The market was strong early in the morning session after the sizable gap down, but has faded with the S&P back on the lows of the day. The pre-market dropped followed losses in the Asian and European markets, responding to a deteriorating situation in Libya and growing unrest in other countries in the region. Oil was up nearly 10% due to Libya and the threat of more unrest in Saudi Arabia.
Market leader Apple Inc. (AAPL) was strong with the market early, but also faded later in the morning trade. The stock is down more than 2% on the day, after a similarly harsh drop Friday, as investors worry over the health of Steve Jobs. In the recent past Apple has been able to rebound from these type of rumors and fill gaps, so we will be watching it close to see if it can regain its strength.
This morning we noted that we would be watching the 21-day moving averages in momentum stocks that had started to pull off. Google Inc. (GOOG), Baidu.com, Inc. (BIDU), Amazon.com, Inc. (AMZN) and Netflix, Inc. (NFLX) all held those moving averages in the morning but are getting pressured once again with the S&P.
The agricultural group that was hit so hard Friday has been mixed today. The Mosaic Company (MOS) got a nice bounce to close its premarket gap before tailing off a bit, while PotashCorp./Saskatchewan (POT) has been weak all day. The action still feels heavy in the ags and it if you are not already involved this could be a time to wait for the group to find some footing.
The combination of the fear trade and growing industrial demand has pushed silver to all-time high prices once again. The precious metal has been weak during the session, though, after a large pre-market gap up. Gold tried to push higher in the morning but in the last hour has pulled back. The yellow metal still has room to get to its highs, and with growing turmoil it feels like it will get there.
Overall the action continues to be troubling. The events in the Middle East and North Africa could have enormous implications for this country and our world, and investors have been rattled by some of the shocking scenes. The market tried to bounce early but that bounce ended up being feeble. This afternoon will be very, very important for the short term complexion of this market. If we get hit hard this could be the start of another 3-5% correction.
*DISCLOSURE: Scott is long AAPL, GLD; Short SPY
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