The Month Of March Should Be Good For Stocks, And These Groups In Particular

Are things ‘back to normal’ for the market? That is to say, was December’s largely unmerited drubbing put all the way into the rearview mirror by the January/February bounce?

If so, that’s good news here at the beginning of the third month of the year.

It’s an often overlooked fact, but after a usually-lethargic February, stocks tend to heat up again before running into their summertime lull. On average, the S&P 500 gains 1.1% in March and grows another 1.7% in April. May through… well, September is a slow time, forcing traders to make a point of looking for hot spots. Between now and then though, the broad tide is poised to rise, assuming the big bounce since late-December hasn’t left stocks dangerously overbought.

That’s a big ‘if,’ of course. But, tendencies are tendencies for a reason.

The bigger question is, which sectors and industries are more likely to thrive in March than others? There’s an answer. In no particular order…

Banks

Whether they’re on a route to a winning year or a losing year, March and April tend to be great ones for bank stocks like Bank of America and Citigroup. Regional banks and thrifts? Not so much. Money-center banks generally log a gain of 2.2% in the upcoming month and add another 2.6% in March.

Environmental Services

It’s obscure but too reliable to ignore. Between the end of February and the end of April, environmental science names gain roughly 4.3%, but then tend to add another 3.0% in May alone. That’s the case regardless of what lies ahead the rest of the year. A couple of names here include Waste Management and Stericycle.

Energy

Energy stocks typically gain 6.0% for the coming two-month stretch. That’s the case no matter what lies in store for the remainder of the year. Drillers do particularly well, as do equipment and services. Refiners and storage, not so much. They all do rather well though.

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