nasdaq, up 30 points today, almost 1% there as well. and the s&p 500 tonight, up 10.5 points, two-thirds of 1% on the upside. the summer kicking off with a sizzling side on wall street. josh lipton is in the middle of it, talking about where stocks are up all day. >> another day, another record for the dow. as you pointed out, we did close off session highs. have been up about 218. we still, though, rack up a triple-digit gain, up about 107 points at the close. positive economic data on home prices, on consumer confidence. you hit a post-recession high. and some traders down here telling me this morning, why fight the tuesday. as you and bill were pointing out now, 20, 20 consecutive tuesdays of gains. in the s&p 500, what worked today, those cyclical sectors, those economically sensitive sectors. that has been the thing, it's financials, it's energy, and it's materials. what did not work today were those defensive sectors, telecom and utilities. in fact, dow utilities closed at a two-month low, down for four straight sessions. and we'll end here, maria, on one bright spot. that was the luxury sector. tiffany reported this morning, higher than expected sales. coors, which reports tomorrow morning, as well as coach, both finish higher. maria, back to you. >> josh, thank you so much. joining me now is tim leech from u.s. wealth management, mike santoli and andrew keene from keene on the markets. good to see everybody. tim leetch, let me ask you your take on what we saw last week and compare that to what we're seeing today. has anything changed in your mind in terms of the reason to own equities? >> this is really playing out the way that we thought it would, maria, with the fed beginning to signal the taper. that's what we saw as a first reaction last week, was facing that reality by equity investors. whereas this week, today, i think this is really that cheering sound of equity investors who are believing now that there may be life after qe. so i think it's all kind of playing out as we had anticipated. >> so, mark, you say the rotation to cyclicals out of defensive, the defensive area, has become expensive. is that -- would you agree it's life after qe that you want to own those companies that are economically sensitive? >> yeah, we're all waiting for a correction that i think we probably all feel is overdue for the overall market. i think you're getting that rotation within the market. this was a reluctant investor coming into this year. utilities, staples, and health care. but now, particularly when you've got technology companies paying a dividend that is just as much as you're getting in some of those safer plays, i think people are saying, where do i see future growth. if i get the same dividend, maybe it's time to rotate. as the economic data today certainly looked better, i think some of those more expensive defensives are rotating to cyclicals, it's almost as if we're getting a market correction, without having a full market correction. i think this is stage one, while we all wait for some sort of pullback. you're going to see it in the defensive areas right now. >> and any catalyst on the horizon, mike santoli, in terms of pushing us one way or the other, that you see, besides the federal reserve being the main components here? mike santoli, you with us? all right, mike does not hear me. but, andrew keene, let me turn to you, then. you're talking about, i see that in your notes, you say that the vix is very important and you're not expecting a big correction until we see some kind of pop in the volatility index. how come? >> yeah, everything, you know, when i watch a stock market trade, we sold off last week on bernanke's comments, and maybe tapering off some of this qe. and i look at the volatility index and the vix. and the june vix features didn't really budge at all. that showed to me that there were going to be buyers coming in the market. the futures got bid up. they got down to about this 1634 level and they came in and bought them. the market continues to move higher. i talked about it the last time i was on the show. i was buying put spreads on the tlt, gld, and i've been long the market. i think the airlines still look good, lcc, ula, i think this market will continue to move higher. always keep an eye on the vix and volatility index, to give me a signal that the market can actually have a correction, which i don't think it's going to have until i see a vix, at least putting on 18. >> what about that, mike santoli, can you hear me now? >> i can, yeah. >> so andrew's talking about the vix popping, as being a catalyst. do you see any catalyst on the horizon to move this market one way or the other? >> to be honest, the only downside catalyst i see is not actually the fed, because i think it's going to be a very managed, telegraphed process. when we get there, we'll be lucky once the taper really kicks in. it will be a microstutter step. last week, that volatility was a little