putting in new highs as well.  After surging through two 161.8% Fibonacci extensions over the last few days, the index is currently breaking above the upper trendline of an upward sloping channel.  Bulls will be looking to push the DAX higher!

Source: Tradingview, City Index

However, after April 1st, all bets are off!  Non-farm payrolls from the US will be released on Friday.  (See our preview here.) Current estimates are for ~650,000 jobs to be added to the economy!  However, whispers on the street are as high as 1,000,000 (which may be a bit stretched).  Regardless, the catch is that Friday is also a Holiday in much of the world, including the US.  There could be tremendous volatility after the print in the fx market (which is open)  and it may carry over into Monday’s stock market trading (for the US)!

Although April 1st is April Fool’s day,  April 2nd is not!  If stock market indices do continue higher on the 1st day of the month, that doesn’t mean they will continue the next day, especially when the next trading day is after the NFP release!

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