After a small morning gap down, the market was slowly churning higher this morning before a grave warning from EU Energy Chief Guenther Oettinger sent stocks tumbling. Oettinger stated that he sees the potential for catastrophic events in the next few hours as the situation at Japan’s Fukushima Daiichi nuclear power plant is out of control. Soon after his comments came through, Japanese authorities expressed similar concerns about power plant units 3 and 4.
Early on, the gameplan from the Morning Call worked out well as strong stocks from Tuesday followed through to the upside. PotashCorp./Saskatchewan (POT), along with the rest of the ags, got another nice push off the open. US Steel Corporation (X) also climbed without pause off the open. Marc Sperling’s Play of the Day Youku.com, Inc. (YOKU) consolidating nicely in the first 30-45 minutes of the session before busting through pivot highs.
On the flips side of things, Scott Redler Apple Inc. (AAPL) noted that Apple Inc. (AAPL) was still sitting well below its 50-day moving average and one of the weaker big cap tech stocks. After early weakness when the market was drifting higher, AAPL got slammed after the market got hit.
All of that great early action was negated, however, by the EU energy chief’s comments regarding the nuclear situation in Japan. The market was able to bounce during yesterday’s session and avoid another drop overnight because there weren’t any additional doomsday headlines emanating out of Japan, especially in regards to the nuclear crisis. However, the situation remained unstable and greedy investors were punished for looking for huge follow-through from yesterday’s move. We have said from the beginning of this crisis that, yes, you can buy dips in strong stocks, but trades should be relatively quick and calculated. When the situation stabilizes, perhaps then there will an opportunity to get great prices on more macro longs.
If at this stage you are still sitting in longs, it would definitely be prudent to get out of most of your size or hedge yourself. Based on comments regarding the nuclear situation, there certainly could be more catastrophic events over the next few days. Authorities are exploring emergency options for cooling spent nuclear fuel and addressing overheating in the cores of the reactors. When the time comes, we will be looking to buy much of the same group of strong stocks that we highlighted in today’s Morning Call, but now is a time for caution and preservation of capital.
*DISCLOSURE: Scott Redler is long SLV, GLD; Short AAPL. Marc Sperling is long SPY, POT, LVS, X, CMG, AMZN, NVLS, YOKU, AMRN, AIG, CTXS, GLD, BP, TZOO
This material is being provided to you for educational purposes only. No information presented constitutes a recommendation by T3 LIVE or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs. Visit the T3Live Homepage, Virtual Trading Floor, and Learn More About Us.
