Investors wonder how it is possible that with all the recent economic data misses, the U.S. stock market indices actually rose to all-time highs.

Washington, DC -- (ReleaseWire) -- 04/21/2014 --The week of March 31, 2014 was another head-scratcher for investors who wonder how it is possible that with all the week's economic data misses, the U.S. stock market indices actually rose to all-time highs says Dawn Bennett, CEO of Bennett Group Financial Services.

The first red flag was the Chicago Purchasing Managers' Index (PMI) which missed expectations by the most in a year and tumbled to its lowest level since August. The Chicago PMI is an economic indicator taken from monthly surveys at private sector companies, which allows it to be an index to first know when trading conditions and company performance has changed for better or worse. This business barometer has been falling since October and the index has collapsed to 50 percent from 59.3 percent, because prices paid have dropped and new orders to the private sector have tumbled to the lowest levels since August of 2013.

The second red flag was the reporting of the February 2014 trade deficit, which indicated a significant widening deficit which should impact the net export of U.S. GDP directly and negatively, potentially knocking off 1 percent from the headline GDP growth rate. This is the last report before the GDP estimates come out on April 30, 2014.

The third economic red flag that occurred this week was the Baltic Dry Index, which is a shipping index. It provides an idea of the price of moving major raw materials by sea, and is seen as an efficient economic indicator of future economic growth and production. The Baltic Dry Index is down 25 percent in the last two weeks, back near post-crisis lows, and just suffered the worst start to a year in over a decade.

The final red flag this week was the market receiving a big gift from the Federal Reserve with a record window dressing operation in the form of some $242 billion in reverse repo Treasuries that were provided to dealer banks in order to make their books look more attractive for quarter end. The banks turned around and dumped it into risky assets, the Dow and the S&P 500. This explains their new highs and the week’s buying deluge.

However, all that easy money for the month of April has now been used up. This was telling on Friday, the only day of the week that the Fed didn't inject any cash into the market, the NASDAQ crashed the most since 2011. When the Fed's collateral window dressing is on, we have almost a fantastical market, and when the collateral window dressing is off, it's a nightmare. Since the Fed has announced their plans for continued reduction of Treasury and mortgage purchases, we should expect more down days.

Securities offered through Western International Securities, Inc. Member FINRA & SIPC. Bennett Group Financial and Western International Securities, Inc. are separate & unaffiliated companies.

All market data references are sourced to Bloomberg terminal database.