Market Blog Posted by lplresearch
Friday, February 26, 2021
March is right around the corner and with it is a harsh reminder of one year ago when everything stopped.
As we inch closer to a lot of reminders about March 2020, here are three charts that have caught our attention recently.
First off, the one year anniversary of the bull market is coming up on March 23 and this current bull ranks as one of the strongest starts to a new bull market ever, rallying about 75% off of lows. But remember, the two previous best starts to a new bull market ever began to tire some around now.
As shown in the LPL Chart of the Day, the ’82 and ’09 bull markets both started off historically strong, but after about a year began to consolidate for the next six months. “After the record gains during this new bull market, history would say be open to some type of weakness or consolidation,” explained LPL Financial Chief Market Strategist Ryan Detrick. “Plus, if you are bullish, maybe a well-deserved consolidation could be perfectly normal for the bull to catch its breath.”
Next, be open to buying any potential weakness should it happen. We call this one the Valentine’s Day Indicator: If the S&P 500 Index is up more than 4% for the year on February 14, the rest of the year tends to be quite strong. In fact, the rest of the year has been higher an incredible 24 out of 26 times, for a very solid 13% average return. Given 2021 was up close to 5% on Valentine’s Day, history would say continued gains over the rest of the year are likely.
Lastly, the S&P 500 fell 12.5% in March last year, for the worst monthly return during March since 1939. Not suprisingly, this greatly impacted the past returns during this normally strong month. For instance, over the past decade, only September has been worse on average and since 1950, this month now ranks right in the middle of the pack at 6, after being near the top before last year.
So there you have it, three charts that caught our attention. Now here’s to a much less eventful March this year!
IMPORTANT DISCLOSURES
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
All index and market data from FactSet and MarketWatch.
This Research material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value