The Dow Jones Industrial Average is on the cusp of doing something it hasn t pulled off since last August: finish in the black over a one-month period. The benchmark is currently sitting around 700 points above where it started March 2, the first trading day of the month. That could mean a healthy 10% gain when the closing bell of the last trading session of the month is rung on Tuesday.

That seems to us like a positive. So why, then, isn t the market cheering? Indeed, the Dow dropped 148 points on Friday.

Part of the explanation is not as dire as you may think. With the first quarter coming to an end March 31, some fund managers may simply be booking profits in order to do a little performance window dressing for their clients. In this environment, a 10% gain looks good on the documents shareholders get in the mail.

Managers want to lock in gains, says Nicholas Yrizarry, CEO of Nicholas Yrizarry and Associates, a Reston, Va., investment firm.

However, Friday s selloff is a reminder to many investors that we may be in the midst of a classic bear market rally. Indeed, while there are some signs that point to optimism this week s housing data, for example many market participants still think the economy has a long way to go before it is truly on the road to recovery. That means stocks will continue to ebb and flow instead of following a smooth upward trajectory as short-term traders dictate the day s direction.

Hedge funds are still 75% of market activity right now, says Charlie Mercer, portfolio manager of the Aston/Veredus Select Growth Fund (AVSGX) . There s more inherent volatility in an average day.

Stocks may also be rallying because more cash is heading into the market after months of sitting on the sidelines. But even that rosy sign may have some inherent problems. The best and biggest [managers] are being flooded with cash, says Yrizarry. They are forced to buy shares as the market is going up. That could be artificially propping up prices.

It s a tough spot for managers with longer-term horizons -- the perspective financial advisers encourage in their clients -- and a basic difference between fast-money hedge fund traders who follow the daily gyrations of the market and people who want to use stocks to increase their wealth over time. Yrizarry says investors getting back into the market now are doing a fundamentally smart thing, but adds that they can t get fixated on day-to-day market results, even when a rally continues.

It has a psychological impact on people, he says. All of a sudden they want to invest their money.

Emanuel Weintraub, a portfolio manager at Integre Advisers, agrees. The thing about investing at the bottom is that you don t have to take a lot of risk prices have gotten so low, he says. You won t get it 20/20 right, but you won t get it 20/20 wrong by buying now. And that s all you can do.