bit about the chinese shortfall and chinese manufacturing growth versus the actual market dynamics over here. i do think that is the risk. and so far this handoff to the cyclical seems like -- >> it seems like we're having technical difficulties with mike santoli. tim leech, if i wanted to get into this market today, obviously, i would miss a lot of the move on the upside. putting new money to work today, would you do that? >> we would do that, maria, but we'll do it in a little bit different way than some other investors do. given how far and how fast this market has come this year, we're actually wanting to play it a little bit more cautiously. we think it's going to be a little bit more choppy over the next three months. and so we actually have a blended position between investment managers who are more long/short versus long only. we think that long/short managers are likely to fare better over the next three months. >> long only being which groups? >> long only being managers who are essentially buying stocks solely as their investment strategy, whereas long/short managers are buying to hold as well as shorting other names that they don't like. >> i see. in terms of the rotation to cyclicals, where do you -- do you, mark ooibl look at financials in that category? give me your sense of the actual sectors that you think are going to lead this rally? >> our managers have been overweight health care, they continue to be. that's one of the foot in the camp of both offensive as well as growth. consumer discretionary, tech, and financials, the weights have been coming up. so i think that's how you play it within the u.s. i think there's another -- people need to step back and not just think of this equity rally within the u.s. europe, certainly, sent smalls overnight, that they're looking a little bit more at the growth initiatives. and emerging markets have not participated. so i think you'll like equities over other asset classes, but you need to diversify those, i think, across the world and not just look at it within the u.s. base, i think, at this point. >> what's vulnerable here, guys? what do you want to avoid? >> i think all the currencies are shorts right now. if you look at the yen, the british pound, the euro, a rally on any of those got short the yen, had been short the yen in the past. i think all the currencies globally will head lower. i want to be long u.s. equities against short global currencies. >> what about you, tim, were you just about to jump in there? >> probably the biggest risk we so, maria, is backing up rates. and we've already seen the first moves of that with the ten-year going to 2.13 today. we're going to see more of that. we think that the ten-year probably ends up the year at 2.25, maybe 2.3. and there's going to be some real pain out of traditional fixed income owning investors. >> all right. we'll leave it there. thanks, everybody. really appreciate your time tonight. we'll see you soon. >> thank you. >> thank you so much. meanwhile, another train derailment in the northeast. this time, it is the freight train outside of baltimore. jackie deangelis now with the latest on that. over to you, jackie. >> good afternoon, maria. i want to share with you some very dramatic video that was posted on facebook from a viewer of this freight train derailment and that subsequent explosion that occurred near white marsh, maryland. take a look. >> how far -- how far away, do you think, we are -- that video really giving you a sense of the size and also the scale of this explosion. reports indicate that the explosion could be heard in downtown maryland. that's roughly 20 minutes away. it's obviously a developing story, maria, which we are following. several buildings collapsed at the site of that derailment. reports also that nearby businesses have evacuated that area and that hazmat is on the scene, working with authorities to investigate not only the cause of this, but what specifically was on that train. as you're watching pictures of this, you see thick plumes of smoke and also fire burning at this time. no injuries, though, reported just as yet. now, it is believed that this was a csx freight train. we are waiting to hear back from the company with a statement from them, but nothing yet. we do have a statement from the ntsb saying that it is, quote, gathering information regarding this incident right now. meantime, a little more on csx. it's a company that provides rail-based transportation services. the stock was higher for most of the day. now negative. and we saw a big pickup in volume in this stock as well after 2:30. half of its volume coming in the last hour and a half of trade. and this, of course, bringing train mishaps into focus. it's the third big one that we've seen in the last two weeks. the first, may 17th, that derailment in connecticut that injured more than 70 people. and of course, the incident that we saw this weekend in missouri on saturday. as more