April’s Market Action Yields Flat ETF Performance as May Arrives

Major Indexes and ETFs finished flat today as the “Sell in May” trend approaches and new “Spain pain” overshadowed global markets

Major indexes and ETFs finished flat today as investors mulled over new troubles surfacing in Spain and the potential slow summer months.  Tomorrow also happens to be “May Day” which historically has signaled the beginning of the “Sell and May and go away” trend in which most investors cash out and hide under the bed until September.  Today’s upbeat Personal and Income Outlays report did little to spur the bulls into any decent market action either; perhaps today’s negative Chicago PMI report did not help matters as well.

Regardless of what happened today at home or abroad, markets were not phased too much, as the S&P 500 lost .39% while the SPDR S&P 500 ETF (NYSEARCA:SPY) lost .37%; the DJIA lost .11% while the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) lost .15%; the NASDAQ 100 declined .74% with the PowerShares QQQ Trust Series 1 ETF (NSADAQ:QQQ) losing .71%, and the Russell 2000 Index lost 1.04% with its iShares Russell 2000 Index ETF (NYSEARCA:IWM) losing 1.10%.

So should we expect slow markets due to “May Day” seasonality or the negative impact of continued pain in Spain?  Spain issues are certainly not helping matters, as Spain announced today that the country is again in a recession for the second time since 2009.  Furthermore, Standard & Poor’s downgraded 16 Spanish banks today; not that downgrades seem to matter anymore, however the fact that Spain has not grown for two quarters in a row is worrisome, especially considering the soap opera of European politics and debt drama in the past year.

What to do: sell in May and go away or sell in Spain and go away?  Interesting choices to say the least, however today’s flat market seems to indicate that investors were not too surprised about Spain’s continued faltering (at least not yet).  Perhaps this is old hat for all of us, however the US economy does continue to show signs of miniscule improvement as indicated by today’s Personal and Income Outlays report, which indicated that consumer spending rose .3% in March while personal income rose .4%.  The Chicago PMI report released today did not please anyone however, as the decline from 60.2 to 56.2 on the index soured many expectations.

Sell in May or Sell in Spain?  Or neither?  Or both?

Bottom Line: Today’s flat markets are nothing to write home about in any direction, positive or negative, however it is important to watch markets closely now as we approach the May and Summer months, and Spain and Europe continue to shake up the world. Keep in mind too that the last few weeks of impressive earnings reports might keep US markets afloat, however even the slightest hick-up from abroad can send markets to rock bottom.

John Nyaradi is the author of The ETF Investing Premium Newsletter.