Today was a flat market day with the DJIA and the S&P off a small amount while NASDAQ gained a few points. But it was better than last week when all style/caps ended the week in the red. Large-cap value was down the least, at -0.8%, while small-cap value was down the most, at -1.11%. 

Four stocks that don't ordinarily make the cut for our institutional portfolios piqued my interest in today's market. One had only two analysts reporting estimates; all had dividends, but none were as high as 2%. For these reasons, they were eliminated from consideration for our institutional portfolios. Yet, all are interesting growth companies, reasonably priced, and in multiple sectors.

• Stock investors are surveying the view from these lofty heights, with the S&P 500 trying to hold up just below the 1700 level, and they appear to be feeling some vertigo. They are wondering if there will be a catalyst to take stocks higher before Labor Day, or if the dreaded correction is imminent. However, my concern is that investors might be hamstrung by a perceived no-win situation.

Overall, earnings reports have continued to beat the low bar of expectations.

We finally had another down week, albeit by the slimmest of margins. This next week promises to be the most important week of the month and, in all likelihood, next month as well. We get the ADP employment report, the FOMC meeting announcement, the first look at Q2 GDP, the Chicago PMI, the consumer confidence report, and more.  Undoubtedly, today’s weakness was based on investor apprehension about this week’s news and continued corporate reports.

Last week’s economic reports were mixed, and the style/caps were simply “mixed up.”  Our style/cap scorecard was turned on its head last week with year-long loser Large-Cap Growth up +0.26% to become the week’s leader and the last year leader (and still leader for the year) Small-Cap Value, bringing up the rear for the week at -0.15%.

We are in the thick of earnings season, and so far the general trend has been as anticipated: modest if any top-line growth and more earnings beats than misses (albeit versus a low bar). But forward guidance has been the big decider on how the stock trades post-earnings, and the message has been decidedly mixed, as many companies have had to reduce guidance or otherwise failed to make the grade in other important growth metrics.

Eleven of the past twelve market days have seen the market move higher . . . generally to new all-time highs. The S&P 500 closed today at 1695.53, yet another new high.

Could the upward run continue?  Yes, it could and likely will for at least three reasons.  1) Funds continue to flow from money market and longer-term fixed income funds into the equity market; 2) valuations have not exceeded reasonable variations from the norm—a tad high here and there but with bargains remaining; 3) the gains have not been powerful, large up days on large volume indicating a blow-off top.

Where is the market looking for opportunities? 

Small caps, mid-caps, Financials, Telecom, and Consumer Discretionary were among the market segments that hit new highs this week, even as bearish sentiment and short interest have risen, and there is still plenty of idle cash on the sidelines looking for a home.

The market opened on positive note this morning after generally positive performances by Asian markets (Japan was closed for a holiday) and a good start in Europe. This carried forward the positive momentum of the five-day up market last week and a seven-day overall winning streak, with both the DJIA and the S&P 500 reaching new all-time highs.

Earnings season is now officially underway, but the Fed is still holding the limelight, as traders anxiously awaited on Wednesday the FOMC minutes from the June 18/19 meeting. Although several members are pushing to begin tapering off this fall on asset purchases (bonds and mortgage-backed securities), which spooked the markets, in fact it now appears that the controlling opinion is that the U.S.

The beginning of Q2 earnings season got off to an inauspicious start with Alcoa (AA) barely beating highly reduced estimates by a single penny per share. Alcoa’s CEO provided cautionary but optimistic guidance on CNBC after the market closed. AA’s shares initially climbed a bit in the aftermarket but have since given most of that back.