SanDisk Looks Sweet, Tech Blooms in April, Is It Sell in May (Or Stay?)

Sell in May and go away? That might be a tough plan to follow through with this year. For one, March was a tough month for U.S. markets. The S&P 500 gave up 5.1% in March after losing 0.9% in February. The Nasdaq Composite surrendered 4.8% in March following a 3.4% loss in February. April showers bring May flowers? We'll soon find out if May flourishes. The S&P 500 soared 10.4% in April, while the Nasdaq Composite ran an incredible 15.3% for the month. Both of our market's major equity indexes closed out April at record highs. For both indexes, this April was the best performing single month in percentage terms since the pandemic rebound of 2020.

What or who to credit for the month that we all just enjoyed? Technology. The tech sector SPDR ETF (XLK) gained 20% for the past month, which was the best month for this fund in 24 years. Supporting this move was a Dow Jones U.S. Software Index that gained "just" 10.5% and a Philadelphia Semiconductor Index that romped and stomped its way to a 38.4% run. That's not a misprint. The "SOX" at one point during April, posted 18 consecutive green candle sessions. That was a record long winning streak for this index, which was created in late 1993.

What semiconductor stocks had April to remember? Intel (INTC) for one, gained a jaw-dropping 114.1% during the month. Yes, it's true that I covered some of my Intel short position for a profit. Yes, it's also true that I remain short a few shares and those few shares have wiped out that profit. SanDisk (SNDK) , Marvell Technology (MRVL) , ON Semiconductor (ON) and Advanced Micro Devices (AMD) ran for 91.5%, 88.2%, 81.1%, and 80.8% for April respectively.

I Got You (I Feel Good)

I feel good

Like I knew that I would, yeah-yeah-yeah-yeah, oh

I feel good, baby, whoo!

Like I knew that I would, yeah-yeah-yeah-yeah, oh

So good

I, I feel nice

Like sugar and spice, yeah-yeah-yeah-yeah, oh

I, I-I-I love

Like sugar and spice, yeah

So nice

- James Brown (1964)

Closing on a High

For the day on Thursday, the S&P 500 tacked on 1.02% as the Nasdaq Composite added 0.89%. As mentioned above, both closed at record levels. Small caps outperform as the Russell 2000 gained 2.21% for the day leaving that index 0.6% short of setting a new record close. That record was set just ten days ago, by the way. Looking at narrow, specialized mid-major equity indexes, on Thursday, the Philadelphia Semiconductor Index ran 2.28%, the KBW Banks popped for a 1.44% run and the Dow Transports added 1.28%.

It was not just stocks that ran. Despite that crude oil largely traded sideways on Thursday, investors flocked back into U.S. Treasuries as well. The U.S. Ten-Year Note paid 4.39% by day's end while the U.S. Two-Year Note paid 3.89%. Those yields were down four and seven basis points on Thursday respectively but have stabilized overnight.

Breadth

All 11 S&P sector SPDR exchange-traded funds closed in the green on Thursday, led by the industrials (XLI) with technology (XLK) still higher, but riding out the session in the caboose. If there is something for the bulls to gripe about concerning Thursday, it would be that the four defensive sectors all finished the day in the top five slots on the performance tables. That would be more concerning to me if the "growthy" sectors had closed in the red, which they did not.

Winners beat losers by a 4 to 1 margin at the NYSE and by a rough 11 to 4 at the Nasdaq. Advancing volume was decisively positive on Thursday, taking a 75.1% share of composite NYSE-listed trade and a 71.7% share of composite Nasdaq-listed activity.

Aggregate trading volume, however, was a little tricky. While aggregate trade across Nasdaq-listings was down just a smidgen on a day over day basis across Nasdaq-listed securities, activity was up an impressive 11.7% across NYSE-listings. Aggregate trade was also higher across the membership of the S&P 500, reaching the 50-day simple moving average for trading volume for the first time since April 17th. That means...

Yes, we have a Day One confirmation or rather re-confirmation of the bullish trend after eight sessions of trading sideways. Though this is not a true reversal of trend, it does come after a lengthy period of inertia. Hence, I am going to treat this as a Day One meaning that I would be okay with and in fact welcome a pause before confirming this day one with a follow-up type day.

Note that relative strength index, above the chart, has remained quite robust throughout and is currently straddling the line standing between something less than a technically overbought condition and something truly overbought. Below the chart, the daily moving average convergence divergence remains postured quite bullishly. Though there had been a sag in the nine-day exponential moving average, that histogram still stands well above zero. In addition, the 12-day EMA is still running above the 26-day EMA with both of those lines in positive territory. In short, party on, dudes.

GDP Growth...

The first-quarter gross domestic product growth printed at 2.0% q/q, SAAR for the the first of three Bureau of Economic Analysis estimates, up from growth of 0.5% for Q4, but falling short of the 2.2% consensus view. Anyone else notice that final sales to domestic purchases printed at +2.8% q/q, SAAR? That's pretty interesting.

Without an estimate for gross domestic income, which we do not get with the advance estimate, final sales to domestic purchasers are the most accurate check on the accuracy of GDP that we have. Next month, we'll average GDP with GDI to get a realistic take on the pace of economic activity for Q1 in this country. What we do have, at the moment, implies that there will be upward revisions to yesterday's headline number.

I am not suggesting that all is well. Not at all. Personal consumption only sported a +1.6% tag and disposable income was up just 1.5%. Government spending was up 4.4% or a whopping 9.3% if the federal government is isolated. Wars are expensive. Especially modern war. Net exports did lop 1.3% off of that 2.0% estimate, so trade is not so hot. No, I am not suggesting that the U.S. economy ripped the cover off of the ball in Q1 (though data did improve late in the quarter). I am simply pointing out a statistical foul ball that will have to be corrected once GDI is included in the data.

Profit Taking

SanDisk posted sales growth of 252%, a sales number that beat Wall Street by more than $1.2 billion and an adjusted earnings per share that beat by almost $9. The company projected current quarter sales of $7.75 billion to $8.25 billion with Wall Street looking for $6.65 billion. Yes, I will be a buyer ahead of the opening bell on this weakness.

Born to Be Wild

Get your motor runnin'

Head out on the highway

Looking for adventure

In whatever comes our way

Yeah, darlin', go and make it happen

Take the world in a love embrace

Fire all of your guns at once

And explode into space

- Mars Bonfire (Steppenwolf), 1968

Note to Readers...

OK, gang. It's Friday. Let's get out there and be who they thought we were. Let's get out there today and win. We are often tested. We have never failed. We are always faithful. Our hearts are pure. We, my brothers and sisters cannot and will not be overrun. Just let them try...

Economics

(All Times Eastern)

09:45 - S&P Global Manufacturing PMI (Apr-F): Flashed 54.0.

10:00 - ISM Manufacturing Index (Apr): Expecting 53.2, Last 52.7.

1:00 p.m. - Baker Hughes Total Rig Count (Weekly): Last 544.

1:00 - Baker Hughes Oil Rig Count (Weekly): Last 407.

The Fed

(All Times Eastern)

No public appearances scheduled.

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: (CVX) (1.00), (XOM) (1.00), (MRNA) (-3.43)

At the time of publication, Guilfoyle was long SNDK, AMD equity. Short INTC equity.