Market Crash Warning? Wall Street Veteran Says Mid-March Could Mark a Turning Point

When asked about the market outlook heading into mid-March, Wall Street veteran Marc Chaikin said current conditions appear to be unfolding much like the prediction he outlined a year ago.

Chaikin, the founder and CEO of Chaikin Analytics, has more than 50 years of experience in the stock market and is known for blending fundamental and technical analysis. His current warning is rooted in the presidential election cycle, one of the market’s longest-tracked seasonal patterns. Historically, he noted, the second year of a presidential term—often called the midterm year—has been the weakest stretch for equities.

Looking at the last 17 presidential cycles dating back to the 1950s:

• The second year of the cycle averaged just a 1% gain in the S&P 500.
• The other three years averaged double-digit returns.
• Market peaks during midterm years often occur between mid-March and early April.

That timing window is exactly where the market finds itself now.

Historical patterns don’t guarantee future outcomes, but Chaikin says they provide a useful framework for understanding probabilities, especially when other warning signs are emerging.

Markets Trading on Expectations, Not Fundamentals

Recent volatility highlights how sensitive markets have become to headlines and geopolitical developments.

Oil prices moving above $100 per barrel have triggered fears that inflation could accelerate again. At the same time, weak employment data suggests the economy may need lower interest rates.

That combination creates a difficult situation for the Federal Reserve.

Normally, rising inflation would lead the Fed to raise rates, while weak employment would lead it to cut rates. But with both pressures occurring simultaneously, the central bank may have limited flexibility.

Adding to the uncertainty are geopolitical tensions and rapidly shifting news headlines. Real-time information—often amplified through social media and political messaging—can cause algorithmic trading systems to react instantly, accelerating short-term market swings.

The result is a market environment driven less by fundamentals and more by short-term reactions and uncertainty.

Weakness Already Appearing Beneath the Surface

Despite recent volatility, the broader market remains relatively close to its highs. The S&P 500 is only about 2% below its peak. For context, a correction is typically defined as a 10%–20% decline, while a bear market generally requires a 20% drop.

However, Chaikin says many popular stocks are already struggling.

Several of the so-called Magnificent Seven—a handful of mega-cap tech leaders—make up roughly one-third of the S&P 500’s market value, and a number of them are already in steep downtrends. As such, investors heavily exposed to tech through exchange-traded funds (ETFs) or individual holdings like Microsoft (NASDAQ: MSFT) may already be experiencing losses far larger than the overall index suggests.

Another important signal comes from the ARK Innovation ETF (NYSEARCA: ARKK), often viewed as a proxy for speculative technology stocks. That fund has already fallen around 28% from its October highs, suggesting that risk appetite may be fading.

These kinds of internal cracks often appear before the broader market begins to decline.

3 Ways Investors Can Protect Their Portfolios

Rather than attempting to predict exactly what will happen next, Chaikin emphasizes preparation. If markets move into a correction or bear phase, investors who plan ahead will be far better positioned.

1. Raise Cash to a “Sleeping Level”

The first step is simple: raise cash.

Chaikin suggests investors hold enough cash so they can remain calm if markets decline sharply. For most portfolios, that means holding roughly 15% to 25% in cash. 

The goal isn’t to exit the market completely. Instead, it’s to create a cushion.

Cash serves two important purposes:

• It reduces emotional pressure during declines.
• It provides dry powder to take advantage of opportunities later.

Investors who stay fully invested during downturns often feel forced to sell at the worst possible moment.

2. Sell Weak Stocks First

If you need cash, a logical place to start is by selling your weakest holdings.

Chaikin recommends trimming stocks that exhibit bearish characteristics in quantitative models such as the Chaikin Power Gauge, which evaluates companies based on 20 fundamental and technical factors.

Stocks already showing bearish signals near market highs are often the most vulnerable during corrections, while stronger areas of the market may remain resilient. Chaikin highlighted several sectors currently demonstrating relative strength, including healthcare, aerospace and defense, energy, and infrastructure tied to data center expansion.

Rather than automatically buying the dip, investors may benefit from focusing on industry groups with strong momentum and fundamentals.

3. Watch Key Technical Levels

Technical indicators can also provide early clues about the market’s direction.

One of the most widely watched technical signals is the 200-day moving average of the S&P 500. Many traders view it as a rough dividing line between longer-term uptrends and downtrends. If the index holds above the 200-day, pullbacks often stay contained. But a decisive break below it can signal that selling pressure is widening—and that a routine dip may be turning into something more serious.

Other indicators, such as the VIX volatility index, have already shown spikes in recent trading sessions. While volatility can create short-term buying opportunities, sustained spikes often accompany periods of market stress.

Why the Best Opportunity May Come Later

Despite the cautious outlook, Chaikin is optimistic.

Midterm election years have often created the best buying opportunities of the entire presidential cycle. Markets frequently bottom in late September or early October, after months of volatility, before launching into powerful rallies. In some cases, gains following those lows have averaged more than 40% over the next 15 months.

That’s why preparation now can matter more than prediction.

Investors who maintain cash during volatile periods have the flexibility to take advantage of opportunities when prices reset. Those who stay fully invested through a sharp downturn may instead find themselves forced to react at exactly the wrong moment.

For now, the market hasn’t entered bear territory—but several warning signs are beginning to emerge beneath the surface.

With historical patterns pointing to a weaker midterm year and geopolitical uncertainty adding to market volatility, this may be a time for investors to focus on strengthening their portfolios rather than chasing short-term moves.

If history repeats itself, the turbulence of 2026 may not just test investors’ patience—it could ultimately create one of the most attractive buying opportunities of the entire market cycle.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.