Which Sectors Could Win in March By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - Why 2025 is a year of fearful transition…
- One last flush before a bullish March…
- Which sectors won February, and which will win this month?
- The top Utilities names to own right now…
- Power Factor stocks are on sale…
Are you feeling the fear? Pulling up my TradeSmith Finance dashboard this morning, I was greeted with this… A year ago, Extreme Greed. A month ago, Greed. A week ago, Neutral. And today… Fear: 
It really goes to show how different 2025 is shaping up. It’s a year of major change, shown clearly by the flurry of actions we’ve seen so far out of the new White House administration. Everything from trade, to government spending, to taxes, to regulation is getting a hard look. This year will also see the AI trade enter the application phase – with enterprise products, consumer products, and eventually what’s called “physical AI,” such as in robotics. All this will come with a heavy dose of volatility, and we’re already getting a taste of it. But as we showed you this past week, we should embrace this volatility. Not only as a simple buying opportunity during what’s certainly a bull market… But as a sign that we’re in the special kind of bull market that we’ve only seen twice before in modern history: the Mega Melt-Up. These peculiar periods are characterized by price action that challenges rationality – with huge bumps in the road leading to an exponential long-run return. | Recommended Link | | | | When Louis Navellier speaks, Wall Street listens. His stock-ranking system has spotted some of the market’s biggest winners — including Nvidia at $1 before it became the cornerstone of the AI revolution. Now, for the first time in years, he’s found a company that shows the same potential markers he saw in early Nvidia. He’s even giving away the name and ticker for free in his new video. Click here to see it. |  |
We’re in one of those bumps now… And despite Friday’s recovery, it may not yet be over. Take a look at this… This is our seasonality chart of the S&P 500 index going back 75 years. And what it’s showing us is that while March is generally a positive month, with gains in 15 out of the last 20 years, the month starts with one more flush down of about (on average) -0.15%: 
The pandemic crash of 2020 very much skews the numbers here. That was an abnormally large crash compared to the rest. Though, it’s worth noting that 2009 – the bear market bottom after the Great Financial Crisis – was an almost equally strong month to the upside… almost canceling out the pain of 2020 in this dataset: 
In the end, we still have seen a median return of 2.19% for the full month of March, which is actually even better than the average: 1.84%. Nonetheless, the start of the month is always a great time to dive into the data and see the best place to be for the month ahead. Last month, we told you Energy stocks have historically had a good February. That was true this month, with the SPDR Energy Sector ETF (XLE) rising almost 3% during a turbulent February. Our top energy pick for the month, Williams Companies (WMB), rose 3.34% – providing a solid gain amid the volatility. Staples, the second-best historical trade for February, also had a great month, with XLP rising more than 4%. Clearly, seasonality points us in the right direction. So what’s it saying for March? Seasonality says you want to be in Utilities (XLU) for March, which has had an 84.6% win rate and an average trade result – counting wins and losses – of 2.8%: 
Consumer Discretionary stocks (XLY) also look like a solid bet, with a 65.4% historical win rate and average trade of 2.2%. But let’s stay focused on Utilities. Of the top 10 holdings in XLU, which is the best bet? 
Today is a good demonstration of why statistics matter… Constellation Energy (CEG) initially looks like a great bet. That stock has had a 100% win rate and a 4.34% average result… but only two trades on record. Vistra (VST) is a similar story. An 85.7% win rate and a 6.54% average trade, but only seven years of history to speak of. For a real contender, look at NextEra Energy (NEE). In 66% of the last 47 years of trading history, NEE was higher by 3.2% on average in March. That’s a seasonal trade you can more easily bank on. Power Factor stocks just went on sale… If you’re confident that stocks are still in a bull market, as we are, you want to use the volatility of the last week to make some smart new buys. And for our money, Power Factor stocks are the smartest buys in the market – rain or shine. Our growth investing specialist, Jason Bodner, defines these Power Factor stocks as those with two key characteristics: - Fundamental outperformance – stocks with the highest earnings, revenue, and profit margin growth rates.
