After last week’s holiday shortened week, market participants began to return to their trading stations yesterday and today, although some do remain on vacation. Whereas the unofficial kick-off to earnings season begins today when Alcoa (AA) reports results, for the most part, we kick into high gear next week when the money center banks report their second quarter results, although Wells Fargo (WFC), the largest US bank will report this Friday. Thanks to smartphones, such as my Apple (AAPL) iPhone, most money managers will read about Wells Fargo on the beach or by their pools on Friday.
Money Managers Begin to take Profits
We have now accumulated about 6% in cash and I anticipate ratcheting that amount to close to 10% as the month progresses. The Russell 2000 (RUT) small cap index has already pulled back from its highs of 1,213.55 by about 2.20%. We sold our RUT related index EFTs last week. The pullback in that index indicates to me that money managers are taking some profits and a cautious view ahead of earnings season. The S&P 500 (SPX) is less than 1% off of its highs but I expect that index to consolidate in the coming weeks as well. However, it could make a preemptive move to 2,000 before pulling back in a more significant manner. By more significant, I am saying something in the range of 3 to 10%.
From my vantage point, which until last night was in the Adirondacks, it appears that, at least in the North East, consumers were on the road travelling, eating and amusing themselves at summer attractions over the 4th of July holiday weekend. One thing that they might not be eating are cupcakes, at least the premium priced ones at Crumbs. Crumbs Bake Shop (CRMB) has filed for chapter 7 bankruptcy liquidation.
Scott Rothbort to Appear on Bloomberg Radio Today
I am expecting a quiet but modestly lower market for the day. My busy travel schedule this week continues as today at about 3:45 PM I will be appearing on Bloomberg Radio’s Taking Stock show with hosts Pimm Fox and Carol Massar to discuss the markets and restaurant stocks. You can tune in on: WBBR 1130AM New York; Bloomberg 1200AM and 94.5FM-HD2 Boston; http://www.bloomberg.com/radio/, and Sirius/XM Satellite Radio channel 119. Tomorrow I will be in the office and Thursday I am headed to Philadelphia.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL — although positions can change at any time.
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