Wedbush Goes There: "Beware The Panics And Crashes Of March"

As if several markets tumbles and heartstopping short squeezes in just the first two months of 2016 have not been enough to turn professional traders' hair prematurely gray and drive all retail daytraders permanently out of the "market", here is a warning from Wedbush's otherwise quite somber repo market analyst, Scott Skyrm, according to whom the volatility is only just starting.

As he says in his latest note to clients, "over the past 20 years, there was a series of market sell-offs during the month of March. In 1998, it was the subject of a news story on CNBC. They claimed it's a combination the market digesting the February refunding and Japanese investors preparing for Japanese year-end on March 31st. These days, world markets are more complex than in 1998, but there continues to be a series of market panics and crashes in March."

And while the past may or may not be prologue, here is a brief history of the March crashes in the past 25 years which could signal a comparable event is on deck in what is already an extremely jittery market.

  • March 1992: Short-end sells-off, market prices a 75 bps tightening, but the Fed eases in April
  • March 1994: Fed tightens in February and March igniting a sell-off in the long-end of the curve. Mortgage and CMO markets crash. Kidder Peabody is sold
  • March 1995: U.S. dollar crashes. Central banks intervene to support the dollar with large operations of March 1996: Large employment number triggers a sell-off across the entire yield curve
  • March 1998: General market sell-off at the beginning of the month Feb/Mar 1999: Bond market experiences a series of 1 point drops
  • March 24, 2000: NASDAQ (technology) market reaches a peak and begins major decline
  • March 2001: Sell-off in U.S. stock market after Fed fails to cut rates aggressively
  • March 2003: After Gulf War II starts, bond market sells-off considerably
  • March 2005: After poor earnings from General Motors, corporate and emerging markets bonds sell-off
  • Feb/Mar 2007: Stock sell-off in China sparks global sell-off, flight-to-quality, sub-prime market under stress
  • March 2008: Liquidity crisis causes the collapse of Bear Stearns
  • March 2009: Sell-off in stocks brings Dow Jones index to a low of 6547; lowest since 1996
  • Feb/Mar 2010: Greek sovereign debt crisis begins
  • Mar 2011: Earthquake in Japan sends ¥ higher, leads to both a flight-to-quality & sell-off in the cash market
  • March 20, 2012: Late hour bailout from the Eurozone and IMF save Greece from default

If the VXX crashes back to 2016 lows tomorrow, it may not be a bad idea to get some.