At the beginning of this month, I discussed the monthly statistics for March. To wit:
“It is often the case that the month following a negative return month will post a positive return as markets bounce from oversold conditions. However, as shown below, this is not always the case.
The chart below shows both February and March returns going back to 1957. During that period, the month of March has posted gains following a February loss 15 times, and losses following a February decline 13 times. Again, at 53.6%, the odds aren’t much better than a coin toss at best.”
One interesting note about the chart above is the sharp increase in monthly market volatility since the turn of the century as computers, online-trading, and algorithms took over the markets. Also, QE programs accelerated returns during the post-financial crisis period which has positively skewed the statistical analysis.
While the month is not over as of yet, the current 5.37% advance is within the context of previous market rallies since 1997.
With the majority of short-covering appearing to be complete, and volume on a steady decline, we may have seen a bulk of the reflexive bull rally already. As noted by Dana Lyons earlier today:
Always useful to observe behavior on days like yest: e.g. Rydex traders covered signif % of shorts;bear assets not low, but lowest since 2/1
— Dana Lyons (@JLyonsFundMgmt) March 24, 2016
With April wrapping up the seasonally strong period of the year, the seasonal adjustment boost to economic data coming to an end, and earnings growth remaining elusive – the summer months could prove to be problematic. For now, we will have to wait and see what develops.
With that, I just want to wish you all a very happy, safe and joyful Easter weekend.
- How To Rob A Central Bank by Bloomberg
- New Rules For The Monetary Game by Raghuram Rajan via Project Syndicate
- Fed Funds Fanaticism Will Keep Failing by Louis Woodhill via RCM
- Central Banks Are Doing The Unthinkable by Mehreen Kahn via The Telegraph
- Why Janet Yellen Is Toast by Pater Tenebrarum via Acting-Man
- The Biggest Short by Robert Gore via The Burning Platform
- April Will Decide Markets Fate by Avi Gilburt via MarketWatch
- Here’s Why Nobody Believes This Rally by Tyler Durden via ZeroHedge
- Dividend Cut List Continues To Grow by Ironman via Political Calculations
- It’s Time – The Rally Is Finished by Macroman
- 2016-2018 Looking A Lot Like 2007-08 by Doug Kass via Real Clear Markets
- Profits Gap Is A Warning To Investors by Alex Dumortier via Motley Fool
- Odey: “No Longer A Market But A Battlefield” by Julia LaRoche via BI
- Clark: The Nikkei Leads The Bust In The S&P 500 by Tyler Durden via Zerohedge
- Saudis Won’t Let Oil Stay Above $40 by Panos Mourdoukoutas via Forbes
- How Bad Will Losses To Banks & Investors Be? by Yves Smith via Naked Capitalism
- Why Oil Prices Are About To Plunge by Tyler Durden via ZeroHedge
- Don’t Be Fooled By Spike In Oil Prices by Matt Egan via CNN Money
OTHER GOOD READS
- Americas’s Retirement Crisis Getting Worse by Philip Moeller via Money
- Why A 100% Stock Portfolio Could Hurt You by John Coumarianos via MarketWatch
- Market Remains Obscenely Overvalued by John Hussman via Hussman Funds
- Yellen – Armed, Dangerous & Lost by David Stockman via Contra Corner
- Mind The Gap by Salil Mehta of Statistical Ideas
- It’s Hard Being A Bear by Joe Calhoun via Alhambra Partners
- Bollinger Band Squeeze Signaling A Change? by Steve Deppe via SeeItMarket
- 3 Critical Things To Know Before Investing by Capitalist Exploits via ValueWalk
- The Wealth Effect Could Shift Into Reverse by Jesse Felder via The Felder Report
- Stock Rally Getting Too Complacent via Dana Lyons via Tumblr
“Successful preservation of capital must overcome the handicaps of socialistic governments, supposedly to help the masses.” – Gerald Loeb
Questions, comments, suggestions – please email me.
Lance Roberts is a Chief Portfolio Strategist/Economist for Clarity Financial. He is also the host of “The Lance Roberts Show” and Chief Editor of the “Real Investment Advice” website and author of “Real Investment Daily” blog and “Real Investment Report”. Follow Lance on Facebook, Twitter, and Linked-In