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Green Bay QB Aaron Rodgers no longer has to live in the shadow of
Packers legend Brett Favre after Sunday’s masterful performance.
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Super Sunday has spilled over into Super Monday for the stock market as the indices race to new highs following last week’s impressive reversal. Today’s strength is broad-based, while bellwether stocks are showing leadership. Investors are shrugging off Friday’s troubling jobs number, which saw nearly 1 million people leave the labor force, instead focusing on further comments from Federal Reserve Chairman Ben Bernanke that he will continue to support risk asset prices.
Protests have quieted in Egypt as President Hosni Mubarak’s government works on a plan for transition of power, also easing pressure on world markets. A series of takeovers have lifted the mood, as well. The biggest deal saw ENSCO PLC (ESV) acquire Pride International, Inc. (PDE) for ~$7.3 billion, an acquisition that would create the world’s second largest offshore oil and gas driller. The most controversial deal saw AOL, Inc. (AOL) pay $315 million for liberal news publication Huffington Post.
Apple Back on Top
Following the leave-of-absence announcement from esteemed CEO Steve Jobs, the third of such kind, investors showed considerable indecision in regards to Apple, Inc. (AAPL). The stock was sold aggressively following the weekend announcement, but then aggressively bought in the following session. A blowout quarterly earnings report sent AAPL back to the highs before more profit taking created an eventual technical wedge pattern.
Last week, though, we noticed the AAPL ship was steadying, and that it was time to look for another breakout to all-time highs. The stock has done just that today, jumping nearly 2% to push the market higher. From an active trading perspective, it would be wise to begin taking some profits into the strength, but long-term this stock has plenty of room to run.
Ford Re-Starting its Engine
Ford Motor Company (F) has been in the doghouse for the past two weeks with a series of recalls and a disappointing earnings report. However, revenues were solid and production continues to increase, so the outlook remains strong for the cream of the American automaker crop.
Last Thursday, we saw a “RedDog” reversal in Ford, meaning it traded through the previous day’s low and then back above for a calculated entry point. Today we are seeing follow-through in F after Evan Lazarus of T3Live.com touted the stock for upside continuation. The stock is up more than 3% as investors scoop up discounted shares.
Fertilizers Continue to Grow
Fertilizer stocks continue to act well ahead of another earnings report this week from Agrium, Inc. (AGU) before the open Wednesday. AGU has actually behaved the strongest today, up 3%, while our favorite in the group PotashCorp./Saskatchewan (POT), up 2%, is also strong ahead of a stock split later this month. Fertilizer demand continues to rise as the world population grows in size and affluence, while arable land remains stagnant.
Banks Participating in Rally
Banks have, for the most part, lagged the rally off March 2009 lows, but with President Obama striking a more pro-business tone of late and some strong earnings, Wall Street stocks have started to play a little catch up.
The group is segregated into two categories this quarter, those with strong earnings and those with weak earnings. Those that beat estimates, like JP Morgan Chase & Co. (JPM) and Wells Fargo Company (WFC) are close to breaking out to 52-week highs, while others, like Goldman Sachs Group Inc. (GS) and Bank of America Corp. (BAC) are breaking out of lower bases trying to get back to highs.
Our favorites in the group at this stage are JPM and GS, in that order. Goldman has some room to play catch-up technically, while JPM is quickly catching the former unquestioned sector gold-standard in terms of prestige.
Casinos a Mixed Bag
After disappointing earnings last week, Las Vegas Sands Corp. (LVS) now finds itself in the proverbial dog house. The stock is now back in the lower end of its recent range and showing relative weakness to the rest of the group. We were not alone in the expectation that LVS could report a solid beat and trigger the next leg higher in the casinos, which have seen tremendous revenue growth continue from Macau.
If you are looking to own a casino stock, look to group leader Wynn Resorts Limited (WYNN) or laggard MGM Resorts International (MGM). WYNN sold off on LVS’ poor earnings last week, but has recovered all those losses with aggressive today. Look for WYNN to breakout above the $121-122 area before earnings near the end of February.
*DISCLOSURE: Evan has no positions. John Darsie is long AAPL, POT, MOS, F, JPM, GS. Scott is long AAPL, BAC.
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