After a long and I would add pleasant Memorial Day weekend, we wake up to some pleasant news. To begin with, the S&P 500 (SPX) closed last week above 1,900 for the first time ever. A pro-European candidate, billionaire Petro Poroshenko won the Ukraine election. While in Europe, anti-Europe parties also won elections. In France, a far-right anti-EU party took 25% of the French vote, voicing displeasure with the ruling Socialist Francoise Hollande. Meantime back home, Durable Goods orders rose 0.8% versus an expected decline and the Case-Shiller Index of home price sales rose 12.4%, also stronger than expected.
When we put all the above together, the markets are indicated to rise at today’s open. This follows a positive pre-holiday week where the S&P 500 (SPX) rose 1.21%. More importantly, the Russell 2000 (RUT) gained 2.11% and the NASDAQ 100 (NDX) rose 2.23% exhibiting important bullish leadership. It appears that the small cap and tech pull back is over.
Apple Back In Favor
Apple is rumored to be working on a smart home application to control home appliances. Apple (AAPL) now stands at its highest closing level since October 2012. With a seven for one stock split set for next Monday, June 2, I see the stock setting up for a post-spilt move toward $100 and a likely new all-time high not long thereafter.
The bears are going to say that last week’s advance was on low volume. That will make little consequence if, as it appears, we continue last week’s rally today as the major portfolio managers return from the long holiday weekend.
Sold Bank of America
On Friday, we liquidated our positions in Bank of America (BAC) which we purchased nearly three years ago. While I can make an argument for the stock to go higher, there is too much uncertainty and continued government interference with the money center banks to risk capital at this juncture.
Let’s see how this market absorbs the early advance. We are close to a point where individual investors might be afraid that they are going to miss a move higher in the stock market. I have some cash to put to work and am likely to do so in the beaten down biotech sector.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL and UWM — although positions can change at any time.
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