This weekend, I did a quick update of my quantitative model to see how earnings updates might have affected the list of the best stocks (you can view prior lists for March, April, and May. Although the most recent update I did isn’t fully complete, one theme I did notice emerging was that semiconductor stocks have established a sizable position in the top 25. Four semiconductor stocks - circuit makers Supertex (SUPX) and Micrel (MCRL), as well as equipment makers Lam Research (LRCX) and Novellus (NVLS) - all appearing. While I haven’t had the time to fully digest these results, the reliance the model has on fundamental data leads me to believe that it points the way higher for the Philadelphia Semiconductor Index (SOXX), as any sort of positive fundamental reason to buy stocks should only add to all the upward pressure we have been seeing. By an extension of this thought process - along with some interesting results seen from Tom Lyons’ article on valuing the QQQQ, I believe there is a very real possibility we could see the market rally even further in the face of everyone wondering when we will have a pullback. After all, we will only seriously pullback once people begin to believe this market is unstoppable.

FYI: It took me quite a bit of mental preparation to write “there is a very real possibility we could see the market rally even further,” but the data can be used both ways. I continue to believe that overall, we are moderately overextended and thus wouldn’t be rushing to buy anything - but there is a ways to go before we see the entire market be grossly overvalued.