NASDAQ Outperforms the S&P 500 and Russell 2000 For The Week Ended March 23, 2012:
NASDAQ’s resilience shows market could go higher although small caps didn’t follow through last week.
The NASDAQ was the best performer for the week ended March 23, 2012. Economic crisis tensions from China as well as mixed positive economic data helped make the tech heavy index more attractive to investors. The increased interest in the NASDAQ shows investors wanted to take some profits from the Dow which jumped past 13,000, but not be fully exposed to small caps due to the negative possible global growth story.
The NASDAQ outperformed the S&P 500 as well as the Russell 2000, however the Russell 2000 index fell slightly less than the S&P 500. This is positive news for bulls who think the rally in tech isn’t over because there could have been a larger disparity between the S&P 500 and the Russell 2K if investors were taking money off the table en masse.
The new quarter begins soon and this means money managers will be looking to rebalance portfolios. If tech and small cap stocks rise in the short run, this would indicate investors are adding to longer term positions and look to start off the new quarter with stock leadership that is risky with more possible return. Balancing risk and return is important in a rising market so expect sector rotation to continue through mid April.