With the rally respite that we had been looking for in April arriving and historically bullish April being negative this year, we expect continued choppy, volatile trading during this year’s “Worst Months,” May through October. But we remain bullish for the full year, explains Jeff Hirsch, editor-in-chief of The Stock Trader’s Almanac.

Historically, election years have been bullish and that was true through Q1 But inflation remains stubbornly elevated while economic activity, measured by GDP, has slowed. This has put added pressure on the Fed and the outlook for interest rate cuts this year continues to dim. Factor in the presidential election and two ongoing wars and the market’s upside appears limited.

However, we also see the market’s potential downside as being limited. Growth has slowed but remains positive. Employment data has been reasonably firm. Federal government spending remains robust, and the Fed did announce that it will scale back quantitative tightening beginning in June. Plus, the hope of rate cuts later this year still exists.

In closing, we remain bullish for the full year, but market upside and downside is likely to be limited through the “Worst Months” before rallying post-election-day to a Q4 gain and full-year gains in a range of 8%-15%.

[NASDAQ Technical Chart]

Regarding the Nadsaq, from its closing high of 16,442.20 on April 11 through its low close of 15,282.01 on April 19, it declined 7.06% and fell back under its old all-time high from November 2021 at 16,057.44. That was essentially the same level of Nasdaq’s 50-day moving average. This level is likely to act as resistance during any rally.

Should the current rebound rally falter, we see first support around 15,500, which is around the January/February consolidation and just above its April low. Should the April low be taken out, the next level to watch is 15,000, around the 2023 year-end highs.

Below that level, last summer’s high and the December breakout/January low at 14,500 is the next support. Down about 15% from its all-time high is 14,000 and last November’s gap higher.

Subscribe to The Stock Trader’s Almanac here…