
[Chart courtesy of MarketWatch.com]
1. Moving the Markets
The resurgent U.S. stock market kicked off the holiday-shortened week by slightly extending last week’s gains as investors digested a big rally that has turned stocks positive for the year and reacted to deals in the hotel, paint and data businesses.
A flurry of M&A deals announced Monday gave an assist, including Starwood Hotels & Resorts Worldwide (HOT) agreeing to a better revised deal of $13.6 billion from Marriott International (MAR) that tops a competing bid from China’s Anbang Insurance Group.
Apple (AAPL) was back in the news today. The company unveiled the iPhone SE Monday, which executives described as “the most powerful 4-inch phone ever.” Hitting the market alongside the smaller phone was a trimmed down iPad Pro. The stock moved up and down, but ended at par with the morning.
I for one am very curious to see if the upward momentum of the recent bear market rally can continue as some of the supporting players are no longer in the game. First, most of the shorts have covered so that driving force has been diminished. Second, the biggest contributors to the recent ramp, namely corporate buy-backs, are entering their blackout period, which is the 5 week time frame prior to their quarterly reports cards being issued. Third, according to BofA, most institutional clients, AKA the smart money, took the recent rally as an opportunity to exit the markets or at least lighten up on equity positions.
If, however, against this negative backdrop, the markets continue on their upward trajectory, we may very well face a resumption of last year’s bull market, which may possibly coincide with a new Domestic Buy signal. You can see the latest numbers in section 3 below.
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