March was an ugly month for stocks, with the S&P 500 (SPX) dropping 6%, the S&P 100 giving back 6.6%, the Nasdaq falling over 8%, the Nasdaq 100 declining 7.4%, the S&P 400 dipping 5.5%, and the S&P 600 losing 6.4%. The overall losses in the major indices were close to each other, but that was not the case at the sector level. Both Consumer Discretionary and Information Technology wilted over 8%, Communication Services faded 5%, Financial dropped 4%, and Materials and Industrials fell 3%. Energy led, rising 3.6%, and Utilities eked out a 0.3% gain. The number of SPX issues that fell at least 8% was an incredible 136. On the flip side, only 27 stocks in the index rose at least 8%. Fortunately, at least in the short term, the indices had a very good last day of March -- and it couldn't have come at a better time. During the first 20 minutes of the session, the big three indices gapped lower and all fell to minor intraday corrective lows under their earlier March lows. From there, it was a steady march higher, with the SPX closing 2.2% above its low. While many will say we are already tracing out a double bottom, that bullish reversal formation will not be confirmed until the index closes above the recent high at 5,777. There remains a cluster of resistance for the SPX between 5,750 and 5,825. It includes the slightly rising 200-day average at 5,760; a 38% and 50% retracement of the decline; and the closing and intraday breakdown levels from January 12 and 13. The falling 21-week exponential moving average is at 5,815 and a 61.8% retracement, as well as the declining 50-day average, are up near 5,890. (Mark Arbeter, CMT)

The stock market may have hit a short-term technical low on Tuesday, as the S&P 500 (SPX) and Nasdaq 100 (QQQ) bounced off their 61.8% retracements of the rally since August. Still, the SPX dropped to 5,528 midday (the lowest level since September 2024), rallied back into positive territory (peaking at 5,636), but once again pared a lot of its intraday gains -- leaving us with more questions than answers. The SPX closed at a new pullback low, falling 0.8%, the Nasdaq dropped only 0.2%, and the QQQ fell 0.3%. Some of the biggest gainers came from the former leaders that are also the most beat-up issues. These stocks mostly are in Information Technology (the beneficiaries of the AI and data center build outs, and utilities). The largest gainers on the SPX were SMCI, LUV, CRWD, VST, and GEV. On the QQQ, the winners were MSTR, MDB, and APP. Unfortunately, these stocks need a lot of repair work in order to correct the massive technical damage that has been inflicted on their charts. The 14-day Relative Strength Index (RSI) has cycled into very oversold territory at 28.4%, which is the most-oversold reading since September 2022 near the bear-market bottom. The VIX Volatility Index fell on the day and is back inside its upper Bollinger Band (BB). A lower close by the VIX will give us a short-term VIX sell signal and an SPX buy signal. There are plenty of breadth measures putting in higher lows. The percentage of stocks in the SPX that are above their 50-day is higher than it was earlier this year, but the percentage of stocks above their 200-day is lower (at 42%) and in danger territory. The percentage of QQQ stocks above their 20- and 50-day is higher than earlier this year, but only 43% of issues are above their 200-day. (Mark Arbeter, CMT)

Treasury bond yields have been falling in recent weeks as concerns over economic growth have returned amid the tariff and immigration debate, as well as from the job-cutting in Washington, DC. Meanwhile, corporate bond yields have headed lower as well, but not as rapidly as Treasury yields, this as fixed-income investors are focusing more on high corporate cash levels and balance sheet strength. As a consequence, spreads between corporate and Treasury bond yields have widened, though they are still tighter than historical averages. For example, the spread between AAA-rated corporate bonds and 10-year government bonds in February was 104 basis points (bps), up from 52 bps in December but still lower than the historical average of 104. The gap between the government 10-year bond yield and a BAA-rated bond (still investment grade) in February was 14 basis points, below the historical average spread of 228 bps but wider by about 50 bps in the past two months. We watch these spreads closely for several reasons. One, from an asset-allocation standpoint, tight corporate bond spreads signal that corporate bond prices are above historical fair value, and we may look to under-weight the segment in our model portfolios. Two, from a broad market standpoint, the changes in the spreads offer clues to the bond market's view of corporate financial strength, which appears to be improving, given the narrowing spreads.

Back in November, we talked about certain indices running into psychological or large-number resistance. This took on more significance because the indices were extended after rallying hard off their August lows. With the strength of the indices in November, January, and February, we thought the issue was put to bed as the NYSE and the Nasdaq cleared 20,000 and the S&P 500 (SPX) jumped over 6,000. But as we have said many times, support and resistance are areas -- not an exact point. So months later, the SPX is back below 6,000, and the NYSE and the Nasdaq are already below 20,000. We also have said that breakouts over resistance should be strong, with volume and follow-through action. And that did not happen. We are again getting concerned about the intermediate term. We are seeing five-day/13-day exponential moving average (EMA) crossover sell signals on the major indices. But more disturbing is the mounting weekly momentum divergences. The weekly moving-average convergence/divergence (MACD), which peaked in March 2024, has now traced out two bearish divergences, while the 14-week relative strength index (RSI) has traced out at least five bearish divergences. So we have almost a year of non-confirmation from momentum. The weekly Coppock Curve peaked in February 2024 and put in a glaring divergence in December. The monthly Coppock Curve has rolled over but has not yet crossed its 10-month EMA, which is required for a longer-term sell signal. The SPX is close to its middle weekly Bollinger Band at 5,968; a break would imply at least a test of the lower band at 5,767. Chart support from the recent low is at 5,773 and a test of the last breakout area would be at 5,650. (Mark Arbeter, CMT)