The Markets
Stocks renewed their upward bias during March as most of the major averages posted new recovery highs to round out the quarter. The Dow Jones Industrial Average, which closed just below 10,000 on February 8th (DJIA – 9906.39), finished higher on eighteen of the next twenty-three sessions. While the run of winning days was impressive, the daily gains were somewhat muted, with only two days of triple digit advances. For the month, the Dow posted a gain of 531.37 points (+5.2%), closing at 10856.63.
The NASDAQ once again outperformed the Dow on a percentage basis as tech stocks such as Apple Computer (AAPL) led the charge higher. For the period, the NASDAQ gained 159.70 points (+7.1%) settling at 2397.63.
Two anniversaries of note during the quarter: first, March 9th marked the one-year anniversary of the bottom of the current bear market (Dow 6,547.05). A year later, the Dow closed at 10,564. But March 10th marked the ten-year anniversary of the all-time NASDAQ peak (5,132). A decade later, the NASDAQ composite closed at only 2352, a full 54% lower than its all-time high!
For the month, each of the Appleton Group Composites appreciated nicely. In what was generally a quiet quarter, all of our firm’s managed portfolios (both core and asset allocation portfolios) finished higher. In large part, all invested positions continue to demonstrate supportive market environments, although both emerging markets and basic materials were both flat for the quarter after demonstrating just a bit more downward pressure than is normal. We rounded out the month with full exposure to all at-risk ETFs in our targeted allocation, including U.S. and foreign equities, real estate, basic materials and high yield bonds. We continue to hold a relatively small cash allocation in each portfolio as well.
So far in early April, all managed portfolios have moved higher still. We continue to believe that the economic recovery – slow though it may be – is gaining momentum. Because the underlying rising trends for the exchange traded funds we use continue to be positive, it our intention to continue to hold our current allocations until the current trend has run its course, whenever that may be.
Looking Forward
This quarter could shape up to be very interesting. We’re only a few weeks away from the start of earnings season, and by all accounts it appears that many companies could demonstrate solid results. With all of the recent cost cutting measures already in place and an accelerating global economy, the stage is set for further profit gains. How much of that is already factored into stock prices is anyone’s guess, and is impossible to gauge accurately. But as is so often the case, the future corporate guidance will determine if additional market advances are warranted. Momentum is hard to stop (both upward and downward), but once the market finds a direction the ensuing move can be significant. Stay tuned…
