It's The `Early April Effect'
According to efficient-market theory, stock-market movements are essentially random. That is, prices show no predictable pattern from day to day or month to month, but instead instantly reflect only changes in fundamental information. Still, market observers are constantly looking for, and finding, "inefficiencies"--market trends, such as the so-called "January effect," that seem to persist over time.
Recently, economist Mike Farrell of Aeltus Investment Management Inc. turned up one such pattern that seems to have legs. Noting that the law creating individual retirement accounts went into effect 20 years ago, he figured the hordes of taxpayers rushing to fund or establish IRAs and similar accounts close to the Apr. 15 deadline would have a positive effect on the market.
Sure enough, Farrell found that the average annualized return in the first two weeks of April since 1978 was an impressive 20.7%. By contrast, the average return in the second two weeks of the month was only 13.6%, which is roughly equal to the 14% market return over the whole 20-year period.