Q&A-SBAuer Funds sees strength in technology, biotech

By Edward Krudy

NEW YORK, June 19 (Reuters) - The U.S. stock market is unlikely to see a significant pull-back after rallying up to 40 percent since March, says Robert Auer, senior portfolio manager at SBAuer Funds.

Auer, who helps manage the $127 million Auer Growth Fund, says investors should buy technology and biotech stocks while dumping defensive shares as the economy swings out of recession.

The fund is up 17.4 percent since the start of the year compared with a rise in the S&P 500 of less than 2 percent, according to Morningstar data from mid June.

Below is a question and answer session with Robert Auer.

Q. Do you think we will see a pull-back in stock prices following the S&P 500's 40 percent rally since March?

A. I'm very bullish. And why I'm bullish is that cash is still at a very high historic level. Cash in mutual funds is high, hedge fund cash is high. Just the amount of cash slushing around in the system is high.

The second thing is that there is so much pessimism. There are enough people out there saying, "Ah, we've still got a lot of downside left." And they have a lot of good reasons. I think all of the reasons are very sound but the market will climb a wall of worry as it always does.

Q. Which sectors will lead us out of recession?