Observations: April 2012 Stock Market Update

Wednesday, May 2, 2012

April 2012 Stock Market Update

Stock market (DJIA) monthly performance / closing prices for last 12 months

Dow Index Monthly Closes Through April, 2012

A Flat Month

After establishing a new 52-week high on the first trading day of the month, stocks skidded. Poor employment numbers and renewed worries about Europe (Spain this time) resulted in five straight down days. These were more or less offset by four straight up days at the end of the month. Bottom line? We ended one and a half points from where we started.

After touching 2.3% early in the month, 10-year Treasury yields receded back below 2%.

There was just a hint of volatility -- but only in comparison to recent months. There were four +/- 1% days, but still no +/- 2% or higher days. After increasing mid-month, the VIX (a measure of volatility) ended the month above the near-record lows of last month, but still below average at 17.15.

The DJIA (Dow Jones Industrial Average) finished the month at 13,213.63, a gain of 1.59 points for the month. (See chart above. Click to expand.)

Where are we Now? April, Year-to-date & Recovery-To-Date Review

Here's where we stand vs. some key dates and milestones:

From All-Time High of 14,165 on Oct 9, 2007: the Dow is down 951 points (6.7%)
From Crash Low of 6547 on March 9, 2009: Up 6667 points (101.8%)
From one year ago close of 12,811 in April, 2011: the Dow is up 403 points (3.1%)
From the new 52-Week High of 13,264 on April 2, 2012: down 51 points (0.4%)
From the 52-Week Low of 10,655 on October 3, 2011: Up 2558 points (24.0%)
Year-to-Date From 2011 close of 12,218: The Dow is up 996 points (8.2%)
From Prior Month Close of 13,212: Up 1 point (0.0%)

For other recent results, see March 2012 stock market results, and May 2012 stock market results.

Note: At the end of the crash, the Dow had lost about 54% of its value (from the all-time high). For an explanation of how it can be up over 100% since then and still be below the all-time high, see The Importance of Avoiding Large Losses.

The Next 10 Years

My stock market projection model continues to project below average 10-year returns. The 2012 preliminary 10-year projection is in the neighborhood of 4.5%/year. The model is earnings based. Now that I have the official 2011 earnings data, I expect to post a formal update in the next week or two.