The Best “April Fools’ Trade”

March 31, 2025

The Best “April Fools’ Trade”

By Michael Salvatore, Editor, TradeSmith Daily

In This Digest:

A new month, a new crop of seasonal ideas…
The low-key best month of the year…
No joke: Energy and materials dominate April…
The broader trend in commodities points to good times ahead…
There’s still a place for growth, and here’s the best of the best…

The end of the month might be my favorite time to write TradeSmith Daily…

It’s a great time to check in on monthly sector performance, along with seasonal signals to watch for the month ahead.

The start of the following month is just as exciting. We’ll have new monthly candles to help us understand the primary trend in all sorts of assets.

We’ll look at the former today and the latter on Wednesday…

And no… April’s reputation aside, I won’t be pulling your leg anywhere in this issue.

The data you’ll see today is 100% free of any kind of foolishness.

But that doesn’t mean it won’t surprise you…

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First, let’s check in on last month’s seasonal forecast…

At the start of each month, I like to look at the seasonal data by sector. Knowing which sectors move most, and when, can lead you to knockout trades.

Let’s start zoomed-out. Here’s what we wrote about March and the S&P 500 one month ago:

[While] March is generally a positive month, with gains in 15 out of the last 20 years, the month starts with one more flush down of about (on average) -0.15%:

The pandemic crash of 2020 very much skews the numbers here. That was an abnormally large crash compared to the rest. Though, it’s worth noting that 2009 – the bear market bottom after the Great Financial Crisis – was an almost equally strong month to the upside… almost canceling out the pain of 2020 in this dataset:

In the end, we still have seen a median return of 2.19% for the full month of March, which is actually even better than the average: 1.84%.

Unless Friday’s trading action throws a big surprise our way, 2025’s March was a somewhat rare loser. As of Friday’s open, the S&P 500 has lost 4.6% since Feb. 28.

It should be noted, however, that seasonality was highly valuable for trading this month. Going off the past 20 years of data for the S&P 500, the seasonal bottom for March is on March 9. This year, we saw the actual low for the month a few trading days later on March 13. If you’d treated the seasonality data as gospel and bought SPY on Monday, March 10, you would be up 1.16%.

You didn’t have to look at a single headline (outside of ours) to make money in March. Imagine!

Now, what’s ahead for April? Great odds of a win.

On average, the S&P 500 has been up 16 of the last 20 years in April, for an average gain of 2.1%:

Since 1945, April ties December for the best month of the year for the stock market, with an average gain of 1.6%. In second place is November (1.4%) and in third July (1.2%).

So, April is statistically a good month for stocks. You know what we do next.

Let’s optimize this data…

If April’s a good month for stocks, you want to be in the best sector, and then the best stocks within that sector.

Last month, Utilities (XLU) showed the best seasonal pattern but disappointed with a flat return of -0.09%. Thankfully, our seasonal stock pick NextEra Energy (NEE) rose 0.94%, less than forecast but positive nonetheless.

Courtesy of the TradeSmith Platinum exclusive Analytics Dashboard, we can get an easy snapshot of one-month returns by sector:

Utilities may have lost money, but they lost the least money of all the major indices. Energy (XLE), meanwhile, was the only sector in the green in March.

Here’s the seasonal data for April:

Another month of Energy outperformance may be in store. XLE has been up 17 of the last 26 years in April. And it’s been up for the highest average result (wins less losses) of the bunch at 4.24% and an average winning trade of 7.85%.

Materials aren’t far behind, either. Same win rate, average trade of 3.24%, and average winning trade of 6.58%.

Focusing on Energy, let’s look at the seasonal data of the top 10 XLE components:

The trade to make for April is, with little doubt, Oneok (OKE). This Oklahoman oil and gas company has risen 34 out of the last 44 years in April, with an average trade of 4.93% and an average winning trade of 8.34%. That’s far and away the stock to bet on.

