Stocks shrug off Italian political uncertainty, surge may be around the corner

Markets were mostly higher at the start of the week despite political uncertainty in Italy.

Italian Prime Minister Matteo Renzi resigned on Monday after losing a referendum he had called to push through constitutional changes.

Asian markets fell on the news. The Nikkei 225 fell 0.8 percent and the Shanghai Composite tumbled 1.2 percent.

However, European markets closed higher. The STOXX Europe 600 rose 0.6 percent.

In the US, the S&P 500 rose 0.6 percent.

However, Peter Cardillo, chief market economist at First Standard Financial, warned that this was just "the calm before the storm" while Claus Vistesen, chief euro zone economist at Pantheon Macro, wrote in a note: "The economy could easily grind to a halt due to political uncertainty."

Still, some analysts think that the stock market rally has at least a bit more to run.

Jeffrey Saut, the chief investment strategist at Raymond James, wrote on Monday that after a pause last week, the S&P 500 has entered the final surge of a buying climax.

Also on Monday, Todd Gordon of TradingAnalysis.com said on CNBC that another big surge for the small caps is around the corner.