Seasonality and recent market behaviour suggest the S&P 500 will rally after reaching a mid-March low, according to Frank Cappelleri, Chief Market Technician at Instinet.

Cappelleri points out that, over the last year, each time the SPX punctured its lower Bollinger Band it was followed by a rally back up to the upper line (Chart 1), though a decisive break of the 50-day moving average was needed before any real buying momentum materialised (Chart 2).

Moreover, he says this year’s February-March period continues to track the 20-year seasonality pattern, which calls for a low sometime in the middle of March (Chart 3), hence adding to the expectation the S&P may soon resume it’s longer-term uptrend.

As such, Cappelleri remains on the look out for bullish signals and patterns.

See Chart 1 / Chart 2 / Chart 3.