After the Monday bounce resulting from the first round of France’s national election, the broad market, as defined by the S&P 500 (SPX), flat-lined for four days. Though, on Thursday, the big cap duo of Alphabet (GOOG, GOOGL) and Amazon.com (AMZN), delivered stellar earnings results. Those two stocks together with strong results from some other of our core holdings: Royal Caribbean (RCL), Whirlpool (WHR) and Western Digital (WDC); capped off strong performance for our Growth portfolios. The month of April which started disappointing, turned out quite well across all our major stock strategies.
May will begin with the announcement of Congressional agreement on a spending bill which will keep the nation operating till the end of this September. Also on Friday, the April jobs report will be released. After a disappointing 1st quarter GDP and March jobs report, bonds caught a little bid. These two economic reports led some Fed watchers to believe that the FOMC may be on hold for the next few meetings.
Expect the financial media to parade pundits out this week who will implore you to” Sell in May and Go Away.” Recall that on Market Watch four years ago, I debunked that simplistic saying. Taking my argument one step further, during the year following a Presidential Election, the May-June period and 4th quarter are both, on average, positive for the SPX. The 3rd quarter is on average just a tiny bit in the plus column. I will explore 3rd quarter expectations in greater detail at the end of June.
This week, Mega cap tech stocks Apple (AAPL) and Facebook (FB) report Tuesday and Wednesday, respectively. There is every indication to expect AAPL to exceed consensus EPS estimates of $2.02 and FB to exceed expectations of $1.12 in earnings per share. In my opinion, it will be a taller task for FB to accomplish. We recently sloughed off a little AAPL and would be inclined to do so for FB if it received a post earnings bounce as did Alphabet. In fact, in April, I was quite active from a transnational perspective in the Growth portfolios. While this might have resulted in above average trade counts, it also allowed me to take advantage of opportunities and eliminate under-performing positions.
For our Growth customers who may have looked at their Scottrade accounts online over the weekend, it appeared that there was an extraordinary gain. As it turned out, a stock holding split 4 for 1 after the market closed. The additional shares were reflected in the accounts, however, the price did not. Thus, there was a phantom “gain” which will disappear once markets open on Monday.
Once again, we see the SPX poised to make another run at an all-time high. The NASDAQ 100 (NDX) thanks to those big cap Techsters is already there. The SPX sits 0.49% from the March 1 high of 2,395.96. I expect that high-water mark to be eclipsed this week.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AMZN, AAPL, FB, GOOG, GOOGL, SSO, SPXL, WDC & WHR— 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
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
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