Markets set for May rally with Apple results the catalyst - based on this 74-year trend

By Louis Goss

Markets could be on course for a rally this May that would see them recover from last month's slump, if a trend observed over the past 74 years is repeated in the coming weeks, a leading technical analyst has said.

The S&P 500 has, since 1950, generated median returns of 1.1% in May, compared to median returns of just 0.4% in April, research from Fundstrat shows.

The trend is even more pronounced in election years, during which the latter half of May and the entirety of June tend to be "very bullish," Fundstrat technical analyst Mark Newton said.

If the trend is repeated this year, U.S. markets should start to recover from the April slowdown that saw the S&P 500 SPX generate dismal negative-4% returns last month by rallying in May and June.

More specifically, Apple's first-quarter results and the soon-to-be-published jobs figures from the U.S. Bureau of Labor Statistics could spark this upcoming May rally, Newton said.

He explained that Apple's outsized 8% weighting in the S&P 500 means its performance plays a vital role in determining market returns.

Apple (AAPL) shares increased 6% in Friday's premarket session after the tech giant announced its largest share buyback, worth $110 million, following a 10% drop in iPhone sales.

Newton noted that the downturn in Apple's share price had already begun to stabilize, as he argued the stock has bottomed and should now start to rally to prices of $198 per share.

Historically, Apple's share price has trended upwards in June, before settling in July, and then rallying again in August, Fundstrat's analysis shows.

He said this surge is likely to be even sharper, if Apple's stock price holds at $180 per share by close this Friday, and the S&P 500 gets back over 5,123, compared to the 5,064 closing mark Thursday.

U.S. jobs figures, scheduled to be published at 8:30 Eastern time on Friday, could also serve as a "key catalyst" for a May market rally, Newton said.

-Louis Goss

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05-04-24 0725ET

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