To say that this was a good quarter in the stock market would be an understatement. The market started the new year with a strong upward move during the month of January and did not correct the entire quarter. Both trading volume and volatility remained low during the period. To put this move into historic perspective, since 1928 or 84 years, the market has had one first quarter like this only eleven times, or thirteen percent of the time. To those of you who have investable cash in your account, I assure you the quarters ahead will provide plenty of opportunity.

If the market continues with an upward bias, it will be interesting to see if money rotates out of bond funds and moves into equity funds. Should this rotation begin it would be another bullish sign for stocks. The likelihood of this rotation occurring is dependent on the economic data. If the data continues to improve, the chances of an interest rate hike goes up. An interest hike is short term negative for stocks but long term negative for bonds. Thus, if this process begins I would also expect an increase in trading volume, also bullish for stocks.

With first quarter earnings due to be released in a few weeks, it will be interesting to see if corporate CFO’s and CEO”s have positive forecasts for 2012. These forecasts from the top companies in each industry often provide a guide for the year. Last year the forecasts were at best neutral, and the market ended up flat for the year.

I did not expect this booming start to the first quarter. Going forward, I would not suggest chasing the market, although I do recommend buying on corrections.