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Time Warner on the back of HBO; new S&P 500 high: What to watch

Good morning. Here’s what to watch while trading today.

The market greets the new week at the top of the range. Will the air prove to be too thin up here to sustain the rally – as it has a few times before?

The S&P 500 (^GSPC) at the 2100 mark is just a few ticks away from another all-time high. But what this really means is that the index has simply shuttled back to the upper end of the fairly tight band of territory that has contained it for nearly six months.

The upbeat take on this action is that stocks are showing resilience by holding firm against threats from several sides – the oil crash decimating energy stocks, the strong dollar pressuring corporate earnings, another soft patch in the economy weighing on growth estimates. High liquidity and still-strong credit markets have so far frustrated the bears and again compressed market volatility, just as happened in the spring a year ago.

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Sure, the US is among the worst performers among world equity markets this year. But with all these challenges maybe playing to a tie and remaining in a long-term uptrend is a form of victory.

The real gauge of the market’s fortitude might well be the stealth strength of its middlemen. The S&P 400 Mid Cap 400 index, tracked by the ETF with the ticker MDY, has been a quiet outperformer for most of this bull market.

Often overlooked in favor of the scrappy small-caps or dominant mega-cap stocks, the mid caps are in a sort of sweet spot of the market: big enough to be substantial companies with defensible franchises, but still with more room to grow and less exposure to the strong dollar than the giant multinationals.

The index has less than 5% in energy stocks – and with a heavy skew toward financial, consumer and industrial names, would seem to be an ideal vehicle for a growth-starved market wary of eventual interest-rate hikes.

That’s why the S&P Mid Cap – itself right up against its all-time high – is your key “tell” on the bull market’s underlying strength.

Turning to individual companies to track today, Time Warner Inc. (TWX) executives can be forgiven the bit of gloating they’re doing in the Monday papers. HBO is the hottest network in media with John Oliver’s Edward Snowden interview and its documentary on accused killer Robert Durst dominating the social conversation.

Not even the apparent online leak of several episodes of its “Game of Thrones” series should dim the good mood at Time Warner – the very fact that it has a cult series worthy of illicit early viewership is a victory in TV today. And now that HBO is a leader in over-the-top premium digital subscriptions, Time Warner has taken the offensive in the cord-cutting wars.

Time Warner CEO Jeff Bewkes might also want to gloat over his stock price rising toward what rival Rupert Murdoch offered to pay for the company nine months ago. Before Murdoch’s Twenty-First Century Fox bid was revealed last July, Time Warner shares were at $71.

They shot above $87 on the deal talk, then sank right back to $72 when Time Warner successfully fended Murdoch off. Now the shares, on their own steam, are back above $85, just as another round of media merger chatter is building again.

The enormous value of HBO inside Time Warner might not be a one-day catalyst for more stock gains. But it’s a pretty good reminder that content, and not Rupert Murdoch, remains king.

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