April seasonality suggests a potential bullish trend, with models predicting gains of around 3% despite some expected volatility mid-month.
Yahoo Finance Markets and Data Editor and host of the Stocks in Translation podcast Jared Blikre joins Catalysts to discuss how historical patterns, pension fund rebalancing, and current market activity point toward a critical month for market direction.
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April is right around the corner, bringing spring showers and perhaps an historical tailwind for stocks if history is any guide. I'm Jared Blikre, host of Stocks and Translation, and today we are looking at April seasonality, welcome because March had a few hiccups, and that was kind of expected. This is our April seasonality map, and what I have two models here. One is going back to 1928 matching the same day of the week, and the other is just the median since 1990. They are both in agreement this month, and they are both heading higher, looking at gains of maybe 3%, and I should add, this is only an historical probability. It accounts for maybe 1/3 of price action. I'm talking about seasonality in general, but you can see here in the middle, maybe we have a little sideways action or stumble in the middle of the month. But this is a market difference from March, which was more like this, and that's kind of what we saw. We saw that dip into the end of the month and a little bit of a rally into the end. Although it feels like we're still trying to get our feet wet and decide if we want to go higher. However, if we look at the entire year, at least by historical standards, and I'm looking at the white map, the white line as a map since 1928 in particular, this one has worked really well. Things tend to take off in April, and they stall out a little bit in the September, October, November area, and then they kind of accelerate into the end of the year. Also have this other model since 1990. That is basically more of a straight line. We get a little bit of a stumble in the third quarter as well. And then finally, I want to highlight what's happened here in blue. This is the actual price action that we have seen in 2025, and this has been pretty closely matching what has happened. We took a bigger dip than would have been expected, but we did critically get that turnaround in the middle of the month. Uh so, it leads me to believe maybe we have the makings for a bullish run into the end of the year. And there's also a flip side. If we don't get a bullish April, that is kind of a warning. That is a red flag that things are so different. We might not have a very good year. So April is going to be critical to watch here. We can also see this playing out in the VIX. This white line is the average VIX level since 1990, and in green, we have the VIX year to date. This too has really tracked some of these spikes that we saw in the month of March pretty well. And we've seen VIX come down nicely. You can see it stays pretty low until we get to the end of the end of the summer here. And then we get into primetime crash season, which is October, November, and then we drift downwards into the end of the year. That's just the historical probability. So, having said all that, I want to I want to kind of segue a little bit and cover something that I don't cover every month or quarter. This is US pension fund rebalancing estimates. And this goes back to 2010, 2011, and this latest rebalancing estimate for about $85 billion, and you can throw another $20 billion in there for target funds. This is the biggest potential rebalance that we've had since 2020. That was March 2020, that was the bottom of the pandemic, and that was a really big deal back then. And so maybe this is also providing a little bit of a bullish tailwind into the end of the month, the quarter. But uh that date is Monday, so that kind of disappears. All in all, it looks like we're facing a potentially bullish April, and so we're just going to have to keep our fingers on the pulse here. Tune into Stocks and Translation for more jargon busting deep dives. New episodes on Tuesdays and Thursdays on Yahoo Finance's website or wherever you find your podcast.
