LPL: Three Charts You Need to See
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!