Looking Back on February and Looking Forward to Leap Day

As we head into the last two days of February, let’s take a look at some of the key stats from what has been a truly wild month.

  • Should February finish the month in the green (up +0.59% as of Thursday night), this would make seven consecutive years this month has finished higher. No other month in the past seven years has been this strong.
  • At the lows, the S&P 500 was down more than 6%. Should it finish green, it would be in rare company, as only eight months since 1970 have done that. Recently, only October 2014, March 2009, December 2008, and March 2003 all saw similar big intra-month reversals. March 2003 and March 2009 were generational buying opportunities. October 2014 was a major tradeable low; but following December 2008, the S&P 500 dropped significantly the next two months.
  • As we noted before, 2016 has seen one of the worst starts to a year ever for the S&P 500. With this, though, have come some extremely negative levels of sentiment. This is important, as once everyone is bearish, no one is left to sell and a potential upside reversal is possible. Looking at the American Association of Individual Investors (AAII) sentiment poll, two weeks ago the number of bulls came in near the lowest level in more than 20 years. Bears have outnumbered bulls for eight consecutive weeks. That is the longest streak of persistence in bearishness in nearly four years.
  • The S&P 500 closed above its 50-day moving average for the first time in 38 trading days yesterday. This was the longest streak beneath this trend line since 52 straight days in late 2011. Not to be outdone, the S&P 500 was beneath its 50-day moving average the first 36 trading sessions of 2016. This was the fifth-longest streak to start a year beneath the 50-day, with only 1982, 1969, 2008, and 1970 longer.
  • Lastly, Monday is the last day of February. Usually February has 28 days, but every four years it has 29, and this special day is known as leap day. Why do we have a leap day? Well, it takes the earth 365.2421 days to rotate the earth. So every four years another day is added to make up the difference. It is easy to remember, as leap days happen during presidential election years. For fun, what usually happens on this rare day? Well, it has been down three of the past four times, and overall, is slightly weaker than your average day. For reference, since 1928, there have been 22,166 days traded for the S&P 500 and the average daily return is 0.03%, with a median return of 0.05%. Also, 52% of all the days have been positive.
    Picture1Source:  LPL Research, FactSet 2/26/16
    Note: The percent change is from the previous day.

 

 

IMPORTANT DISCLOSURES
Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

Stock investing involves risk including loss of principal.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period.
This research material has been prepared by LPL Financial LLC.

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