What an April for the ages!

The S&P 500 gained 10.4% in April, the best monthly performance since November of 2020.

If you recall, that’s when a pandemic-stricken market got news of a Covid-19 vaccine and triggered a face-ripping move higher.

Even better, the PHLX Semiconductor Index (SOX) blasted 38% higher, one of the best monthly performances in the index’s history. The last time we saw a move like that, it was in February 2000, one month before the dot-com boom started to bust.

Yes, April was a great month. But now what?

The Takeaway: CAUTION

Let’s refer to history to set the game plan our next tactical trading bias.

The S&P 500 has gained 10% or more in a month 30 times since 1928, and in just four cases since 1992. The average gain the following month was just 1.6%.

So a cooling-off period is the best odds outcome as we start May.

If you look at today’s news, it’s easy to see why this could happen.

First, the Iran conflict continues to worry investors. Oil is still above $100 a barrel, and gas prices are above $5 a gallon in some states.

And second is the affordability crisis in the U.S., a widespread economic challenge in which rising costs of essentials outpace stagnant wages, leaving millions of families struggling to meet basic needs.

The key drivers of the crisis are housing costs, healthcare expenses, childcare and education, and food and utilities.

All of these are on the rise, which is why inflation and the economy now rank as Americans’ top national concerns according to a CBS News poll.

“Everything is going up in price very quickly,” said Jeremy Tolbert, a 47-year-old web developer in Lawrence, Kansas.

But it’s what he said next that caught my attention….

“Our food budget is going to go down. We’re not talking about eating beans and rice, but going from a comfortable middle-class lifestyle to eating how we did when we first got out of college.”

While this doesn’t sound like good news, it could be a boon for a company like McDonald’s (MCD).

The company reports earnings report Thursday. Will high oil prices, combined with an affordability crisis, provide a lift?

In other words, will higher prices across the board mean that more and more Americans are scaling down their lunch and dinner spending, leading to more frequent “cheaper” meals at McDonald’s?

We’ll know later in the week, but I think there could be an opportunity to make an overnight trade.

YOUR ACTION PLAN

With MCD trading around $285, down nearly 20% from its March high, could this be an ideal time to bottom-feed on MCD before it pops? Join us inside The War Room to see how we’re playing it!