Getty Images / Stephanie Keith
- History suggests the stock market will be strong in March and April, according to Bank of America Merrill Lynch's technical analysis team.
- The firm provides two charts that uphold its expectation for equity gains over the next two months.
The next two months should treat the stock market well - at least if history is any indication.
The technical analysis team at Bank of America Merrill Lynch has looked at past monthly performance for the benchmark S&P 500, dating all the way back to 1928, and concluded that March and April provide a sweet spot of sorts for equity investors.
The first chart below shows the S&P 500 has, on average, risen 0.62% in March and 1.22% in April. Those are vast improvements upon past Februarys, which have lost money, while also featuring a higher percentage likelihood of the benchmark being positive for the month (as indicated by the yellow line).
Bank of America Merrill Lynch
"Seasonality tends to improve in March and April," Stephen Suttmeier, a technical research analyst at BAML, wrote in a client note. "The next month with more challenging seasonality is May."
The second chart address six-month stretches for the S&P 500, all with different monthly ending points. BAML points out that we're entering the final two months of the November-to-April span, which has historically been the strongest period of the 12 being compared.
That's true both on a return basis - the S&P 500 has gained 5.39% on average over the period - and based on percentage likelihood of a positive month (70.8%).
Judging by Wall Street year-end forecasts, BAML's technicals-driven forecast for two months of gains doesn't seem too outlandish. The 24 strategists surveyed by Bloomberg are expecting a 10% S&P 500 gain from current levels by the end of 2018.
Bank of America Merrill Lynch
Get the latest Bank of America stock price here.