US stock futures point to healthy gains for Wall Street Monday as the situation at the Fukushima Daiichi nuclear site looks to be stabilizing. Also, over the weekend a coalition led by the US and France launched a series of missile attacks on sites in Libya aimed at crippling Moammar Gaddhaffi’s air defense and communication systems. The coalition is seeking to enforce a no-fly zone over Libya, which was agreed upon, but not followed by the Libyan leader, as part of a cease-fire by the UN last week. Oil prices jumped over the weekend on the news as Gaddhafi promises to fight a long war “inch by inch”. They say war is often good for the markets, is this another example of that phenomenon?
Contributing to the bullish sentiment on Wall Street this morning is a mega-deal involving At&T Inc. (T) and T-Mobile USA (T). AT&T has agreed to pay $39 billion for its rival from Deutsche Telekom (DTE) in a cash and stock deal that will create the country’s largest wireless carrier. Shares of At&T were up marginally in pre-market trading, while shares of Sprint Nextel Corp (S) are down more than 4% on fears that the merger will create a market duopoly with Verizon Communications and AT&T.
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The question for traders now is whether this up open is buyable, or simply a shortable bounce. Last week the action was difficult to decipher, as the action was dictated by headlines regarding the Japan nuclear situation. After an up open Friday, the market sold off during the session, leaving a bearish taste in traders’ mouths into the weekend. However, it seems that the market is greeting the increasing possibility of war in Libya warmly, along with the fact that that power has been restored to the nuclear reactors in Fukushima. The S&P is coming into major resistance now at the 1295 level, which the bears will need to defend if we are to see any more downside action in the short-term.
At the end of last week, there were several signs that the market was heavy, not the least of which was weakness among the big cap tech leaders. Apple Inc. (AAPL) saw heavy selling pressure amid two major concerns: supply chain problems in Japan and the future of Steve Jobs. The health of Jobs has been the major focus of Apple investors over the past few months since he announced his latest leave-of-absence from the company. Reports last week suggested Jobs could soon announce his permanent departure from the company. This morning, however, Apple is back in a familiar positions: leading the market. The stock is up nearly 2% in pre-market.
Many other stocks that were acting weak Friday are perking up this morning as well. PotashCorp./Saskatchewan (POT) is opening back toward the upper end of Friday’s range as it looks to continue its bounce-back. With food prices on the rise, POT seems to be in play for significantly higher prices. One stock that held up extremely well Friday was Caterpillar Inc. (CAT). CAT could play a significant role in the rebuilding efforts in Japan, pushing the stock to new all-time highs. CAT has acted very strong and should also see more upside if the market can build on this morning’s pre-market gains.
You can find strength almost across the board this morning, but traders have to be careful not to chase the up open. Over the past few weeks, the market has been indecisive, and it has not been prudent to chase moves in either direction. Until the market proves itself once again and disaster at the Japan reactors is completely off the table, that mindset will continue to be the most sensible. You don’t have to be early to the party, just be there for the good parts. Be sure to follow T3Live.com contributors today in the T3Live.com Virtual Trading Floor as the action unfolds, where you can see actual positions update in real-time and listen to live trader radios.
*DISCLOSURE: Scott Redler is long F, BAC, GLD, MCP, NYX; Short SPY, BIDU, PCLN.
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