The indices held their pre-market gaps up this morning and have trended higher most of the session Thursday. This market has made a habit of bouncing back quickly from corrections, and looks set to continue that trend after potent down day on Tuesday.
Apple Leads the Charge
The market has been boosted by the return of Apple Inc. (AAPL) to market leader status. Concerns about Steve Jobs’ health have plagued the stock for the past couple weeks, but his appearance yesterday at the iPad 2 launch event pleased investors. A good market has strong leadership, and Apple has been strong over the past two days, surging above its recent pivot high. Jobs’ immediate future with the company remains unclear, but he spoke strongly and looked healthy on stage.
Clouds Lift
Cloud computing stocks have been among the strongest in the market Thursday, many surging back to near highs. Riverbed Technologies, Inc. (RVBD) bounced nicely off its 50-day moving average last week, and has rallied back through the recent pivot high. The stock is an IBD favorite and looks like it wants to go higher. Another cloud-related stock we like in the storage space is Rackspace Hosting, Inc. (RAX). RAX is still some ways off its highs, but is testing recent pivot highs today. Expect RAX to break through and get back to highs. The sector is a mixed bag though, as others like F5 Networks, Inc. (FFIV), Akamai Technologies, Inc. (AKAM) and salesforce.com, inc. (CRM) remain in the dog house.
Banks Bounce
The banking sector has come under some pressure in recent days with JP Morgan Chase & Co. (JPM) announcing $4.5 billion in un-reserved legal liabilities and a former Goldman Sachs Group Inc. (GS) board member being charged by the SEC for providing insider tips to Galleon Fund. Both leading banks looked on the brink of breaking below major support levels yesterday, but today have bounced with the market and appear out of big trouble for the time being. GS in particular has formed a bearish head and shoulders pattern, and could be a place to turn if the market comes back under pressure. The stock failed to pierce below the neckline on the first try, but that is often the case.
Ags Also Near Pivot Highs
Pivots provide active traders with actionable areas to get involved in a stock for a momentum move. We are seeing several groups back near pivot highs from last week’s bounce back. One such sector is the agricultural stocks. The two we are watching closest, as usual, are The Mosaic Company (MOS) and PotashCorp./Saskatchewan (POT). Both have not yet pushed through their pivot zones, but we expect to see them back at highs over the next few weeks. MOS has been the stronger stock today.
*DISCLOSURE: John Darsie is long POT, AAPL, MOS, JPM, RAX, RVBD.
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