Why Do Market Crashes Keep Bottoming in March?

If you’ve been watching the stock market over the past few decades, you may have noticed something oddly specific: when things go bad, they tend to hit rock bottom in March.

Let’s take a look:

Major Market Crashes & Their Bottoms:
• 📉 2000 crash (Dot-com Bubble): Bottomed in March
• 🏦 2008 crash (Global Financial Crisis): Bottomed in March
• ⚙️ 2018 crash (Tech selloff): Bottomed in March
• 🦠 2020 crash (COVID-19 pandemic): Bottomed in March
• ❌ 2022 crash: Did NOT bottom in March. It bottomed in Oct.

Takeaway: 80% of recent crashes bottomed in March.

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🤔 So… What’s With March?

There isn’t a single reason, but here are a few strong theories:
1. 💸 End of Tax-Loss Selling
Investors often sell losing positions in December for tax benefits. That downward pressure lingers into Q1, and by March, much of the selling is flushed out.
2. 🧾 Fresh Capital Inflows
New fiscal years, bonuses, and retirement account contributions often kick in around March, giving the market a boost.
3. 🏛️ Fed Policy Announcements
The Federal Reserve tends to make major policy updates in Q1, often calming fears or injecting stimulus after a rough winter.
4. 🌱 Seasonality & Sentiment
After a gloomy Q4 and volatile Q1, investor optimism tends to return in the spring — what some call the “spring rally.”

📈 Market Update: Navigating a Choppy Rally

Over the past week, the stock market—as represented by the $SPX—has made some effort to rally. We’ve seen a couple of strong days, yet resistance at or just above 5700 has repeatedly pushed back these gains. Typically, oversold rallies are expected to reach, or even slightly surpass, their declining 20-day moving averages. In our current scenario, that moving average sits at 5760 and is falling rapidly. Rather than the market surging to meet this level, it now appears that the moving average will drop to align with $SPX.

🔍 Key Levels to Watch:

Resistance:
🚧 The 5700 mark remains a formidable barrier.

Support:
🛡️ There is tentative support in the 5500-5540 zone—the area where daily lows were recorded a week ago. If this fails, we might see support near 5400, a level that provided relief last September.

📊 Rally Dynamics and Technical Signals:

Put-Call Ratios:
📉 Equity-only put-call ratios continue to send sell signals. Even on rally days, these ratios are rising—the weighted ratio, in particular, has reached levels last observed during the 10% market correction in October 2023. The standard ratio is also on an upward trend, though not as extreme yet. These metrics won’t flip to buy signals until they peak and begin to decline.

Market Breadth:
⚖️ Breadth has been volatile, with large net plus or minus figures appearing almost daily. While breadth oscillators have moved into buy territory (reflecting recovery from oversold conditions), this optimism hasn’t translated into consistent upward momentum.

Implied Volatility ($VIX):
🔄 The $VIX spiked sharply in early March and has since pulled back, creating a “spike peak” buy signal on March 12th that will remain valid for 22 trading days unless $VIX closes above its recent peak of 29.57. Concurrently, a $VIX sell signal established in late February persists, given that both $VIX and its 20-day moving average are above the 200-day moving average (just above 17).

🤔 Final Thoughts:

In summary, the market appears oversold and is making a violent effort to rally, yet the momentum is not gaining significant traction. In a typical bear market environment, these oversold conditions are eventually worked off, with sell signals resuming their influence.

For now, Staying informed and agile is key in navigating these choppy waters.

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