Manic 1st Quarter Fruition: March 26-30

It was the last week of the quarter, so individual mutual fund portfolio adjusting was front and center. This will at times skew the overall price action.  The 1st quarter of 2012 was a very bullish one, so therefore portfolios adjustment should be more prevalent than usual. The fact that we are seeing an absence of consistent high plus NYSE tick in this trading environment is a distortion of a great magnitude. Eventually the deteriorating of the internals, much like the foundation of a large edifice will bring the large structure down. 1380 was probed on the S&P 500 as well as the ceiling of the box formation. The bonds journeyed below 137 Monday morning and then were rescued. This type of action generally is associated with some heavy volume, but that was not the case. The swings were suspicious. Ordinarily movements dropping lower in the early morning will continue in that direction.

Ben Bernanke cautioned the economy is not growing quickly enough to handle the gigantic inflow of unemployed. Moreover, he said the unemployment rate will probably rise as unemployment benefits stop and ex-workers attempt to step back into the job market.

After carefully assessing the current trading environment it is safe to say it is abnormal, with no NYSE tick either high plus or high minus.  It’s a rare observation for the last week of the quarter. Monday had a powerful up day but had no follow through. It is a greater likelihood that the S&P 1420 price area is indeed a short-term resistance.

The 1420 price area became a resistance area with intermediate implications. Finally, a correction of more than 25 points from that high occurred, as this market is showing some signs of wear and tear. The psychological area of 1400 area was penetrated Wednesday. The bonds made a move to an area of resistance just shy of 139. The market is showing some signs of normalcy.

Crude-oil seems to have run out of steam as it hovered around $103 a barrel. The bonds attempted to approach the 139 area, but it has been on an ice mountain. Keep in mind the quarter was not favorable for it, so therefore I expected portfolios might lighten their position as they have a tendency to avoid areas that were underperformers.

The end of the month and end of the quarter held stock prices firmly. Several stock indexes are already trading at levels exceeding year-end forecasts. The S&P 500 companies keep accumulating mass amounts of wealth, even with a crummy economy. I believe the timeliness of this market is difficult with the Federal Reserve intervening, but I do believe the technicals are more powerful than the Federal Reserve manipulations.

The bonds were an ugly sister this quarter. They failed to perform and maintain the manipulated gains from the fourth quarter in 2011, despite a backdrop of the Federal Reserve’s rhetoric. 
When a bubble has formed it takes a pin to pop it and the pin has been introduced.

To conclude the bullish quarter, the market was deemed worthy of a couple accolades: the best quarterly stock market performance since 2009 and the best 1st quarter performance since 1998.