Thread: Stocks log strongest 1st quarter in 12 years

Stocks log strongest 1st quarter in 12 years

Updated 22m ago
By Matt Krantz, USA TODAY

Don't be lulled by the lazy calm that has settled over Wall Street the past several weeks. The stock market is on a roll.

Stocks are coming off their best first-quarter performance in a dozen years, up 4.9% year-to-date, says Standard & Poor's. It's the fourth consecutive up quarter, the market's best streak since the five-quarter run that ended after the third quarter of 2007, based on the broad Wilshire 5000 index.

The quarter's gains might not seem like much considering the jumps during the past three quarters as stocks roared back from bear market lows. Remember, though, that halfway through this quarter the market was on the verge of its first correction, or drop of 10%, since the bull market began.

The market's strong performance during the first quarter has some investors believing the momentum can last, especially since the first quarter historically hasn't been one of the market's best.

"It was a great first quarter," says Hugh Johnson of Johnson Illington Advisors. "Looks like this bull market and economic recovery has more to go."

Investors are picking apart the action in the quarter to get clues about:

•Momentum going into the second quarter. First quarters aren't usually the market's best, causing some to wonder if the follow-through could be better. Stocks have gained just 1.9% on average during the first quarters going back to 1945, says S&P's Sam Stovall. While that beats the average 0.5% gain during third quarters, it's a far cry from the 3.6% average gain in fourth quarters, he says.

"If you liked the first quarter, just wait until the second quarter," Stovall says.

•Hints of future pullbacks or corrections. The fact the first quarter rallied, faded and then recovered much like the fourth quarter is a signal stocks are ready for a setback, says Jeff Kleintop, market strategist at LPL Financial. Investors may decide to sell even if S&P 500 companies deliver the strong 70% year-over-year growth forecast when they report first-quarter earnings, he says.

•Source of industry leadership. Half of the top 10 best stocks in the S&P 500 in the first quarter were financials. Leadership could spread if history is a guide. The second quarter is the only one in which all 10 sectors averaged gains since 1990, S&P says.

But investors shouldn't let the first-quarter performance make them complacent, says Joe Saluzzi, trader at Themis Trading. "As long as the stock market keeps going up, no one seems to have a problem. But how is it going to keep going up?"

http://www.usatoday.com/money/markets/2 ... rter_N.htm

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Bottom line... go with the trend till the trend says different, even if it is a market built on crap and not the true free market, it hasn't been for a long time now. The market can't go up forever, it will reverse, the question is, will it be a sharp reversal?

Seems like everyone is expecting something to happen because the options are going crazy lately, people are buying insurance in case of a down slide? Also the trading volume is very low as is the Volitility.

Gas is rising as well and this will put a damper on all profits.

Oh yeah, don't forgett, when the Dow or other indicies don't perform well, just remove the underperforming stocks and stick in good one, then the Dow is back on the rise again, another cheap trick to keep everyone believing everything is great.