Financial Professionals


Market Update


Just two trading sessions remain in April, a month which began by establishing a nearly 4-year high on April 2 for the S&P 500® Index (SPX) of 1422.38 (Figure 1.1). From the October 4, 2011 trough (1074.77) to the April 2 high, the SPX appreciated a staggering 32.3% (Figure 1.2).
Subsequent price action for the month of April can be categorized as a modest healthy correction. Keep in mind this month’s double-bottom lows – 1357.38 on April 10 and 1358.79 on April 23 - have neatly held support (Figure 1.3) above the March 6 low of 1340.03. A disappointing early April U.S. jobs report and rising Spanish bond yields were the catalysts for April profit taking.
It is time to look ahead to the first week of May, which will bring some important economic data. In fact, these three reports may set the tone for the entire month of May:
•   China PMI – Monday, April 30 @ 9 p.m. EDT 
•   German PMI – Wednesday, May 2 @ 4 a.m. EDT
•   U.S. Labor report – Friday, May 4 @ 8:30 a.m. EDT
It seems the current healthy “pause” in appreciation is seeking further guidance on whether the incredibly robust recent earnings will be enough to support a market that is challenged by softening economic data. As the SPX churns within this corrective range, I caution investors not to implement any major portfolio strategy adjustments unless after next week’s important economic data week, the SPX further deteriorates below 1340.03.
Figure 1.1 SPX – June 2008 to Present

Source: Bloomberg
Figure 1.2 SPX – October 2011 to Present

Source: Bloomberg
Figure 1.3 SPX – Year to Date

Source: Bloomberg

Past performance is not a guarantee of future results.

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.