Though, we should also keep an eye on EOG Resources (EOG) – it may have a relatively low win rate, but the average win is over 10%.

This speaks to an interesting broader trend…

Commodities are surging right now. Specifically the metals.

We’ve talked time and again about gold. Silver’s done nicely, too. But we should also talk about oil, natural gas, and copper.

From the start of March, all but natural gas are outperforming the stock market:

Even with the base energy fuel prices down, the stocks are outperforming as investors continue to favor value.

Just look at this chart of XLE. It’s knocking on the door of a new high, and if April matches the historical average, that 4.2% boost would get it there:

Granted, XLE is showing waning momentum on its Relative Strength Index (RSI). As you see in the purple shaded box above, that’s charting a lower high while the price charts higher highs.

XLE could defy the technicals on this one. So much of the price action in oil is tied to global events, and the war in Ukraine as well as tariffs are providing plenty of uncertainty on that front.

Let’s also look more closely at gold.

Gold bugs have shown up over the last couple months. Despite worsening momentum conditions in the RSI, they keep pushing prices to new highs:

My read is you want to be careful here. Waning momentum is a warning sign. If you’re trading gold, there will be better times to bet on higher upside momentum.

Finally, we can’t ignore the fact that copper prices are at new highs this week:

Proper stock market vets know the phrase “Dr. Copper.” Dr. Copper has a Ph.D. in economics due to its accuracy in forecasting the economy. When copper goes up, you want to be bullish on the economy and therefore the stock market.

The dashed vertical lines above highlight a few times copper prices staged bottoms before trading much higher:

November 2008, a few months before the Great Financial Crisis bottom…
November 2015, the year before the post-GFC market really picked up…
March 2020, self-explanatory…
September 2022, the same month stocks bottomed…
And now November 2024.

Copper goes up when it’s in demand. And when lots of industries need it, that tends to be in economic expansions.

We’re almost losing count of the reasons to stay bullish on stocks right now, but this is a big one. Don’t lose sight of the big picture because of a couple months of bad price action.

Let’s wrap up with some great growth stocks to buy…

Mid-February was a bad time to buy growth stocks. Lots of babies got thrown out with the bathwater, with tons of high-quality growth-stage companies down 20%, 40%, 50%, and more.

But now, with that washout likely completed, it’s a great time to buy them on sale.

Our very own Jason Bodner, whose publications and software tools are bundled with our Platinum subscription, knows how to find the best of the best. He combines two bulletproof Power Factors that every fortune-making stock holds:

Strong fundamentals – earnings, revenue, and profit margins that lead the market.
Strong momentum – price action powered by Big Money buying.

Jason shares the latest Power Factor stocks each week with his Quantum Edge Pro subscribers. Here’s last week’s list (the most recent crop of names will be in subscriber inboxes this afternoon):

Exelixis (EXEL) is the new top spot this week, with a Quantum Score of 87.9.

Agnico Eagle Mines (AEM) represents the excitement about shiny metals this week, and Chinese shipping logistics firm Full Truck Alliance (YMM) join it in the top tier. We’re also seeing more tariff-proof reps Hamilton Insurance Group (HG) and Brown & Brown (BRO) – the latter being a consistent presence on the list.

Cohu (COHU) ranks near the bottom yet again, along with biopharmas Xencor (XNCR) and Biohaven (BHVN). Restaurant holding company Cannae Holdings (CNNE) hits the bottom spot, just ahead of Japanese investment firm SoftBank Group (SFTBY), the very same SoftBank that’s supposedly putting up $500 billion for the U.S.’s new Stargate AI initiative.

Make no mistake about Energy’s seasonal outperformance in April or on-the-books performance in March. There’s still a great opportunity in growth stocks right now, and it’s only gotten better in the recent volatility.

Jason’s algorithms, powered in part by TradeSmith’s software platform, can help you find them.

To your health and wealth,

Michael Salvatore signature