Window Dressing?

The trend continues upward. The Dow Jones Industrials have posted six gains in the last seven sessions. The Industrials gained over 3% for the week – the biggest weekly gain since last summer. The major indices - the S&P 500, the NASDAQ 100, and the Russell 2000 - broke a two week losing string. For the week, the S&P 500 was up 34.6 or 2.7%, the NDX down up 91.02 or 4.09%, and the Russell 2000 up 29.19 or 3.67%. Each index more than covered the losses from the previous week. The absence of fear of was highlighted by the VIX, the CBOE Volatility Index on the S&P 500. The VIX declined from 24.44 to 17.91 This is the lowest closing level for the VIX since February 18. Volume was a counterpoint to the bullish move. The market saw the lowest weekly volume for the year.

The coming week is highlighted by the ending of the quarter on Thursday and employment reports on Friday. Friday’s employment report will have the ability to move the markets.

End-of-the-quarter markets are often highlighted by behavior know as “window dressing.” Window dressing strategies are used by some mutual and portfolio managers near the year or quarter end to improve the appearance of fund performance before presenting it to clients or shareholders. To window dress, the manager will sell stocks with large losses and purchase high flying stocks near the end of the quarter. These securities are then reported as part of the fund’s holdings. In addition, stocks with winning positions are often bid up to further enhance the perception of positive performance. Be aware of this behavior.

Have a good trading week. Be focused. Know where you are and where you might be going. Remember: “Chance favors the Prepared Mind.” – Louis Pasteur

This week’s domestic economic news:

Monday March 28:

Economic: February Personal Income – 8:30, February Consumption – 8:30, Pending Home Sales - 10:00

Tuesday March 29:

Economic: ICSC Goldman Stores Sales – 7:45, Redbook – 8:55, S&P Case-Shiller Home Price Index – 9:00, March Consumer Confidence – 10:00

Wednesday March 30:

Economic: MBA Purchase Applications – 7:00, Challenger Gray & Christmas March job-cut – 7:30, ADP Employment Report – 8:15

Thursday March 31:

Economic: Initial Jobless Claims- 8:30, March Chicago Purchasing Managers Index – 9:45,February Factory Order – 10:00

Other: First Quarter Ends in Y.S. – Year End in Japan

Friday April 1 :

Economic: Motor Vehicle Sales -7:30, March Employment – 8:30, March ISM Manufacturing – 10:00, Construction Spending – 10:00