If the month were to end today, the Russell 2000 would be up 9.8% in March.This would be the 11th strongest month since 1980, in the 97th percentile of monthly performance.

The question is, what now? 

If history is any guide, the market probably goes higher.  In the 11 other occasions when the market rose as much or more than it has month-to-date in March, the index was up on average 2.9% a month later, 5.2% two months later, and 6.5% three months later.  On only three occasions was the market down one and three months later, and only twice two months later.  One year later, small-cap stocks were 13.1% higher on average, and were down only three times.

The anatomy of each period is interesting.  Such gains usually occurred soon after the market bottomed (1980, 1982, 1984, 1991, 2003 and 2009) or just before the market topped – in May 1987, and two months at the end of the Tech Bubble, December 1999 and February 2000.  On two other occasions – 1985 and 1997 – the explosive month was after a period of consolidation before the market moved higher.  (The market crashed a few years later in both cases.) 

The market had been moving sideways prior to taking off in February.  March may be an explosive move higher after market consolidation.