Often many traders and investors will watch the leading stocks in the sector to identify strength in the stock market. The financial sector leader is Goldman Sachs Group Inc (NYSE:GS). The energy sector leader is Exxon Mobil Corp (NYSE:XOM). Therefore, when these two stocks trade higher the markets will generally trade higher as well. When these two stocks decline the stock market often declines. Rarely will the stock markets ever move significantly without these two stock leading the markets up or down.
Today Exxon Mobil Corp is trading lower by 0.21 to $57.06. This important stock is negative when the entire energy sector is positive. Therefore, until XOM can catch a bid, don’t expect much out of the energy sector today. Should XOM rally then the energy sector will likely trade a lot higher. It is important to remember that XOM still has the largest market capitalization in the stock market.
Goldman Sachs Group Inc has been a beaten stock since April when the SEC accused the financial giant of fraud. The company also has the unclear financial reform bill hanging over its head at this time. It is important to remember that since the 2008 credit crisis Goldman Sachs Group became a registered bank and will have to abide by the new banking rules. Therefore, if the company can no longer do proprietary trading this would severely hurt future earnings for the company. Today Goldman Sachs Group Inc is trading lower by 0.62 to $133.08.
Exxon Mobil Corp and Goldman Sachs Group Inc are two very important stock market barometers. When these stocks trade higher together the stock markets will usually trade sharply higher. When these two stocks decline together the stock market will often trade sharply lower. When one of these two critical stocks are trading higher and the other is lower the stock market is usually flat or unchanged.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
