Key Points:
* Q1 2018 saw the return of volatility that investors had not seen in several years. Normally, Q1 is a positive time for U.S. equity markets.
* Of the three major averages, only the Nasdaq is at or above its historical average for Q1. The DJIA and S&P 500 are down year-to-date.
* Only the Technology and Retail sectors are at or even near their historical averages for Q1. We would like to see more sectors turning positive before we feel more confident in the market outlook.
* Q2 in the second year of a presidential term is historically much weaker. Only Consumer Staples, Healthcare, and Retail have posted average positive returns in Q2 of the second year of a presidential cycle. All other sectors are down, with Transportation, Financials, Utilities, and Technology performing the worst. This poor performance is magnified even more if it is the second quarter of the second year of a first-term president, as is the current case.
