Monday was not a blockbuster session, but it was impressive against a backdrop of events that could have sent stocks substantially lower:

• American cities on fire
• Disappointing news on leading COVID-19 vaccine candidate
• Increased tensions with China
• Endless whining from bears
• Financial media disbelief of rally

They are laying it on thick, but the market just keeps going higher. The financial media mused out loud yesterday morning about how detached the stock market was from the headlines.

It’s okay to wonder how the market keeps rallying. It does seem counterintuitive to current headlines. But it’s not necessarily out of touch with what might happen in the economy, geopolitics, and America’s challenges on race and class. Perhaps the stock market is signaling that in six months, one year, or eighteen months from now, there will be marked improvement in all those areas.

Or, perhaps the stock market is insane when it goes up and spot-on when it goes lower. 

Widening the Net

The good news about this rebound effort is the net is getting wider and more stocks are on the move.  Historically, expanding 52-week highs has been a sign the market will get stronger.

Market Breadth	NYSE	NASDAQ
Advancers	2,236	1,992
Decliners	739	1,280
New 52 Week Highs	50	133
New 52 Week Lows	5	9
Up Volume	3.8 billion	2.7 billion
Down Volume	860 million	1.1 billion

Market Leadership

The stock market was able to rally without big tech or Health Care. The latter underscores my contention that the market is moving on the notion of living with COVID-19 for a long time before a vaccine. 

Gilead Sciences (GILD) shares wilted after the mixed results from its COVID-19 vaccine candidate, and while there was good news out of Eli Lilly (LLY) on a candidate, it would not be ready for more than a year.

Utilities were up for sixth consecutive sessions, underscoring there is a cautious element to buying and investors starved for yield.

S&P 500 Index	+0.38%
Communication Services XLC	+1.15%
Consumer Discretionary XLY	+0.95%
Consumer Staples XLP	+0.69%
Energy XLE	+1.75%
Financials XLF	+1.15%
Health Care XLV	-0.99%
Industrials XLI	+0.22%
Materials XLB	+0.69%
Real Estate XLRE	+1.99%
Technology XLK	-0.03%
Utilities XLU	+1.19%

The flatfooted responses that initially emboldened rioters and looters led to nefarious actors ransacking the United States. This week, it looks as though they are trying to make amends before there isn’t anything left standing in their towns.

Most of the big cities instituted stronger and earlier curfews, and several states announced reopening sooner than expected:

• Michigan (phase one) immediately, dine-in restaurants to open with capacity limits; groups of up to 100 can gather outside (6 ft apart), up from a threshold of 10 people
• New Jersey (phase two) June 15^th outdoor dining; June 22nd, salons and barbers
• Massachusetts (phase two) June 8^th childcare and summer camps

Unfortunately, so many of these states dragged their feet and spent time arresting salon owners and barbers, only to let rioters run roughshod. The market won’t read the political stuff - just add in the notion more people are getting back to work sooner.

Portfolio Approach

We added a new position in Technology to our current buys in the model portfolio and lowered cash. 

Today’s Session

The markets are off to another positive start.  We are watching auto sales data closely.  

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