Seasonality Versus Price
The seasonality pattern has matched reported tops and bottoms 9 out of 13 times, with an alternative count of 10 out of 13. The update also notes expectations for a low around 31 March, potentially earlier because the top occurred on 17 March. Technical levels cited include a 0.236 retracement near 6492 and a 1.618x extension at 6493, used as targets for an ending diagonal from the 25 February high. The projected path is: completion around 6490 ± 10, then a countertrend B-wave rally to about 6900 ± 100 on 18 April, followed by a red W-c decline to at least the 0.382 retracement. Looking back at our analysis from this time in 2025, the mid-term election year seasonality played out almost perfectly. The market bottomed around March 13 and topped near March 17 of that year, just as we anticipated. This gave us a reliable roadmap for that specific period. Today, we must recognize that 2026 does not share that same seasonal pattern, so a direct comparison is not useful. However, we are seeing a similar price structure with the market pulling back from its late February high of around 7250. This kind of correction, where the VIX has recently climbed from a low of 13 to over 18, suggests traders should prepare for short-term weakness. Using the same technical tools from last year, we are watching for a potential bottom for this initial downward move. The 0.236 Fibonacci retracement level of the rally from the October 2025 low sits near 7020, which could provide initial support. Derivative traders might see put option volume increase around this level as a sign of a temporary floor.Near Term Support And Bounce
Should the market find support around 7020, we would anticipate a countertrend rally, similar to the B-wave structure discussed in 2025. This bounce could be an opportunity for traders to hedge or initiate short-term bullish positions, perhaps using call options targeting a retest of the 7150 area. However, we see this as a temporary move before the next leg down. Given that core inflation ticked up again last month to 3.1%, we believe this entire pullback is part of a larger correction. A failure of the B-wave rally would signal the start of a more significant decline, potentially targeting the 0.382 retracement level near 6800 later this spring. This suggests that any strength in the coming weeks should be viewed with caution, and protective puts with later expiration dates could be considered. Create your live VT Markets account and start trading now.
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