Last month, the S&P 500, Dow Jones Industrials and NASDAQ 100 cash indices rose +5.31%, +4.07% and +2.96%, respectively. For the year, that left them narrowly mixed at +1.76%, -3.15% and +18.48%, respectively.
The monthly price action was characterized by light choppy trade with a mild pullback in week three. News flow featured the lead up to the GM Bankruptcy, the (early) release of the Banking Stress-Tests, and the Fed's 2009 Outlook reduction. Although increasing energy costs and bond yields also threatened the third month of gains, these elements were judged to be balanced against continued "green shoots" supported by the "slowing of the decline" thesis as numerous negative economic measures nevertheless mildly beat expectations.
Sector-wise, the reflation turnaround trade left Materials (XLB), Energy (XLE) and Consumer Discretionaries (XLY) up on the year. Style-wise, the Large-Cap Value stocks (PWB) took the lead. Lastly, in spite of the major rebound in the Financials (XLF), they continued to be down on the year. While we got our spring-time hat trick, I suspect it may be harder to pull off a fourth month of advances without stronger fundamental underpinnings.
Volatility: Declining (VIX 28-35)
The Style-Box was calculated using the following PowerShares™ ETFs: Small-Growth (PWT), Small-Value (PWY), Mid-Growth (PWJ), Mid-Value (PWP), Large-Growth (PWB), and Large-Value (PWV). The Sector-Ribbon was calculated using the following Select Sector SPDR™ ETFs: Materials (XLB), Industrials (XLI), Energy (XLE), Staples (XLP), Discretionary (XLY), Financials (XLF), Technology (XLK), and Healthcare (XLV). The Standard & Poors 500, Dow Jones Industrial Average and NASDAQ 100 may be traded through ETF proxies, including the SPY or IVV, DIA and QQQQ, respectively.