While many investors may be rightly bullish, traders cannot simply throw a dart at the board and expect to hit the bullseye every time. Yesterday’s action was a consolidation day as the stocks leapt out the gate on Monday and needed a day of rest. Today’s gap lower may cause some bulls some pain though. It’s important to remember that even though Goldman Sachs Group, Inc. (GS) may have a year-end S&P 500 price target of 1440, markets don’t move in straight lines. As Scott Redler of T3Live.com said in his CNBC appearance yesterday, investors must stay long but stick to their discipline. This entails not chasing moves but allowing stock to pull-in and then adhering to strict stop loss limits.
Commodities a foretelling sign of weakness?
The action seen in the commodity markets yesterday could be a foreshadowing coming weakness in equities, opines Redler. The SPDR Gold Trust ETF (GLD) dropped 2.36% yesterday setting up a triple top technical pattern of resistance. Likewise, the iShares Silver Trust ETF (SLV) fell 3.00% and the iPath Dow Jones-UBS Copper ETF (JJC) slipped 1.13%.
Outside precious metals, importantly, crude oil tumbled with the United States Oil Fund ETF (USO) falling 2.48% on the day. Most commodities are quite extended in their rallies with gold and copper pushing out to new all-time highs in just the last month. Some of this vicious selling may spill over into equity markets and traders should take caution.
Fertilizer stocks continue running
The Mosaic Company (MOS) released its second quarter earnings last night handily topping estimates with adjusted earnings per share of $1.01 versus analyst estimates of $0.91. The top line was also above estimates by $300 million at $2.7 billion. Mosaic CEO excited investors with his commentary: “Market conditions are excellent and we are beginning calendar 2011 against a backdrop of expected record phosphate and potash demand, low producer inventories and a very lean global distribution pipeline.” Shares of MOS are trading nearly 3% higher in the pre-market.
This earnings release seemingly supports the recent breakouts to new 52-week highs with sector leader, Potash Corporation of Saskatchewan (POT) gaining 6.1% in December while smaller rival, Agrium Inc. (AGU) mounted a strong 14.26% over last month’s trading. These stocks can break out to new highs again today Marc Sperling of T3Live.com believes. He will be keying on this sector in the coming days for active trades.
Two top trade ideas for the day
Redler thinks Las Vegas Sands Corp. (LVS) may have an ace up its sleeve. He sees a technical wedge formation that could point to higher prices after two months of consolidation action. He highlighted the $48.00 price level on his daily Pricepoint Sheet as a possible trigger buy.
Evan Lazarus of T3Live.com outlined a trade he sees developing in Trina Solar Limited ADR (TSL). After a strong sell-off in mid-November shares of TSL have been basing for well over a month. Should the stock break the rising trendline at $23.00, Lazarus has identified no relevant support level until the $20.00 area.
Check out T3Live.com’s Virtual Trading Floor to follow these traders and their live portfolios in real-time throughout the day!
*DISCLOSURE: Marc Sperling is long LVS, short SPY. Scott Redler is long LVS and GS, short SPY.
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