The market once again held in near highs on this snowy day in the Northeast, with more strong earnings overcoming higher than expected jobless claims this morning. After a brief period of sloppy action that is often a precursor to a short-term top, the market has continued to rumble on.
Amazon.com, Inc. (AMZN) is trading down sharply after hours after a narrow earnings beat, with the real concern coming with disappointing operating income. Come earnings time, you either hedge or take options into the announcement to limit risk. Microsoft Corporation (MSFT) is mildly lower after a narrow beat leaked 15 minutes before the close. Riverbed Technology, Inc. (RVBD), the latest cloud stock to take a stab at earnings, has mostly recovered from a sharp initial drop after-hours following a narrow beat.
Some of the sectors that were beaten down during the period of indecision last week and early this week are starting to repair.
The fertilizer stocks, led by PotashCorp of Saskatchewan, Inc. (POT), and, to a lesser extent, cloud stocks, have gotten a lift to boost the market. In terms of technical action, we are also seeing a return to very segmented sector rotation, with oil stocks breaking out nicely yesterday, led by Halliburton Company (HAL), and today insurers like MetLife, Inc. (MET) and Prudential Financial Inc. (PRU) stretching their legs.
Gold is at a four-month low as there is no discernible cost driver at this stage of the game. After such a long and precipitous run, it is not surprising to see a correction in gold, but the degree of weakness must be concerning even to the most ardent gold bugs. Silver also continues to get hit but is still above support from late November. With a high degree of economic uncertainty still present, you have to believe that the precious metals will once again have their day at some point in the future. It will be up to us to time the trade while limiting risk.
*DISCLOSURE: Scott Redler his long AMZN calls.
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