March is known for two big events: the Ides of March and St. Patrick’s Day. Over the past 40 years, the market has performed quite well in March. In fact, it’s the fifth best-performing month for the market. However, there are many things that are concerning the market right now. There’s the rising price of oil, Greece’s debt crisis, a possible bank stress test, declining earnings, and the conflict in Iran. In addition, there’s also the Facebook IPO, which could have a huge impact. The major growth markets like China and Brazil are also slowing down.
But looking at our indicators, we are bullish as we see a cross current in earnings and valuations, as well as technicals and sentiment. Probably the biggest key in the near term is sentiment. Banks are currently afraid to lend, but as business activity and employment picking up, money velocity could improve and can have a real impact on earnings and GDP growth. Our technical indicator and relative strength indicator is showing some vulnerability, and could be showing that the market is bracing for a bit of correction.
Overall, we are positive. The Facebook IPO does look like it could be coming sometime in the next month. With a valuation of about $100 billion, this could divert a large amount of capital from the market. When Google went public, it flattened out the market and dried up IPOs for a while.
Lastly, I’d like to share some recent highlights at Singular Research. Trancend Services (TRCR), which we cover, is being acquired by Nuance (NUAN) at a 39 percent premium. We still think it’s a stock picker’s market right now, and we favor small-cap stocks with growth over value prospects right now. Singular Research also runs the Argonaut Fund, which leverages our IP and mispricings of companies that lack research coverage. Over the last five years, the fund has outperformed all 500 publicly traded mutual funds in the small-cap blend category according to MorningStar. You can learn more about the Argonaut Fund by clicking here.
Disclosures: To read Singular Research’s important disclosures, click here. For the full March 2012 Market Indicator & Strategy Report, and other research reports from Singular Research, click here.
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