As we noted earlier this week, the strongest two months of the year over the past 10 years are right now: March and April.
Taking another look at seasonality shows the S&P 500 historically tends to form a low in early March before a nice surge into early May. Although the bottom this year potentially occurred a little bit earlier, in the middle of February, from a seasonal point of view, history still favors the bulls in the next few months.
Source: LPL Research, FactSet 03/03/16
Now here’s where things get interesting. For the past 10 years, early weakness is nothing new. In fact, January has been lower each of the past three years, with losses of 3.5%, 3.1%, and 5%, respectively. February was slightly negative this year, but in the two previous years it did bounce back, with gains of 4.3% and 5.5%. Then again, considering February this year was down as much as 6.7% at its lows, the reversal to end nearly flat could be viewed as just as impressive.
The chart below shows the average S&P 500 moves over the past 10 years, during which early March has marked the low of the year, before a nice rally.
Early Weakness Is Nothing New for the Past Decade
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.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit
Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor
Tracking # 1-474729 (Exp. 03/17)