March appears to be a relatively non-distinct month on the trading calendar. It is not in the bottom or top quartile of performance metrics in any of the top three equity indexes. It lands at fourth best in the S&P 500, fifth best in the Dow Jones Industrial Average and sixth best in the Nasdaq Composite.
The performance in the S&P 500 and Dow in March has been significantly stronger — both in overall percentage and in the number of up versus down months— than in the Nasdaq. We noted here two months ago how the technology-heavy Nasdaq wildly outperformed the S&P 500 and Dow (more than 2.5 to 1) in January, and suggested a long Nasdaq/short Dow or S&P 500 trade (see “January: Bet on tech,” MODERN TRADER, January 2018). The Nasdaq’s early year outperformance against the Dow and S&P 500 persists on average, though less dramatically, in February. Anyone making that bet in the beginning of January may want to take profits in March.
More recently, March is known as a month for major turns. While everyone knows that March was the turning point that triggered the most recent bull market in 2009 following the credit crisis crash, a significant bottom was also set in 2003. While the low from the 2000 bear markets was set in October of 2002, equities across all indexes retraced, losing most of its gains before setting a solid bottom in March.