Will the Rally Continue? The Naysayers Are Out

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Will the rally continue? For months, economic data has been improving — last week we had retail sales, along with the Empire State Manufacturing Index improving.

No matter: the Street is enamored with the old "sell in May and go away" philosophy; everyone seems poised for a sell-off, or at least a consolidation. Never mind that many of those spouting these clichés have lost a ton keeping their short positions on for the last couple months: The economy is just not improving the way everyone keeps saying, they insist, and dammit I am going to be right — at some point.

Attention will turn to housing this week, with February housing starts data out Tuesday, existing home sales on Wednesday, and new home sales out Friday. Warm weather has been a big help with traffic and early signs are that new orders are up 20 percent to 30 percent, about in-line with expectations.


1) Wouldn't it have been nice if Apple had done something unexpected, like...buying Twitter? Like everyone else, I stood in line and got my iPad this weekend. The screen is indeed a marvel: It was possible, if you squinted, to see the pixels on the main screen of my old iPad 1, but this one looks seamless to the naked eye.

As expected, Apple did announce a dividend, but somewhat toward the lower end of what some on the Street was expecting: $2.65 a quarter, roughly a 1.8 percent dividend yield, with a $10 billion share repurchase program.

While it's better than some of the large-cap technology peers, many were expecting payouts of around 35 percent of the current earnings consensus of $43 or so, which would imply a payout of about $3.75 per quarter, or about a 2.5 percent dividend yield.

Still, roughly $10 billion in payouts is nothing to sneeze at.

2) Speaking of dividends: Target edges slightly higher on light volume after the discount retailer said it expects its annual dividend to reach at least $3 per share by 2017, if it meets its profit goal of $8 per share. Wow! Target currently pays a $1.20 dividend per year, a yield of 2 percent. The retailer said it plans to continue buying back shares under a program authorized in January after recently completing a $10 billion buyback program from 2007. The company expects to complete January’s $5 billion buyback within two to three years.

3) China: Bad news is good news. Home price reports in China indicate that the Chinese government's effort to cool off the housing market has been working — prices were weakest in over a year in a survey of 70 cities, but the government has not been tracking city price movements for a very long period of time. China has raised downpayment requirements and mortgage rates in an effort to cool off the housing market. Bulls again argued this increased the chances the government would continue to lower reserve requirements for banks, increasing money available to lend.

4) United Parcel Service shares rise 1.4 percent pre-market after Dutch peer TNT accepted the package delivery company’s takeover offer for $6.85 billion. The deal will make UPS the biggest package shipper in Europe, boosting UPS’s global sales to more than $59 billion. UPS’s offer of 9.50 euros per share represents a premium of nearly 54 percent.

5) LDK Solar falls 2 percent on light volume pre-open after the Chinese solar company lowered the top end of its fourth-quarter revenue outlook and said gross margins would be hurt by decreasing market prices for wafers and modules. LDK revised its revenue guidance to between $440 and $450 million, a smaller range than the previous forecast of between $440 and $520 million.

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