This morning the market shrugged off the higher than expected initial jobless claims, which jumped to three month highs of 454k. Working against the weak data was strong earnings from Caterpillar, Inc. (CAT) and news of a stock split plus dividend increase from PotashCorp./ Saskatchewan (POT). There were no big surprises from the group of big pharmaceutical companies that reported this morning.
Some believe the frequent harsh winter weather may be to blame for the higher jobless claims, and we have a nice reminder of that as NYC is a winter wonderland once again today. We also saw durable goods orders continue to grow, and pending home sales surprised to the upside just like new home sales yesterday.
Fertilizers Fade After Gap Up
The fertilizer group opened higher this morning after solid earnings and the split/dividend announcement from group leader PotashCorp.
We have been pounding the table to buy the dip in these agricultural stocks despite Cargill’s decision to sell its Mosaic stake, and today’s action was some confirmation that such faith was not misplaced.
POT has given back more than half of its pre-market gains as investors look to take profits on the spike. The others in the group, like The Mosaic Company (MOS), CF Industries Holdings, Inc. (CF) and Monsanto Company, have gone negative after more muted gap ups this morning.
Long-term investors can feel secure about holding fertilizer stocks after the bullish report from PotashCorp management (which is typically very conservative in their outlook). For active traders, the sell signal after the morning gap up was a cross back below the previous high in POT which stands at $174.30.
Netflix Staying Up
Netflix, Inc. (NFLX) continues to hold up after its nearly 15% after hours gain following another stellar earnings report. The stock is heavily shorted with some analysts adamant the company is grossly overvalued and vulnerable to competition, but the stock continues to charge higher as investors show thirst for the shares.
Casinos Still Holding
The casinos stocks continue to be a little bit frustrating for active traders, selling off today after yesterday’s bounce. Las Vegas Sands Corp (LVS) has the best consolidation pattern in the group, and as long as it stays above $44 its still in the game for a break back above the $50 level.
Insurers Breaking Out
The insurers group is another that has a few stocks with attractive technical upper level bases. The best looking pattern in the group is MetLife, Inc. (MET), which has just started to break out this morning. Lincoln National Corporation (LNC) is another that looks set to break out after a nice push today. and Prudential Financial, Inc. (PRU) and StanCorp Financial Group, Inc. (SFG) continue to extend higher after yesterday’s breakout.
Amazon Showing Some Life Into Earnings
On October 24th Scott Redler of T3Live.com outlined a strategy for catching an oversold bounce in Amazon.com, Inc. (AMZN). Despite the trade being somewhat sloppy AMZN continues to hold above the $74 area and got a bounce this morning. The stock has come off a bit, and has earnings after the close. We will revisit this stock near the end of the session today to decide whether to take some options into earnings.
Pedal Off the Metal
Precious metals continue to be weak, as Gold has now made a new low. Scott has been looking for an opportunity to bottom fish GLD, and says he will look for another spot to buy in the near future after being stopped out at the recent pivot low of $129.07. The feeble bounce was good for a short-term cash flow trade, but nothing more for now.
Rare Earth Bounce
Rare earth stocks, which are a big focus of short term momentum traders, have perked up a bit today after a few days of weakness. We will be watching the volatile sector for some potential short term trades on the.
*DISCLOSURE: Scott Redler is long LVS, SHZ; Short SPY. John Darsie is long GLD, LVS, POT, MOS.
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