Positive Momentum to Consider

The December 2022 low was 3,783, represented by the red horizontal line. The market tried to test that line in mid-March, but ultimately the market rallied higher. Barring anything crazy happening over the next two days, (knock on wood), we should get through the first quarter of the year without falling below December’s low.

📈 The following chart shows the full-year S&P 500 returns anytime we don’t go beyond December’s low in the first quarter of the year.

As you can see, these are pretty impressive results.

⬆️ 94% of the time, the market is higher, with an average rate of return of 18.6%. The only two negative years were flat and down 0.7%. Now, this isn’t some sort of magic formula that makes this happen, it’s momentum. It’s the same reason the market fell for nine months and has moved sideways for the last six months. Once things get heading in a particular direction, it’s hard to get them to move in a different one. This process of bottoming and turning around takes a while, and this data is an excellent first indicator that momentum could be shifting.

Shean