US stock futures eased higher Tuesday following gains in the Asian and European markets, maintaining the recent trend of first-day-of-the-month gap ups. Investors are once again putting risk on as the unrest in the Middle East eases, despite the fact that deranged Libyan leader Moammar Gadhafi remains in power. The gains also come in the face of softening manufacturing activity in China, which actually could end up being a good sign as the Chinese government may be less aggressive with monetary tightening.
It’s the first day of the month, that means today we will also see US manufacturing data with the ISM survey, which is expected to come in at 62. Also in the headlines, JP Morgan Chase & Co. (JPM) could come under some pressure as the company announced its legal liabilities could significantly top reserves.
For more market and individual stock commentary, watch Scott Redler’s Morning Call video below.
Watch Oil Stocks
As for the market right now, we are in a tricky spot for active traders, says Marc Sperling of T3Live.com. After heavy selling during the beginning and middle of last week, many stocks have had a nice bounce from oversold readings, with several resuming their uptrend. The agricultural and oil sectors seem to be the strongest groups right now. Sperling believes some of the oil names, like Suncor Energy Inc. (SU), Helmerich & Payne, Inc. (HP), Transocean LTD (RIG), and Apache Corporation (APA), all look like they are going higher with nice charts and a price catalyst with the Middle East unrest.
Waiting for the ‘Go’ Sign
While Sperling is bullish on the oil sector, he says he will not be aggressive with most stocks at these levels. After an impressive snap-back, he thinks the market needs a bit of basing before taking off again.
An important area to watch right now is high beta tech. While leader Apple Inc. (AAPL) has bounced back nicely, overall high beta tech is actually weak right now. Sperling does not believe that will last, however, and could provide some signals. When the momentum names start waking up again, that’s when the market might go again. The down days in this market are fast and over before you know it, and then many stocks are just resuming their uptrends.
Silver Miners Higher Overnight
Yesterday we called out the silver miners, namely Silver Wheaton Corp. (SLW), which was setting up nicely out of a four-day consolidation. The stock closed the day up nearly 5%, and is set to open higher again this morning. After a potent down day on Thursday, silver took back that entire move Friday and has continued higher. The chart for SLW looks a little less extended than iShares Silver Trust ETF (SLV), as SLW is only just getting back to highs. It could extend higher but watch the price of silver closely. Gold, with the SPDR Gold Trust ETF (GLD), also looks set to breakout of a recent mini consolidation/cup and handle pattern.
*DISCLOSURE: Scott Redler is long GLD, OIH. John Darsie is long SLW, POT, MOS, RIG. Marc Sperling is long BP, HP, RIG, XOM.
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