Year to date through April 29, the S&P Equal Weight (EW) 500 jumped 17.1%, recording the third-strongest four-month start to any year since 1990, observes Sam Stovall in CFRA Research's flagship newsletter, The OutlookThe Chief Investment Strategist at CFRA is also participant in The Interactive MoneyShow Virtual Expo from May 11-13. Register for free here.

Investors now ask if this benchmark of unweighted largecap U.S. stocks has gone too far, too fast.

Yes, and no, according to history, which says (but does not guarantee), that such early strength is typically followed by a digestion of gains in May, and a volatile performance through September, before resuming its above-average advance during the remaining three months of the year.

The S&P EW 500’s return in May following the top-10 starts to the year fell an average of 1.4% in price versus its more normal 1.1% rise, and declined 60% of the time, as compared with its typical 70% frequency of advance. From June through September, the EW 500 then slipped an additional 0.5%, on average.

However, once the digestion of these early gains had run its course, the bull market typically resumed its charge, as the S&P EW 500 went on to climb an average 8.0% in the remaining October through December period, versus the average three-month gain of 5.1% for all years.


Along the way, the EW 500 advanced in price in 10 out of 10 years versus an average 83% frequency of advance for all years. Therefore, CFRA believes that while the bull market remains alive, it may need to rest in the coming months before experiencing an above-average end-of-year run.

The broader S&P 1500 also rose by double-digits in these first four months, as did all of its sizes, styles, and sectors. Energy, financials, and communication services led the way, while laggards included growth stocks and the defensive sectors. Finally, 95% of the S&P 1500’s 147 sub-industries rose in price.

Representative companies from this list of best YTD S&P 1500 sub-industries are: Louisiana-Pacific (LPX), Williams-Sonoma (WSM), Best Buy (BBY), Goodyear (GT), Unifi (UFI), Freeport McMoRan (FCX), EQT Corp. (EQT), and Six Flags (SIX).

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