February Ends on a High Note, But Will March Come in Like a Lion?
While some of Friday's is likely due to positioning for the new month, the first trading day of March has a strong track record. Here's what to know.
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The market finally managed a strong close on the last day of February, even though there is no greater clarity about tariffs, economic growth, or inflation. Interest rates continued to drop on concerns that the economy was slowing very quickly. There is now the potential for up to three Fed rate cuts during the year.
Drama at the White House between Ukraine President Zelensky and President Trump may have pushed back the potential for a Russia-Ukraine deal, but the excitement seems to have invigorated the market, which initially fell on the incident and then jumped straight up for the remainder of the session. There was a very sharp upward spike in the final minutes of trading.
At the closing bell, breadth was in good shape, with 6,000 gainers and 3,700 decliners, but due to the early market weakness, the number of stocks hitting new 12-month lows rose to over 670 names. It was the first strong close for the market since the all-time high on February 19. The Magnificent Seven MAGS led the bounce with a late surge and a gain of more than 2%.
Some of the action on Friday is likely due to positioning for the new month. The first trading day of March has a strong track record. Over the last 25 years, the S&P 500 has advanced 68% of the time with an average gain of 0.36%, according to the Stock Traders Almanac.
The calendar may help the bulls out in the short term, but the uncertainty of the tariff issue and other economic issues is not going to go away quickly or easily. Those issues are likely to keep volatility elevated next week.
The good news is that the mood has become quite gloomy, and many stocks are oversold. There was a decent snapback on Friday afternoon, but it is going to be tough to keep that going with the new flow.
There are many broken stocks and poor charts out there, but there also are some interesting values developing.
Have a great weekend. I’ll see you on Monday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
