Almanac Trader — End of Q1 – Prone to Volatility and Weakness since…

Over the past 35 years the DJIA has declined 22 times and advanced 13 with an average loss of 0.62% near the end of March. S&P 500 has a similar track record. Excluding advancing years, the average decline is right around 1.5% for DJIA and S&P 500. End-of-quarter portfolio restructuring likely plays a role as managers lock in any gains and look to establish positions for the next quarter. These declines can begin on either the fourth-to-last trading day or the third.

Market weakness dominated the end of March from 1990 through 2009. From 2010 to 2017/2018 DJIA and S&P 500 largely bucked the previous trend and improved the recent 21-year trend in March. More recently late-March selling appears to be staging a comeback.

As of the market’s close yesterday (March 20), DJIA and S&P 500 were down 4.3% and 4.9% respectively this March. Historically end-of-Q1 weakness has occurred regardless of how strong or weak the month had been. In 2009 DJIA was up 12.20% and still declined 3.98% over the last three trading days. DJIA was down 11.24% in 2020 and lost another 2.82% at month’s end.