Beware The Ides of March? (After a positive January and February, now what?)

March 07, 2019 | Vito Finucci


We're off to a strong start in 2019, what happens next? Where does the market go if the US and China come to a trade deal?

With all due respect, I was never a big fan of reading Shakespeare in school, but did enjoy “Julius Caesar”. For those of you too young to never have read Shakespeare, the title of this Infomail was one of the classic lines from that play.

After gaining 7.8% in January, the S&P 500 added another 3.4% in February to have a year to date return of 11.5%. Surprisingly (and quietly), Canada’s TSX has added about 12.2%.

It’s the best first two months of the year since 1987… and yes, I know what happened late that year. But I believe after a brief rest, we could get more gains in the rest of the year.
All we have is history as a guide, so let’s look back and see what’s happened in the past with similar starts.

Since 1950, the S&P 500 has kicked off the year higher each of the first two months on 27 occasions
Incredibly, the final 10 months finished higher… in 25 of those 27 times.
The average return in those final 10 months was an impressive 12.2%. You can see it all on the following chart from LPL Research:

So while the markets may still get one more catalyst higher from a trade deal agreement between China and the USA, my gut is much of the gains have been made and the “pros” sell into any “knee jerk” rally.

We are due for a bit of a rest/pause here, and that’s OK, but look for higher gains the rest of the year if history is any guide.

Stay tuned,
Vito Finucci, B.COMM, CIM, FCSI
Vice President and Director, Portfolio Manager


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