Chest-thumping bulls might be hard-pressed to justify upside extensions at this point; however, there is a better 'tone' almost everywhere, reflected a bit by airline decisions in recent days; by reopening the economy broadly in a number of states; and even by Dr. Fauci hedging his 2nd wave warnings a lot; to the point of suggesting there won't be anything doctors can't control.  

Executive Summary:

• S&P blew past resistance; and with promising additional stimulus might not be done yet; although the massive bond rally is re-converging a bit;

• Yields going higher can become problematic; but probably not quite yet; however the 10-year rallies could influence Fed comments next week;

• New highs for NASDAQ, NDX, SOX are all welcomed, as having been leaders off-of our 'Inger Bottom' low nailed in late March;

• BLS 'admits' they may have made an Unemployment error by about 3%, but that didn't inhibit markets with the head-of-steam generated;
   
• Economic recovery and 'social reopening' are in-tune with the market's move; however big-caps tend to overshoot a bit; while economy trails;

• Carefree 'social-closeness' replacing social-distancing; as confidence increasing; even promoted (note zero masks worn at the White House gathering this morning); hopefully that's not getting ahead of itself;

• Prospects of avoiding a '2nd wave' of Covid, even speculated by Dr. Fauci; and while he was probably pressured a bit; we hope that's the case and things are 'looking' better; with most analysts too conservative in either warning or flat-out bearish throughout the upside romp both as regards the stock market, and worst-case pandemic outcomes;

• An FOMC meeting takes place; as the Fed already states they're reducing Treasury purchases to 4 Billion daily for the coming week;

• Speculators are again leveraged (we thought they'd use it, based on gains the Fed largely engineered, as we've been optimistic about); it is a pattern that is somewhat algo-driven with ultimately renewed risks as this crowd (that missed the lows mostly) had to chase prices higher;

• Saturday, despite 'deescalation replacing escalation' in Washington's mindset, you have massive demonstrations coming in the Capital; the blow-back from that (if any) may impact market's; so far they've not as we suggested historically civil disorder events usually do not;

• For the coming week; 'situational awareness' matters; both for stocks and when venturing out, as concern exists at these levels; with BLS admitting error; with a FED meeting; and risk of a Covid-case-rush.

  

I suspect some of this is aspirational; and even though one can question the BLS data forming the incredible leap in Jobs numbers (because the dates at this point appear to have been 'before' hardly any reopening had begun); we have been optimistic about achieving these S&P price levels; of functioning a bit closer to 'new normal' despite absence of 'proven' cures for Covid-19 (a lot of hope and promising 'cocktails' of medications); vaccines (really coming along now); and in the interim there are better treatments and understanding of how lives will recover; business will percolate; as 'The Inger Bottom' (that refers to our nailing the March 22-23 'max fear' low and not expecting tests of that at all; even though we definitely allow for corrections along the way.  

Along the way to what? As I've proffered; lots of disruptions ranging from the pandemic, to the protests, to the destructive chaos fomented by extremists, as some actually wish to keep the Nation constrained from expansion; while many of the looters are pathetic hoodlums, thieves, or opportunists with little clue about the backdrop of the tension, or care about the lives they harm.  

 (Societal concerns remain; and reflect some political or economic irritants. It has been challenging for many analysts to grasp how that didn't inhibit S&P.)

 The trajectory of the S&P is excessive and due to cool-off. That's does not mean one has to (or even should) fight the trend, or 'fight the Fed', which of course remains a primary catalyst to enable the S&P upside persistence. That it's an Election Year not only makes it attractive for politicians to fund recovery (and I include Democrats as constituents everywhere are watching both the parties to see if they come-through with help for struggling citizens).  

So we might get, in what is 'battle for economic survival', a slow growth rate of 2% of less into next year; and that helps defer the ultimate Fed tapering I spoke of the other night, as 'eventually' being an impediment for the S&P as well as a potential systemic issue for markets; but ideally not anytime soon.

Meanwhile . . . a few individual comments.

There are tech-stocks, like our AMD, pick-of-the-year from late 2018 of course for 2019; and we still hold it with no eagerness to sell. That's despite it being of course at a ridiculous PE; but as you know PE's aren't terrific as a a way to gauge performance among Semiconductor stocks that presumably would benefit 'even more' that what is a triple for us (entry was 16-17), if the relations with China calm down and improve, which may well be the case. In this respect, the financial stimulus in Europe and pretty-much globally; helps recover and demand for technology overall going forward. No reason to rush to sell, and no reason to chase it either (for new members); the majority of the move (it's over 300% my gosh) is behind; but sure it can do even better.

Finally.. the BLS (Bureau of Labor Statistics) admited an error, midday after a market romp was well underway. Before that came up, I commented that the 'dates' for the survey did not correspond (aside the final days surveyed) with the data reported, as the economic reopening trend had not yet gotten underway. But it of course the report was taken splendidly as market gains continued.   

What the error was is this: if all the workers who were recorded as employed but absent from work, due to "other reasons" (Covid), had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported. (Or they counted those who were furloughed basically.) Let that sink in a bit; even as the US economy genuinely is showing the green shoots we optimistically desired throughout the last couple months, they 'inadvertently' distorted the initial recovery data, even as I very much would like something like that incredible number to be real. It's problematic when bureaucratic government departments can't get this right.    

 In sum: anyone can look back now and see the rotation that broadened the market; and we're glad we've sensed the need and prospect of 'value-based' growth stocks to shine a bit more; and supplant the upside leadership that of course 'super-caps' as I term the FANG+ types provided, which led both S&P, NASDAQ (and QQQ) solidly to the upside coming-off our nailed March low.

Government support matters: monetary policy dominated; fiscal policy now becomes a necessity. And sure, as we work our way thru the summer, we'll see how much better healthcare companies amazing responses continue in the march toward not just vaccines, but more urgently; 'real' therapeutic drugs.  

Yes there are known unknowns like the track of Covid infections; but as we have indicated (and so did the President); there won't be further shutdowns; but there will be aggressive efforts to contain breakouts that do occur.  

Bottom line: the thrust higher has exceeded near-term goals; but there's at this point not been a reason to fight the S&P trend from our March lows; but rather to ride it. Conserving liquidity for any stumble (and one is due to come along). So for now we don't want to play for negative behavior, which makes sense in the context of an S&P that (with the right moves) could reach higher later.

S&P, with proper continuing Fed support and without yields surging too high, can forge ahead 'slightly'; then consolidate with not too much angst ahead of the FOMC meeting this coming week; presuming a friendly Fed persists.  

Again; as contended throughout the move since the March 'Inger Bottom': hold, don't chase big-cap leaders; but not fade aggressively either. Above all:    

 'Don't fight the Fed'.