So, overall market bias is to the upside. We know this not only because the major indices are near all-time highs, but also because on the lowest volume session of the year, with minimal volume, the Dow climbed 100 points out the gate and held into the closing bell.  All sectors were higher with utilities and financials slightly ahead of the pack. 

Interestingly, financials continue to be the roll of the dice long shot while utilities are now seen as oversold having been up more than 20% earlier in the year.

There was some bottom fishing in names like Express Scripts, which missed earnings big time, and Mylan which some say missed humanity big time.  I suspect more of the same today, and while we like our cash position going into the three-day weekend, I would like to put on a couple positions or add to existing ones before the severely underperforming big boys and girls climb off their yachts and play catch-up.

This might be a dull melt up, but it might also be a harbinger of things to come.

Today’s Session

The big news is the European Union is coming after Apple for €14.5 billion in taxes, which could actually be worse news for Ireland than the tech names domiciled there. 

Hersey stock is melting (I couldn’t resist), as Mondelez is backing away from a potential takeover, and the moral of this story is to sell on the news (waiting on a higher bid or the legal hurdles is too risky).

Housing Market

On the housing front, prices increased at the slowest pace since last August according to the Case – Shiller 20-city report.  The 5.1% increase is below the 5.2% expected.  I actually think the market needs a much slower pace of increases and see declining rents in certain cities as a sign prices have gotten too far ahead.   This isn’t an indictment on housing, which is seeing solid demand, but a dearth of supply. 

As natural adjustments occur, slower price increases will be a net-net good thing.