After opening lower near the bottom end of the current three-day range, the market has been strong all-day and is close to testing the upper end of the that same tight consolidation. At this stage, every time the market feels like it could get even at least a temporary flush, buyers have stepped in. The resolution of this range, which coincides with the top of the wedge pattern, to the upside would likely send this market back to the highs with momentum.
Hot Clothes
We are once again seeing explosive moves from a host of stocks even though the market range has been somewhat tight. The leading sector today has been the apparel stocks. Over the last two weeks Scott Redler and Alix Steel have highlighted two of the hottest new apparel companies, Lululemon Athletica, inc. (LULU) and Under Armour, Inc. (UA).
Lululemon stores are almost always packed, and it’s almost impossible to watch a sporting event without seeing an Under Armour logo. The stocks have been two of the biggest winners in the market over the last couple years, and have continued to get momentum today. UA is holding up well after a recent run, up nearly 1%, while LULU has taken its turn breaking out of an upper level base, tacking on 3% today.
Also on the apparel front, Abercrombie & Fitch Co. (ANF) is up nearly 10% today after hosting its first ever analyst day. Apparently the analysts liked what they saw in the stores and on the balance sheet. Aeropostale, Inc. (ARO) is up 2.75%, Pacific Sunwear of California, Inc. (PSUN) is up 4.5%, and while Polo Ralph Lauren Corporation (RL) is up only 0.85% on the day, it is just poking its head above a base.
Apple Regains Balance
Apple Inc. (AAPL), after falling sharply after hours due to index rebalancing, has taken back all of those losses. Despite lingering concerns over the health and status of Steve Jobs, AAPL remains undervalued and should retest highs above $360 at some point in time.
Metal Stocks Shine
Also from the Morning Call today, Freeport-McMoRan Copper & Gold Inc. (FCX) triggered another buy through $56 above a recent consolidation. In fact all commodity-related stocks have been strong today, highlight by the precious metal miners. FCX is up 2.6%, Market Vectors Gold Miners ETF (GDX) is up 2.7%, while silver miners Endeavour Silver Corp. (EXK) +6.8%, Coeur d’Alene Mines Corporation (CDE) +5%, and Silver Wheaton Corp. (SLW) +2.3%, have also been strong.
Oil Catching Fire
Also from the Morning Call, Exxon Mobil Corp. (XOM) has broken out above the $85 trigger price. Oil stocks have lagged some of the other commodities this morning but are starting to play some catch-up. The first resistance area to start looking to take incremental profits for XOM is above $86. The Oil Service HOLDR’s ETF (OIH) has also rebounded from the bottom end of its range and looks poised at some point to break out of the consolidation. The ETF’s largest component, Schlumberger Limited (SLB), has been among the weakest in the group, so look for that stock to hold the key to the move.
Sector rotation remains key as Chinese stocks have rested and commodity stocks have taken the lead. Continue to monitor the price action, and if you need some help, subscribe to the T3Live.com Virtual Trading Floor, where you can interact with a group of experienced professional traders calling out the hottest stocks and sectors every hour of every trading day.
*DISCLOSURE: Scott Redler is long FCX, AAPL, XOM, LVS, GLD, V, JPM, OIH, MSFT, BAC, F, LMT, SSYS.
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