Hot Stocks/ETFs for April 29, 2022 - RWM, USO, ARKK, IBB Seasonality

UPDATE: the actual performance of this trading basket, on a capital-balanced basis, was +1.86% ROC for the day.

For the Last Trading Day of April, there are many hot stocks and ETFs projected to move significantly. The StockOdds Seasonality Dashboard provides quick insights for stocks, ETFs, or other securities likely to move in a given seasonality period such as monthly, first or last trading day, mid-month or 3rd Friday (option expiration) performance. In this case, we’ll take a look at a few ETFs that typically have either bullish or bearish performance on the last trading day of April, since individual stocks are expected to be volatile on that day.

Seasonality for The Last Trading Day of April 2022

Using the Free Seasonality Almanac, we can generate seasonality-related ideas for stocks and ETFs to trade. In this case, we’ll look at the Last Trading Day of April, which for this year is April 29 and falls on a Friday. On the first page of the dashboard, after selecting the ETFs universe, we can pick the top ETFs to long and the top ETFs to short by considering both the Average % Change and Odds data. In this case, we’ll look at ProShares Short Russell2000, United States Oil, ARK Innovation, and iShares Biotechnology ETFs.

For the last trading day of April, historically, RWM has 75 Odds of going up (which means it has moved higher on this same day 6 out of 8 years on this day), on average +1.07%, and USO has 75 Odds with an average move of +0.93%. On the bearish side, historically, ARKK has 100 Odds of going down on average by -2.04%, and IBB has 75 Odds of going down on average by -1.22%.

These numbers are drawn from the previous 8 years for RWM, USO, IBB and previous 6 years for ARKK. This can be found by hovering your mouse over the expected performance (green and red) bars, as seen below, and looking at the number of Events.

Traders can use this information for context as to the seasonality of ARKK and IBB, which may qualify as shorts, or RWM and USO, which may be suitable longs. Traders may want to look at additional Signals for each exchange traded fund individually before entering a trade to “line up the ducks” with complimentary Odds and average performance for the same day, or even for longer and overlapping periods, based on MFI, Bollinger Bands, Momentum and others.

Additional Signals can be found through the Dashboard Reports or through the WebScreener. As we near the end of the month, traders typically look at RSI and %BB values for confirming Odds and average performance.

Before taking these statistics for granted, it is important to look for factors which may have contributed to past performance. For these ETFs, some of the underlying stocks release their quarterly earnings earlier in the month. This can have an impact on the underlying individual symbols, as well as expanded effects with sympathy.

RWM Seasonality for April 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at ProShares Short Russell2000's performance for the entire month of April, alongside SPY for context.

Looking at the bottom of the above screenshot, we can see the historical performance of SPY is negative on the last trading day of April compared to RWM which far outperforms the index. Also looking in the right-hand section, we can see the top 8 bullish seasonality signals for RWM.

The average monthly performance of RWM has averaged -1.7%, with positive performance typically coming from the beginning of the month, as well as very end of the month. This gives indication that RWM’s trading action is typically choppy or bearish for the middle of April. This, along with looking at how RWM is currently performing this April, can help frame intraday or swing trades for RWM for the month.

USO Seasonality for April 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at United States Oil ETF’s performance for the entire month of April, alongside SPY for context.

Looking at the bottom Seasonality Timeline, we can see the historical performance of USO outperforms the SPY at the beginning and end of April. Also looking in the rightmost section, we can see the top 8 bullish seasonality signals for USO.

The monthly performance of United States Oil ETF in April has averaged a marginal -0.1%, and we can see many seasonality windows counteract each other. However, given the positive average performance on the Last 1 and 3 Trading Days of April, this indicates the action in USO can be choppy for most of the month. This can all help frame intraday or swing trades for USO for the month of April, with positive performance expected only at the very beginning, and last few days of the month.

 ARKK Seasonality for April 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at ARK Innovation ETF’s performance for the entire month of April, alongside SPY for context.

Taking a look at the seasonality Timeline at the bottom, we can see ARKK historically underperforms the index during most seasonality windows. Adding to the average monthly performance of +5.2%, this indicates ARKK typically has positive performance outside the given seasonality windows. This can help frame intraday or swing trades for ARKK for other days in the month.

Looking in the right-hand section, we can see the top 8 seasonality signals for ARKK, from bullish to bearish. Since ARKK is a potential short for April, we can refer to these signals to see the least bearish times to trade ARKK ETF.

We have since November 2021, the benefit of trading SARK which is an actively managed ETF that attempts to track ARKK, but in an inverse fashion, just for a single day at a time. This means you can buy it and it would be equivalent to trading shorting ARKK. The reason for the creation of SARK was to give investors the opportunity to use it to bet against disruptive tech companies which often have earnings goals in the future, which is speculative.

Since it is so new, we do not have Seasonality data on SARK, but since it tracks the inverse of ARKK, which we have data on, you can use SARK in its place.

IBB Seasonality for April 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at iShares Biotechnology ETF’s performance for the entire month of April, alongside SPY for context.

Looking at the bottom timeline, we can see IBB historically underperforms the SPY in the last 1, 3 and 5 trading days of April. Given IBB’s average monthly performance of +1.7%, this gives indication that performance is typically bullish for most of April, until it mean-reverts during the last 1-5 trading days of April with Bearish action. Historically, within these last days of the month, most of the performance comes from the last day itself, giving indication that IBB may be choppy during the last 2-5 trading days of April.

Looking in the right-hand section, we can see the top 8 seasonality signals for IBB, from bullish to bearish. Since IBB is a potential short for the Last Trading Day of April, we can refer to this section to see seasonality windows that indicate the least bearish performance.

Closing Thoughts

The Seasonality Almanac Dashboard uses close-to-close (CC) performance, so one looking to take these trades has a few options. One could enter positions on the second-last trading day of April and exit at the close of the last trading day of April or enter at the Open of the last day of April if conditions are favorable. It’s worth considering, with overnight or even intraday trades, even though one has curated a high-probability trade, the market could interfere with its own agenda (that being what is most probable to occur). Most symbols tend to be impacted by larger market moves, so it is an advantage to hedge any trades in some way. Even with this in mind, why trade probability-blind when you can trade hedged, with the Odds!

By taking a quick look at the summary numbers at the bottom of the dashboard, we can see that 75% of ETFs in the dashboard that meet our filter criteria have a negative expectation for the last trading day this month. In addition to this, we can also see that over half the symbols are expected to underperform the S&P 500 ETF. This can help set the context for April as well.

If you’re a trader or investor, then we highly recommend that you take our Seasonality Dashboard course. In this course, not only will you learn more about why seasonality patterns exist and how to better utilize the Seasonal Almanac Dashboard but also have access to exclusive insights from some of the world's leading traders on using probability-based approaches for trading.