Technicals | 10:30 AM
By Daniel Goulding
As a technical analyst, I closely monitor seasonality the tendency for equities to perform better during certain times of the year and worse during others.
Following in the footsteps of W. D. Gann, I always circle the dates of the equinoxes and solstices on my calendar as potential turning points in market sentiment.1 2
Historically, March has often provided investors with buying opportunities. For example, three of the five largest declines in Australia’s benchmark share market index, the S&P/ASX200, since 2000, have occurred in March.
The most recent instance occurred two years ago when there was an -8.9% decline into 20 March, primarily due to the collapse of Silicon Valley Bank in the U.S. and significant lapses in internal risk protocols at the global financial services company Credit Suisse.
Despite the prevailing panic, I emphasised to my readers it was a buying opportunity, given seasonality, bearish sentiment and favourable Wave Structure – how various market advances and declines relate to one another from a psychological or quantitative viewpoint. A reasonable rally followed.
This year is shaping up to present yet another potential buying opportunity in March. When the ASX200 was trading at approximately 8400 points in early December, I opined this was “as good as it gets for Australian equities.”
I projected a decline to between 7500 and 7700 points over four months, illustrated in Exhibit 2. The low on Tuesday was 7818 points. Wave Structure indicates the market is near a bottom from a price and time perspective.
Given recent developments, the forecast provided back then requires some revision.
The weight of the evidence suggests there is maybe a 75% chance the market rallies one last time to new all-time highs before a bear market of around -24% commences.
In this scenario, the target range is between 8615.2 and 8900 points, probably achieved in the fourth quarter of 2025.
The alternative scenario is that the peak is already in and a bear market decline of -24% has commenced. Even in this scenario, the market should bounce back to at least 8370 points by the middle of May before another downleg kicks off in earnest.
My portfolios are currently around 60% invested. I suspect I will deploy the remaining cash within the next five trading days. I also hope to open a levered long ASX200 position in the same timeframe.
While I am hopeful that the market will print new all-time highs in the coming months, I will review the evidence daily, because hope is not an investment strategy.
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Daniel Goulding is a technical analyst with over 20 years of experience. He is the publisher of The Goulding Letter on Substack, and previously The Sextant Market Letter. His Twitter handle is @CopernicusASX. In the past, he worked as an Authorised Representative of the Townsville branch of RBS Morgans, and later Grow Your Wealth Financial Services Townsville.
Footnotes:
- W. D. Gann was anointed one of the five titans of technical analysis by Stocks and Commodities magazine. David Penn, The Titans Of Technical Analysis, Stocks & Commodities, 20:10, (2002).
- Evidence shows that the changing seasons may be a “fundamental source of variability in how people think, feel, and behave.” Ian Hohm et al., Homo temporus: Seasonal Cycles as a Fundamental Source of Variation in Human Psychology, Perspectives on Psychological Science, (2023). https://doi.org/10.1177/17456916231178695.
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