As a new month begins, investors are naturally curious about what March might hold for the stock market, especially after seeing monthly declines in February. While history isn’t a perfect predictor, it can offer valuable clues about seasonal patterns that often influence stock prices.
Looking at historical data since 1990, March has typically been a positive month for stocks, with a median return of about 1.4%. Perhaps more importantly, its historical “win rate”—the frequency of positive returns—jumps to around 64%. This is a notable increase from the win rates of January and February, which often hover in the 50s. The most reliable seasonal trends, however, tend to occur later in the spring and toward the end of the year, with April, May, November, and December boasting win rates above 70%.
Digging deeper into the typical pattern for March itself, a more detailed historical map suggests a common trajectory: a slight dip at the very beginning of the month is often followed by a rally, with another dip tending to occur as the month concludes.
This year, however, the market has been unusually quiet. So far, trading activity has remained in an exceptionally narrow range. In fact, one analysis suggests the S&P 500 is experiencing its tightest trading range in history, dating back to 1928. This kind of compression often indicates that the market is coiling, building energy for a significant breakout. The direction of that move, whether sharply up or down, remains unknown.
Another seasonal indicator that might offer guidance is the Volatility Index (VIX), which measures market expectations for near-term volatility. Historically, the VIX has tended to trend upward into the middle of March before declining. Since stock prices often move inversely to the VIX—falling when volatility rises and rallying when it falls—this pattern suggests we could see some market turbulence in the first half of the month, potentially giving way to a rally later on.
Ultimately, while seasonal trends provide a helpful framework, they are just one piece of the puzzle. The market’s unusually quiet start to the year suggests that any move in March could be more pronounced than usual, making it a month for investors to watch closely.