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.
Yep, I guess it will explode higher; as high as 1700 will fit me well. Next, I guess it will implode, very low. To 300; lifetime low.
Posted by: dacian | March 24, 2010 at 12:50 PM