It was a monster recovery for the stock market on Monday, which had a few chinks in the armor last week even with the Dow Jones Industrial Average finishing at an all-time high. The rally saw all the major indices move higher with the Dow, and the S&P 500 hitting fresh all-time highs.

It’s the 22^nd new high for the Dow and the 23^rd new high for the S&P 500 since the inauguration. The big winner of the session was the NASDAQ Composite Index, which powered to a 1.4% gain, taking it to almost 16% for 2017. 

The move was driven by tech, but it's not the names you’re thinking about. This was all about semiconductor chips with Micron Technology (MU) and Advanced Micro Devices (AMD) leading the way. There was a time the conventional wisdom was never to buy computer chip stocks because they were cheap commodities.  So much for the mavens; these names are looking great, and demand will remain sky-high for a long time.

The continued rebound in bond yields is a relief for all investors, but one could quibble with very light volume in equities- although that’s something we could quibble with going back to March 2009.

Making Money on the New Arms Race

Last week, Secretary of Energy Rick Perry announced a major initiative to propel the United States back to the front of the pack in the race for the world’s fastest supercomputer. The goal is the first supercomputer to reach the Exascale computing power, which is the ability to compute 1 million trillion floating-point operations per second (FLOPS).

1,000,000,000,000,000,000

The plan calls for the federal government to invest $258 million or 40% of the total cost over the next three years with the following leaders in the industry:

• (AMD)  Advanced Micro Devices
• (Cray)  Cray Inc.
• (HPE)   Hewlett Packard
• (IBM)   International Business Machines
• (INTC)  Intel Corporation
• (NVDA) Nvidia

During the Obama administration, China stepped up with its fastest supercomputer going from 2.6 petaflops to 93.0 petaflops while the United States was largely flat-footed at 17.6 petaflops.

If you believe the next big global war will be fought online, it will be a critical race that the United States must have the best weapons to win.  Moreover, the computing power in these machines can gameplay nuclear warfare, help police the Internet for terroristic campaigns, recruiting, find cures to diseases, and fight back against cyber espionage.

From an investing point of view, NVDA is the monster in the group, but AMD acts great and is also benefiting from the surge in cryptocurrency. However, Cray is the wildcard, but I would not buy it yet.

Today’s Session

I have been pounding the table on the Homebuilders, and this morning, Lennar (LEN) posted earnings that beat on the top and bottom line. Revenues were up 18.8% year over year.  There is a shortage of new homes, especially for first time home buyers. Lennar is extremely well positioned to take advantage of this as they are not only one of the largest homebuilders, their target markets include first time, move-up and active adult homebuyers.  

Stocks are opening a bit lower.  Investors are looking to see if the markets can continue to build on yesterday’s performance.