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%.

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? 

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.

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.