Date: April 14, 2022

Strong Seasonals & HOTTTT Inflation

Today is the day before Good Friday which is a seasonally strong day for stocks with surprisingly low downside when the bulls do not show up. Additionally, Monday is tax day which is also a strong seasonal day for stocks. The only 1%+ down days (2) in the past 20 days occurred with the S&P 500 below its average price of the last 20, 50 and 200 days. Today, the S&P 500 lies in between the 50 and 20/200.

A quick word about seasonals. First, they act as tailwinds and headwinds not ringing buy or sell signals. Second, you cannot cherry pick them. They work over the long-term.

On Wednesday in the face of 11.2% inflation at the producer level, stocks jumped more than 1% and long-term interest rates fell by four basis points or 0.04%. Both of those reactions are counterintuitive to what the masses believe should have happened. Remember folks, it’s not what the news is, but rather, how markets react. This is an early sign that markets have grown “comfortable” with the inflation numbers and do not see them increasing from here.

Don’t forget the deadline for 2021 IRA, SEP, ROTH and HSA is Monday!

On Wednesday we bought levered inverse S&P 500 and NDX along with more DINO. We sold levered NDX and Russell 2000.


Paul Schatz, President, Heritage Capital