Market Recap 31st March 2014 – Was this just a “window dressing” rally?

By Markus Heitkoetter

The S&P ended the day up +14.75 points while the DOW had triple digit gains, up 135 points. Today’s rally pushed the S&P into positive territory for the month. The S&P ended the month of March 13 points higher and wrapped up the first quarter of 2014 up +24 points.

Today’s move looks a lot like a “window dressing ” rally than anything.

If you’re not familiar with the term, “window dressing” is a scenario where mutual fund & portfolio managers sell losing positions and add top performers at the end of the quarter. This portfolio balancing is an attempt to make funds more attractive to potential investors.

One of the indication of “window dressing” is the fact that popular stocks like NFLX (-1.91%) and AMZN (-.52%)  were down for the day after a losing quarter  – despite a broad market rally that lifted old faithful blue chips like JNJ (+.81%) and MSFT (+1.71%).

Were seeing mixed messages watching the major indices. The DOW has lagged the major indices during most of the rallies that we’ve had in the last 6 months, but surprisingly this march higher has the DOW leading the indices.

This recent move has turned two of the Power Crossover Method indicators bullish in the DIA (DOW ETF). How the DIA reacts to new all-time highs could help determine if this rally can be supported.

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