Beware the Ides of March

March is often an inflection point for the market.  In eight of the past ten years, the market has turned in March, either up or down.  In only two years this decade - 2006 and 2008 - was there no March reversal of some kind.

Sometimes the inflection point is a major turning point in a bull or bear market, sometimes it is the high or low for the year, and sometimes it is a reversal for the next few months.

The following is a chronology of what happened in March in each of the past 10 years.  The year in green signifies a market bottom, in red a top.

2009 – The market bottomed on March 6, 2009.

2008 – No change in trend.

2007 – The market hit its lowest level of the year on March 14, 2007.

2006 – No change in trend.

2005 – The market hit a year-to-date high on March 7, 2005 before falling 7.6% over the next month.  The market then went higher.

2004 – The market hit a year-to-date high on March 5, 2004, before falling 8.9% to the yearly low in November.  The market then went higher.

2003 – The market bottomed on March 12, 2003.

2002 – The market hovered around the year-to-date highs between March 8 and March 20, 2002 before the market collapsed, falling 35% by October.

2001 – The market hit a year-to-date low on March 22, 2001 before rallying into May.  The market proceeded to fall even further.

2000 – Stocks peaked on March 24, 2001, ending the two decade-long secular bull market.

Given the relentless upward movement in stocks on light volume over the past month, and the current extreme overbought condition, I am guessing a top is approaching.  Whether it would market the top for the year or just the next few months, I do not know.

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