Aside from today’s angst about China (Asian markets fell this morning), this week will give US investors reason to move, either as buyers or sellers. Given that the market is already looking for a reason to pullback, the data coming out this week could play the role of catalyst.
- March consumer confidence on Tuesday
- February durable goods orders on Wednesday
- Final fourth-quarter Gross Domestic Product on Thursday
- February personal income and spending data on Friday
- Chicago Purchasing Managers Index on Friday
Depending on the data above, the market could swing either way. Acting as agents in the reaction are some other “key” factors that could tip the scale one way or the other.
Positive
Portfolio managers will be doing some last minute shopping for winners from the big stock market rally as they take part next week in the quarter-end ritual of window dressing. Window dressing typically involves investors grabbing some of the quarter’s best performers to dress up their portfolio listings.
Overall, if the data this week is viewed in a positive light, even moderately so, expect a flurry of buying from investors who have held back, and if this happens, we just might see investors begin to chase the market higher.
Negative
Insider selling is up to $4.7 billion this month, and TrimTabs said that translates to an insider sell/buy ratio of 20.8, the highest since February 2011.
Insiders could have many reasons for selling, but this factor will probably affect particular equities, and the overall market to a lesser degree. However, one should compare this data to the data below, if one is inclined to use the data to define a strategy.
Lipper data shows $85 billion in net equity inflows so far in 2012, on pace to be the best since the $98 billion of net inflows recorded in the first quarter of 2010.
In March of 2011, the market began a long, slow downturn, ending the year strongly. In March of 2010, the market began an up and down move toward ending the year strongly as well. Given the year-end finishes for both, one could have both short-term and long-term plays beginning this week.
So far this year, my picks for opportunity have shown particularly well. The S&P 500 financial sector index and the S&P technology sector index sport gains so far this year of 21 percent for the financials and 19.9 percent for techs. Like the overall market, investors might see this as opportunity to book some profit; however, if investors perceive the data this week as solid, these sectors just might play the role of the mechanical rabbit in a greyhound race.
Trade in the day – Invest in your life …
