March seasonal patterns: Buy the dip, except in bitcoin
March begins on Monday
It's been a wild month in markets but it ends today as we enter March and the anniversary of the pandemic. Last March there were some insane moves that really mess up the seasonal averages but if we look beyond that, there are some typical patterns.
1) Second best month for the S&P 500
March was the best month for the S&P 500 until last year, when the 12.5% drop brought down the average over the past 20 years. In general, it's a strong year for stocks and that extends into April where it's gained in a remarkable 14 of the past 15 years.
Aside from seasonals, I can think of 1.9 trillion other reasons to buy US stocks. For what it's worth, the positive seasonals also extend to other global markets
2) Bitcoin weakness
Bitcoin has fallen in March in 6 of the past 7 years, including a 25% decline last year and a 35% decline in 2018. It's easily the worst month on the calendar for BTC.
3) AUD strength
Last month I wrote about the period of seasonal strength in AUD that runs from February through April. It had a great start and remains higher despite the brutal two-day drop in the pair to close out Feb. Naturally there was some March weakness last year but there's a decent track record of gains and now there's a dip to buy.
4) Mexican peso
I'm a bull on Mexico and the peso but it's been a rough stretch for the past five weeks. If the seasonals are any indication, that will change in March. It's the best month over the past 20 years with an average 1.75% gain and that's despite the 17.3% implosion last year. Strip that out and the peso has risen in 12 of the prior 14 years.
I hesitate to write this one because it's been such a strong run already but there are big seasonal tailwinds in copper, oil, natural gas and other commodities in March and April. The OPEC+ meeting is a risk and natty already got a huge boost from cold weather but the seasonals are what they are.
Here is the February seasonal report card.