information becomes available on this, we will bring it to you. back to you. >> jackie, thank you so much, jackie deangelis. a lot more coming up on this market rally today on wall street. the rally keeps on going, but so do calls for a summer swoon. somebody insisting a big decline is right around the corner. we'll find out why he thinks so. and which of these stocks are still a bargain in your view? we're focused on different companies every day this week. you cannot afford to miss where the value is in this market. which five brands everybody knows won't be around by the end of the year? the editor of "24/7 wall street" has a list you need to keep an eye on. you're watching the "closing bell" on cnbc, first in business worldwide. ♪ bonjour ♪ je t'adore ♪ c'est aujourd'hui ♪ ♪ et toujours ♪ me amour ♪ how about me? [ male announcer ] here's to a life less routine. ♪ and it's un, deux, trois, quatre ♪ ♪ give me some more of that [ male announcer ] the more connected, athletic, seductive lexus rx. ♪ je t'adore, je t'adore, je t'adore ♪ ♪ ♪ s'il vous plait [ male announcer ] this is the pursuit of perfection. welcome back. dow notching a record 20th straight tuesday in the black on the way to another closing high today. seema mody, what is going on with tuesdays?! >> it is pretty amazing, maria. the record winning streak for the dow just continues to go higher. today marks the 20th tuesday in a row that the dow jones industrial index closed higher. tuesday rallies a count for about 68% of the gains for the dow this year. what if you just traded a tuesday run? well, if you bought the dow jones industrial at the close on the prior trading day and sold at the close of tuesday, you would have a cumulative return of about 12%. the last time we had a run of tuesday wins, even close to this run, was in 1927. that streak ended at 15. and it's not just a dow. today marks the tenth consecutive tuesday gain for the s&p 500 and the nasdaq. the nasdaq run ties a ten-session run back in 1972, almost 40 years ago. so what's so special about them tuesdays? well, you ask ten traders and you may get a dozen reasons. upbeat economic data around housing and consumer confidence have helped some days, but not all. other traders also suggested maybe the optimism behind the market expression "turnaround tuesdays." and then there are other traders who say, this is simply a spoof. no real reason. nonetheless, maria, an interesting run. back to you. >> seema, thank you so much. well, the start of the summer, temperatures are not breaking records or hitting new highs. the markets certainly are. but as the inevitable summer swelter arrives, will it provide a market meltdown? michael guyed says there's a real risk of market correction, but john could not disagree more. gentleman, good to see you. thank you so much for joining us and make the bull and the bear cases. michael, why would a correction be around the corner? >> i think the most important thing is here to watch how the bond market behaves. we saw last week how stocks react when you have interest rates spike. the biggest black swan is no longer anything except what could happen in the bond market. now, in the event that this yield curve steepening really starts to go vertical, i think you're going end to up having people doubt the housing recovery, doubt the cyclical story, and you'll have a lot of people doubt the central banks' ability to control this frankenstein they've created in the bond market. >> yeah, but even with rates where they are, even moving up from the absolute bottom, the stock market keeps on trading up. >> it did that prior to the crash of '87 and did that also in the mid-'70s. if you really want to understand what's going to happen to the trend here, you have to notice the speed under which interest rates move. >> john, what about you. you don't see a chance of a correction all this summer, but at some point, does something have to give? >> well, we've been bullish for some time now, three or four years, so we're continuing to be bullish. i understand what gary is saying, but the fact of the matter is, right now, what we're having is kind of like an all-state moment in the bond market, where we're recalculating. basically, they're recalculating for the taper. the fed is not buying $85 billion a month worth of stocks, they're buying treasury securities. so the bond market needs to recalibrate for that liquidity to come out. basically, in terms of what we had forecasted in the prior months back is the yield is probably being compressed by 90 to 120 basis points, because of qe, right? so basically, we've had rates back up about 50 or 60 basis points. so, basically, we've discounting the tapering, probably about 60% right now. i would say over 50%. as the fed starts to taper, the bond market reaction is going to be 50% less if the ted didn't say anything about tapering. so right now we're seeing a recalibration in the bond market given the fact that qe and