The first day of the month has been by far the market's best since the recovery off the March 2009 lows. In 2010, the first trading sessions brought 123 of the 134 points the Standard & Poor's 500.
In 2011, the first trading days of January and February put up 32 of the S&P 500’s 65-point gain thus far. (Interestingly, the more tradable SPDR S&P 500 ETF did little in either session, though the broad index rallied).
Whether the trend holds up Tuesday is dependent on a number of factors, but market behavior would indicate that it should be a good day.
The market, after all, rallies on good news and bad news alike these days. Traders likely will be in a better mood as the Federal Reserve buys up to $19 billion in Treasurys this week and provides still more artificial goosing for the equity markets.
Also, March is usually a pretty good month overall for the markets, ranking fourth best since 1945. The average gain for the S&P 500 is 1.2 percent, and the month has been positive 65 percent of the time, according to Sam Stovall, chief equity strategist at S&P.
Though Stovall believes the market could be in for a pullback of 7 percent to 11 percent or more off its seemingly unstoppable rally, he thinks the general direction is higher.
“There is a good possibility that the digestion of the market’s more than 30% advance since the July 2010 correction low is now upon us,” he said in a research note.Monday. “However, even though the factors triggering this decline (higher oil prices resulting from the uncertain outcome of tensions in the Middle East) could indeed derail the still-fragile economic recovery, S&P believes it will likely result in a pullback or mild correction. What’s more, history says (but does not guarantee) that it could run its course toward the end of the month. Only time will tell if history is once again a valuable guide.”
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