Last week’s market performance was nasty again, especially for the Small-cap Growth style/cap, down 4%.  Large-caps faired the best, losing only 2.7%.  That’s ugly and today’s market seemed likely to be uglier today with escalating tensions over the weekend in Ukraine. 

The sudden bearish turn last week in the market -- after hitting new highs the prior week -- has come fast and furious as selloffs are wont to do. And the pullback might have further still to go. But there are several reasons to expect a stabilization or bounce during this holiday-shortened week, and in any case I still expect that it eventually will turn out to be a great buying opportunity leading to higher prices later in the year.

What can we say after yet another sharp sell-off?  Since last Friday’s open, the S&P 500 has fallen nearly 3%, the Nasdaq has fallen more than 4.3% and the Russell 2000 has fallen more than 3%.

Although the large caps set new highs early on Friday, small caps and NASDAQ have not come close to their prior highs. Friday closed with extreme weakness across the board, and it was on high volume. The technical picture and our fundamentals-based sector rankings have both taken a bearish turn, so we might see more weakness ahead.

Today’s market was strong with lots of volume to open the week and close the quarter.  The strongest index of the day was the Russell 2000, up 1.8%, followed by the S&P 500, up 0.8%, and the NASDAQ, up 0.7%.  NYSE volume was a strong 810 million.  The S&P 500 squeaked out a narrow 0.7% gain for the month, which is better than the NASDAQ’s 2.5% drop and the Russell 2000’s 1% drop.  The biotechnology ETF, IBB, delivered an exceptionally strong perfo

As Q1 of 2014 comes to an end, we can see that January was extremely weak, February gained it all back, and March treaded water. At this point, as we head into what has been the strongest month of the year over the past 20 years, signals are mixed, with a steadily recovering economy and bullish fundamental indicators mixed with neutral technical and some bearish sentiment indicators.

Bulls continue to climb their wall of worry, as uncertainty from the latest “bricks in the wall” created by Russia in Crimea, slowing growth in China, and Fed tapering fades into the mosaic.

Today was another surprise Monday.  Short sellers who thought a rough weekend in Ukraine might stir up the war drums again were wrong.  In addition, China took several steps to boost its economy, and the domestic economic reports were fairly positive.  As a result, the shorts capitulated at the opening and risk was on.  The day ended led by the DJI (every stock was positive!), up more than 1%, with the S&P 500 up nearly 1% and the NASDAQ up about 0.8%

The weakness last week in U.S. stocks was entirely expected. As I mentioned in last weekend’s article, the technical condition had become quite overbought and the market was overdue to take a breather and pull back a bit. Also, our SectorCast rankings had moved from bullish to a more neutral bias.

Today was the beginning of “spring break” for the market.  At least it seemed that way with a very low trading volume of only 600M shares on the NYSE.  Either the college crowd does more trading than we imagined or parents are taking the week off as well.