The markets drifted lower again but nothing of major consequence. Apple (AAPL) held its worldwide developers conference or WWDC. While that is really a means of delivering information to developers, it has become another platform for Apple to reveal updates and product changes. Yesterday was no different as Apple unveiled a streaming music service and operating system upgrade. None of those announcements were earth shattering or market moving.
In the meantime, one group that is beginning to exhibit leadership is the financial sector. This is an important market development. Recall that we recently took positions in SPDR Regional Banking ETF (KRE). We also hold an older stake in Discover Financial Services (DFS). On the other hand, transportation stocks, which we exited a few weeks ago, are exhibiting weakness. People who swear by Dow Theory see the latter development as a bad sign. Investors who understand the importance of a strong financial sector see the development within the financial sector as a strong sign. I believe in the latter not the former. Likely, the markets will continue to dither about in a trading range for a bit linger.
While there is great debate as to the direction of the stock markets, there is little debate as to where fixed income markets are headed in the US. Bond prices are declining and yields are rising, with or without the FOMC taking any action.
Wynn Resorts (WYN), a short position which I have been writing about recently, got clocked yesterday, wiping out any gains from a recent analyst upgrade.
China and Greece remain hot topics in the financial media. The Chinese markets remain hot, reminiscent of the Japanese markets of the 1980s and US Technology boom of the 1990s. What we have learned is that you stick with these exuberant markets until they stop working. The clock is winding down for Greece’s payment due date, but expect that can to get kicked down the road again.
I expect another lethargic day. It is likely that we open soft but don’t be surprised if buyers step up to drive a Turnaround Tuesday.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long DFS and KREand short WYNN — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
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