Stock Signal Flashing for First Time in 17 Years

The DJI and SPX tend to outperform after steep March losses

by Andrea Kramer

Published on Mar 29, 2018 at 1:55 PM

The Dow Jones Industrial Average (DJI) and S&P 500 Index (SPX) are set to close March with steep losses -- something we haven't seen since 2001. However, if past is prologue, that may not be a bad thing for the stock market. As such, and considering the February correction, the indexes are set for their first quarterly losses since September 2015.

Blue Chips Outperform After a Bad March

The DJI is set to end the month with a loss of roughly 3.72%, at last check. The last time the blue-chip barometer suffered a March loss of at least 3% was in 2001, according to Schaeffer's Senior Quantitative Analyst Rocky White.

However, following steep March losses, the Dow tends to outperform. The index averaged a rest-of-year gain of 7.71%, and ended higher 78% of the time. That's compared to an average anytime rest-of-year gain of just 5.35%, with a smaller win rate of 62%.

dow march losses vs anytime

S&P Rest-of-Year Returns Skyrocket After Steep March Drops

It's a similar story for the S&P 500, which is pacing for a March loss of 3.08%, at last check. The last time the SPX ended March with a drop of 2.5% or more was in 2001, and before that, you'd have to go back to 1997.

Again, the index tends to outperform after steep March drops -- even more so than the Dow. Specifically, the S&P averaged a rest-of-year return of 15.85%! That's almost three times its average anytime rest-of-year gain of 5.58%. Likewise, the SPX ended the year in the black 75% of the time after a bad March, compared to 67% anytime.

spx after steep march losses

Looking ahead, we found it interesting that the month of April was the S&P's best month of the year on 14 occasions, considering data since 1929. That's the most of any month. As such, perhaps March showers will bring April flowers for stocks this year? Either way, these stocks could outperform in the near term, if seasonal trends repeat.

spx monthly rank


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