The market has held in a tight range Wednesday after a big gap up. This time around, though, some of the recent high-flyers have been reigned in while some laggards have provided a boost to the indices. As we mentioned in the T3Live.com Morning Call this morning, in the natural progression of a rally that follows a correction, new market leaders emerge at the beginning of the bounce while laggards then play catch-up as the rally takes hold. Weaker stocks playing catch-up is a healthy sign for this rally, and the composure remains very bullish.
The three Chinese names we highlighted last week that have performed well in the last few days, Baidu.com, Inc. (BIDU), Sohu.com, Inc. (SOHU) and SINA Corporation (SINA) all pulled in after gaps up. Perennial market leader Apple Inc. (AAPL) has been weak, likewise with the Oil Service HOLDRs ETF (OIH) which had made a strong move over the past two days.
Some of the previous strong stocks have remained so, however. Amazon.com, Inc. (AMZN) has held in well after a large gap up, currently sitting 2.5% higher on the day. Lululemon Athletica inc. (LULU) has also held up fairly well after another gap up, while fellow apparel maker Under Armour, Inc. (UA) has added another 2% today. However, the most “trabeable” moves with the best risk-reward, have come from more laggard-type plays.
Banks Bounce
The banks, specifically leader JP Morgan Chase & Co. (JPM), were on area we highlighted as a catch-up play, and JPM has shown relative strength today. The stock is up 1.5% on the day, while Goldman Sachs Group Inc. (GS) has tacked on another 1% after yesterday’s RedDog Reversal.
Credit Card Resurgence
Yesterday on the Morning Call, we highlighted the credit cards as a beaten down sector that could get a big bounce with news that Durbin Rules could be relaxed. After large gaps up on the overnight news, MasterCard Incorporated (MA) and Visa Inc. (V) have continued higher during the session, up 3.2% and 3.8% on the day, respectively.
Casinos Mixed, JDSU Pulls Off
The casinos are another sector we highlighted this morning, and the group has been mixed. Wynn Resorts, Limited (WYNN) is the leader, which we prefer to trade, but Las Vegas Sands Corp. (LVS) has acted the best today, surging nearly another 2% on the day. Finally, the last laggard play from this morning, JDS Uniphase Corporation (JDSU) got a big push early but has since pulled off and is up only slightly.
*DISCLOSURE: Scott Redler is long XOM, V, BAC, VLO, JDSU, SOHU, LVS, BA, JPM, OVTI, RIMM, OIH, NYX; Short SPY.
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