March starts off to the upside as investors pick and chose what they like. Technology, industrials, basic materials and healthcare received the most votes of confidence yesterday based on money flow. Nothing really changed relative to leadership only some reaffirmations on them. The volume was solid on the NASDAQ with the NYSE lagging which was reflected in the respective moves yesterday.

Technically the move did show some positive breaks from two week consolidation patterns. The big question mark is momentum and follow through. Will investors buy into this rally or is it just more consolidation in the broad markets? I would look for a potential move to the January highs, but beyond that is still a guessing game short term.

Small and mid cap stocks moved up nicely and within a couple of points of the January high. Their leadership is important and where I would look for the follow through. The S&P 600 index is near the 344 high and a break on volume to the upside would be a positive sign. After an attempt at leading in January the index pulled back and tested support near the 312 level.

Technology was up 1.5%, but remains below the 50 day moving average. Semiconductors did their part gaining 3% yesterday and they will need to follow through if the sector is to regain the leadership for the broader markets. SanDisk gained 11.5% on upgrades to lead the sector. Software and networking need to pick up their pace as well to help the sector overall.

The dollar was up again yesterday hitting 80.73 and back at resistance. The consensus is for the dollar to move higher. I am not convinced short term, but continue to watch the global picture for clues on the direction. The IMF statements yesterday on global currency values had some impact, but the valuations will come down to the economic picture globally and the sovereign debt issues in Europe.

Oil was lower on the day and consolidates in the short term uptrend. There is a flag pattern in play on the chart technically. This could be the consolidation before making a run to the top of the trading range. The stocks have been lagging versus the commodities. I look for crude to rise and the stocks to follow short term.

The economic data was okay yesterday, but not stellar. The ISM Manufacturing numbers continued to show expansion for the seventh month, yet they were below expectations. The internal data points were not impressive either. It looks like the data is showing or validating the slowing GDP projections from the fourth quarter numbers. The preliminary numbers for fourth quarter are 5.9% growth. The outlook for the first and second quarter are in the 2-3% range. Thus, it would follow the data points slow. How the market reacts or digests this data is the key. Yesterday it moved higher without cause for concern.

The spending rates were higher and the savings rate was lower. Not the best combination looking forward and I would expect some slowing in the savings rates as consumer confidence grows. However, the confidence data was not exactly stellar last week. The key is the income growth was less than expected at only 0.1% growth. That is the data point to watch in the coming months. If income doesn’t keep pace spending will slow.

Jobs report on Friday is being talked about in terms of weather impact. The expectations of -55k jobs for February may be too low based on the weather reports. Interesting angle to soften the blow. The weekly jobless claims data shows the situation worse than expected, but we will see on Friday. Hope for the best and prepare for the worst.

Remain focused on your goals and discipline. Set your stops according to the risk you are willing to accept and keeping looking for the opportunities. Take what the market gives and don’t lose sight of the goal.

Have a great day investing.