the tapering is going is come out. and conversely, at the same time, the stocks have not really sold off. so -- >> what's the number that you would look for in the bond market that actually would be nerve-racking or a reason, a good enough reason to take money out of stocks and put it into fixed income? >> well, i think as long as we don't see a dislocation in the bond market, like i said, you know, we calibrated about 100 basis points of yield compression because of qe. so if we take out a hundred basis points, that means it goes from 160 to 260. we don't think that's probably outside the realm of the possibilities going forward. the other thing we have to remember is that the united states economy is a super tanker. we just saw moody's upgrade the banking sector for the first time since 2008. consumer confidence is the highest since 2008. so, obviously, this handoff between the fed to the real economy is working. and yields will obviously backup because the economy is getting stronger. >> what about that, michael? >> i hear a lot of 2008 in that rhetoric, which concerns me a little bit. but, you know, i think we have to be really, really cautious here. you have this real disconnect here between the stock market and the bond market all year. the stock market has moved higher. bond yields have now been very, very jumpy. i think in general, if qe, this whole issue of tapering, has to be considered in the light of inflation expectations. how can the fed really taper if inflation expectations are falling, and they have been, really since the end of january. there is still this reflation disconnect between the story of the stock market and the bond market? >> i think the other problem is that the fed is talking about tapering, because as the deficit falls, they cannot be the only buyer of treasuries. they can't continue to buy $85 billion worth of bonds each month if there's not that amount of bonds to be bought. as the deficit falls, the fed has to taper, right? and the average duration of the fed portfolio is about 7 1/2 to 8 years. so therefore, they could actually let those bonds run off without buying new bonds, as the taper proceeds. >> i do not disagree with any of that, but this is ultimately about speed. you can have a shock in the bond market that can cause stocks to fall pretty substantially. every day that goes by, we get closer to that risk of a butterfly effect happening in fixed income. so we're in equities very near-term, we can very quickly rotate into bonds in our mutual fund. but i have to stress, if you're only looking at the stock market's trend, you are vulnerable very much to this possibility of something happening overnight or something like that -- >> we can always worry about what-ifs, but my guys want to know, what is going on? they don't know what if is going to happen. >> yields are rising -- >> and utilities are falling. as yields rise, utilities fall. so what's going on is actually the same thing that goes on all the time. i would also say that, probably, some of those dividends stocks that have been bought, because people want a yield of 3, 4%, they might also come under some pressure. >> there has to be some kind of a strategy for when the federal reserve does start to taper off and start sending rates higher. i mean, we don't know if it's sooner rather than later, that's one of the issues here, because, john, if it happens in june, in july of this year, then we get clear evidence that, in fact, the federal reserve is beginning to taper, is there an argument to be made that you have to start taking chips off the table in stocks? >> i don't think so, maria. >> even while the fed is cutting -- >> it depends on how it happens. >> we've already seen 50 to 60% of the bond market begin to discount the fact that the fed will begin to taper. and stocks haven't done anything, except stay -- stocks could go sideways, and then, eventually, go higher. nobody cease saying that we're going to go up 1% every week, until the end of the year. but, you know, everybody who's calling for a 10% correction and waiting by this correction, i don't see it. there's so much money underneath the market, goldman sachs order book, just on corporations, just on merck alone, they have to buy 100 million shares of merck just to satisfy their buyback. do you want to fight merck, do you want to fight all the central banks in the world, as well as the fact that we have two elections coming up, one in japan, right, where they're going to vote in june, and then in the fall, we have merkel up for re-election. do you think any of those governments will do anything to upset the masses? >> final word here, michael, go ahead. >> you're assuming that central banks have power over their respective bond markets. i think the experiment going on in japan is going to very much question that notion, given what happened last week. that may be the first sneak peek into how bond markets can suddenly counter everythin