- Market-beating momentum – the stocks moving up faster than any other, propelled by the undeniable strength of institutional capital.
Every week, Jason shares the top- and bottom-ranked Power Factor stocks with his Quantum Edge Pro subscribers. Last week’s list is below, and the most recent names will be going out to Jason’s subscribers later today. 
Nothing excites me more than seeing new names on the top spots… or seeing repeat entries week after week. The new names we can think of as Big Money breakouts – they’re the stocks the biggest institutions on Wall Street have just uncovered and have started buying up. Chefs’ Warehouse (CHEF) and Vita Coco (COCO) are two of those new names. And the repeat holdings are those with consistent signals, week after week. Palantir (PLTR), Robinhood Markets (HOOD), and Doximity (DOCS) are three examples of those. These are the names that should be on your watchlist in the aftermath of last week’s volatility… And especially since a lot of those stocks faced the brunt of the selling. The Big Money doesn’t lie. A great buy last week, in their eyes, is an even better buy today. On your “not” list, however, is all the stocks at the bottom – including Foretrea Holdings (FTRE), Seabridge Gold (SA), and two biopharma companies, Structure Therapeutics (GPCR) and Ionis Pharmaceuticals (IONS). In addition to each week’s list, Jason pens a valuable update for his subscribers. Commenting on the earnings season last week, Jason had this to say… Earnings seasons are predictable… and unpredictable.
[86% of the S&P 500 companies] have reported earnings. We’re most of the way through this season. According to FactSet, 76% beat earnings expectations while 62% exceeded sales estimates. This is right in line with the 10-year average, and as I’ve said before, analysts consistently underestimating earnings builds in an upward bias.
Earnings growth is beating predictions in 7 of the 11 sectors thus far, which is also pretty predictable. But investor reaction is not.
Some of the biggest up moves in share prices are in sectors with the lowest growth in earnings: - Energy, despite experiencing earnings contracting, is up 6.7%.
- Health care, one of the weakest sectors recently, is up 6%.
- Discretionary stocks, which seem to be exceeding growth predictions the most, are down 1.2% since Jan. 1.
- Technology, the engine of growth that I like to see power bull markets, is up modestly.
- Growth indexes are up nicely.
- The small-cap Russell 2000 is a lagging index but still up 1.6%.
- Semiconductors are performing nicely: +6.6%.
I’ve seen a push and pull in sector performance in February. When we look at money inflows and outflows, we see steady but not heavy inflows into financials stocks. The sector is clearly rising, but the big inflows took place months ago. Utilities stocks are seeing rising inflows and dwindling outflows, pushing the sector higher.
Tech is interesting in that both inflows (green bars) and outflows (red bars) have increased since the start of the year. That indicates a tug of war within the sector, and the result is sideways price action (blue line). 
Source: MAPsignals.com The headlines scream that investors are becoming less confident on the economy and lightening up on risk. Fears are surfacing that President Donald Trump’s aggressive actions and sweeping changes in government could impact inflation and shove us into a recession.
Maybe. Maybe not. That’s still a fear and a guess. Meanwhile, the S&P 500 is still only 2% below its all-time high, which was just two days ago. I expected some selling anyway as we wrap up earnings season. The market is tired and needs a little rest, and some giveback is natural and even healthy. It’s worth noting that Jason observed heavy inflows into Utilities stocks… and similarly, sees the recent volatility as a healthy retrace of the highly optimistic moves of the last few months. The money flows line up with the seasonals, and Utilities could be an outperformer in the month to come. Also, remember how well Utilities stocks performed last year as the electricity needs of AI became a central narrative. That’s still true today… And what’s great about the Utilities trend is that it doesn’t matter whether we’re in an AI infrastructure buildout or an appliers phase. The technology will continue to soak up energy, and companies that provide that energy should continue to earn a premium. To your health and wealth, 
Michael Salvatore
Editor, TradeSmith Daily | 
