The market is turning lower as we head into lunch time hour with former bank leader Goldman Sachs Group Inc. (GS) among the hardest hit, down nearly 2.5%. The S&P looks set to test the prior day’s low as yesterday’s rally proves fleeting. Gold and silver are also continuing their slide, now standing near major support levels that could be buyable. On the economic data front, consumer confidence data came in at the highest reading since May, but was unable to lift futures.
Last week the choppy action got many traders talking top, but Monday’s bounce frustrated the bears once again. Traders looking for a buyable dip have been forced to make a more short term, low risk approach to the trade. Bulls are starting to feel invincible, and often times it takes that type of extreme complacency for a significant correction to occur. We could be seeing that playing out today as action continues to be sloppy and the most recent move lacks leadership.
As for the leading tech stocks we watch each day, Apple Inc. (AAPL) has been a bright spot in the market today, following through to the upside after yesterday’s bounce. The $340 area is a spot active traders could look to take some size off after a nice bounce.
Google Inc. (GOOG) has also begun to recover somewhat after the post earnings sell-off. If it can continue to go higher, the next level resistance is $628-632
Amazon.com, Inc. (AMZN) is trying to work off the down open. Scott Redler of T3Live.com continues to watch AMZN for a potential reversal trade.
The cloud computing sector remains a concern after the negative response to VMWare, Inc. (VMW) earnings. The company beat consensus on the top and bottom line, but warned about shrinking margins due to new hiring in 2011. The stocks in this sector are highly valued and even the slightest negativity in their reports triggers panic selling. Others in the group like F5 Networks, Inc. (FFIV) have tried to push higher but are having a hard time gaining any steam.
The financial sector has been a mixed bag, but overall has been weak. As mentioned, Goldman has been a drag after its disappointing quarter. The group has largely been driven by earnings this quarter, with others like Citigroup Inc. (C) who had disappointing quarters also showing weakness. JP Morgan Chase & Co. (JPM) remains the strongest in the group after its impressive quarter, and is quickly emerging as the best in group for this year, led by mercurial CEO Jamie Dimon. Expect GS to recover long-term and for both it and JPM to lead the group this year.
The solar group is holding up well in a weak tape, with Magnet pick ReneSola Ltd. (SOL) leading the way. Group leader First Solar Inc. (FSLR) recovered from a slight down open and is basing intraday near yesterday’s high. Molycorp, Inc. (MCP) is the unquestioned leader in rare earth as it holds above yesterday’s high. The company yesterday announced a secondary offering to fund Phase 2 expansion of operations at its Mountain Pass mine in California.
This morning Evan Lazarus of T3Live.com was looking for a long in Direxion Daily Small Cap 3X Shares (TZA), and the fund is knocking on highs from last week as small cap stocks continue to lag. Strength looks to continue rotating into large cap value stocks as investors look for more safe haven areas to put money that is rotating out of bond and money money market funds.
*DISCLOSURE: Scott is long GLD; Short SPY. Evan is long TZA. Jordan is long SOL.
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