I Told You April Would Rock

"Despite all of the gloom and doom, I've been feeling pretty good about April," I wrote in early March.

Sure enough, last month was a sweet time to be long the market. The S&P 500 soared 9.4%, its best monthly gain in nine years. That's padded on top of March's 8.5% spurt, and I should point out that my bullish call came when March was still in the red.

I'm not as limber as I used to be, so I'm done patting my own back. Now I'm going to teach you how I did it. My optimistic thesis consisted of three components:

• A new federal tax credit was set to kick in come April. Workers making less than $75,000 will receive $400 for the year, dispensed in small chunks in each paycheck. It certainly may not seem like much, but I saw it as a psychological boost. "The perceived raises will provide a welcome contrast to the salary cuts and layoffs that have scarred morale over the past few months," I wrote.
• Earnings season also began a few weeks into April. The market had already discounted an abysmal showing in many key stocks. Pessimism ran thick during the months of January, February, and through a good chunk of March. I didn't buy in, since companies were already sharpening their pencils. "Companies whittling down their headcounts -- and even the rare ones keeping their workforces intact -- are also cutting costs elsewhere," I wrote. "What do you think this will do for corporate margins?"
• My last point was that tax-filing refunds are starting to trickle in. There's a reason why the old adage is "sell in May and go away" instead of "sell in April or … something bad that rhymes with 'April.'" As the tax-filing deadline approaches, folks begin funding their IRAs. That translates into money flowing in -- and not out -- of the market.

Betting on the beaters
Two days after writing my "In April We Trust" article, I came back with "7 Stocks That Should Soar Next Month." Instead of the plethora of companies projected to post lower year-over-year earnings in April, I decided to key in on the companies bucking the trend.

I set my sights on seven stocks that analysts figured would actually grow their bottom lines during one of the more trying recessionary quarters in recent history. Six of them reported in Marchm and for the most part, they lived up to the hype.

Source: Yahoo! Finance.

Green Mountain, Google, Netflix, and Panera topped Wall Street expectations. Network uptime specialist NetScout was the only one to clock in below its profit target, but shareholders seemed OK with that. The stock climbed more than 25% last month.

Time to pack the crystal ball
So what will May bring? I hate to retire on top, but I'm just not getting a reliable read -- one way or the other -- for May.

For starters, there is no longer the same level of pessimism baked into today's prices. The S&P 500 has shot up 18.7% over the past two months. The NASDAQ Composite, which is more indicative of the growth stocks that I typically follow, has soared 24.6% in that time.

That kind of bubbly performance would typically cap the market's upside potential, but the equity markets are still way behind where they used to be. Despite the amazing gains of the last two months, the NASDAQ Composite is still off by 28.8% over the past 12 months.

That one-year drop may limit any rounds of profit-taking over the coming weeks. It also helps that some bellwethers like Amazon.com (NASDAQ:AMZN) that were expected to post lower quarterly results, came through with upside surprises instead.

You also have historical -- perhaps even hysterical -- lows in money market and government bonds, so it's not as if there are many attractive parking spaces for idle cash.

All of these factors may keep prices from falling by grave sums, but there is also an absence of the upside catalysts that I saw percolating in April. So if I have to make a call for May, I would say that it will be generally flat with a slightly upward bias. It shouldn't be anything like the rosy gains of March or April, but you can't expect the market to shatter nine-year records every passing month.

Some other ways to learn from the past to gauge the future:

• In April We Trust
• What's Next? Dow 5,000?
• Stocks You Have to Trade Today