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Energy stocks ignited in March with Oil Equipment & Services outstripping the (still) high flying Internet stocks.

Q1 1999 following the same market script of 1995-1998, with big cap stocks, especially Nifty Fifty types, dominating smaller companies in terms of market performance.

Contrary to Wall Street wisdom, rising MZM is not necessarily indicative of Fed easing. Nor does contracting MZM mean a tightening Fed. Also, unlocking the mystery of the low U.S. savings rate.

Back on sidelines again, Major Trend Index negative. Stage being set for a huge small cap market.

In December 1998, nearly everybody seemed bullish about early 1999 (including me). A seasonal flood of new money was expected to run the market on the upside in the first quarter…..But, the flood never came.

Big Rise in Treasury yields has resulted in improved risk/reward profile for T-bonds.

The extreme selling dollar volume is confirmed by the ten week average number of net sells. Latest weekly reading registered 290 net sells (a 40 week high) driving the average into bearish territory.

Net inflows into U.S. focus equity funds for February were significantly down from January.

What might threaten Main Street equity confidence???

This group has quickly moved up the ranks of our SS Score work to become the second highest scoring sector.

The month of love left most tech investors and small cap investors broken-hearted.

Internet classification too broad and confusing. Tracking performance of the Internet necessitates breakout into three, distinct sectors: Technology…Internet Services, Consumer…E-Tail and Technology…Inter/Networking.

Up/Down earnings ratio continues to point toward slowing momentum.  Last month's ratio (data for complete third quarter) was lowest reading since the beginning of the current economic expansion.

It’s no secret that the term “January Effect” has taken on a different meaning in recent years. Once a reference to the price bounce that underperforming small caps stocks receive as year end selling pressures dissipate, it has now been adopted by commentators to describe the unconstrained rally of large cap stocks, as the seasonal flood of cash pouring into big cap growth funds is invested

This has been the greatest bull market in history. Investors coming into the market in the last few years have garnered unbelievable returns. Over the last five years, the S&P 500 has compounded at an annual rate of 24.0%.

Net inflows into U.S. focus equity funds were somewhat ahead of last year’s pace by the end of January. Estimated net inflows of $18 billion compares to last January’s $16.1 billion.

The insanity continued in January, with the Internet stocks up 56.9% during the month.

We did not employ this tactical trading strategy in late 1998. Buying the beat up stocks late in the year and holding them into mid-February had been a consistent winning strategy...that is until the last four years.

BROAD SECTOR PERCENTAGE BREAKDOWN BY 3000 STOCK UNIVERSE

Nine out of 19 trading days in January (47%) ended with close to close moves of at least 1% in the S&P 500.