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So here is the 3/09 (the low) and 3/10 monthly candles where all the psychological dynamics would exist of massive 1yr returns, thoughts of the previous year etc. Investors in this case responded with another strong month.
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Off the 2002 low one year later we do see some weakness but it's rather muted
Now having said that at some point this year we are going to enter a giveback stage. Maybe it is March again all the past tells us is the behavior of traders in similar circumstances and how that speaks to probabilities. We have strong recency bias, everyone waiting for something big. Saw in the crypto thread I think it was, a poster selling out of stock because of the fear of a coming crash. I feel like a broken record but people really need to look at the weight of the evidence, strength is not a reason to sell.
Pullbacks are scary but they are completely normal and healthy for a long term trend. The market isn't going to go up every day, nor ever week, or month. That does not mean the primary trend has been violated. Take it in stride, if the character of the market changes and you want to get out then act if that suits your goals, but doing so just because you are fearful is almost always going to be a mistake.
My read on it based on the evidence in hand is that the rally could extend to 4200 or so on the SPX before a more sizeable correction (~10-19%). So if that assumption is correct that will have us revisiting this 3500-3800 level again some time later this year. When/if it happens it may feel like the sky is falling some individual stocks will be down substantially more. We'll cross that bridge when we come to it. How the underpinnings of the market behave will give us clues how to respond.
We don't yet know where yields are going to level out, we don't know how growth stocks will respond to higher rates (Contracting pe?) We don't know how the Fed will respond to increasing inflation (they have told they will ignore it, repeatedly)
As the 10yr yield rises enough to challenge the earnings yield of the S&P that is when things are more likely to get interesting as money flows will become muddied. Institutional money is way overweight bonds, for all retails fear of stocks gains ignores just how much money came out of stocks since 2018 and into bonds. That tide flowing back has just started, stocks are overextended, bonds where in the most massive bubble the debt markets had ever seen. The charts show that the 30yr bull market in bonds may have finally ended and a protracted bear market may have begun.
All we can do is take it a day at a time, stay open minded and clear headed, leaving our bias at the door.
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