Courtesy of Scott Martindale, Senior Managing Director, Sabrient
Beaten-down Materials and Energy stocks led the market rally off its 52-week lows. Financials and Technology showed impressive leadership, too. The last 45 minutes on Tuesday started it all in impressive fashion after reports came out in the Financial Times that finance ministers in the European Union are considering plans to recapitalize banks that hold loads of PIIGS sovereign debt. In that brief window of time late Tuesday, the S&P 500 rose a whopping 4% to close up +2%, and then it climbed another +1.8% on Wednesday. Small caps performed even better, indicating an embracing of risk. Shorts were running for cover.
Sentiment could hardly be worse, which from a contrarian standpoint is a good thing. Down volume has been trouncing up volume. Investors have been streaming out of equities and into money market funds. Some are looking at the extremely negative sentiment and this sudden bounce and saying that the bottom is in … and that the year-end rally is ready to rumble. However, despite compelling forward valuations – assuming the EU can save itself and keep the rest of the world out of another global recession — it probably won’t be quite so clean and monotonic as the March 2009 V-bottom.
Tech and the Nasdaq have both shown relative strength despite the limited participation of mega-cap Apple (AAPL), which disappointed after unveiling an atypically uninspiring iPhone 4S. It appears that the widely anticipated iPhone 5 is still a year away.
But a much bigger blow to Apple and the business world came late in Wednesday’s afterhours trading when it was announced that Steve Jobs had finally succumbed to his long battle with cancer. Jobs was more than just the co-founder of one of the iconic brands of all time, he himself was an icon of innovation, creativity and marketing genius. While late-90’s juggernauts like Microsoft (MSFT), Dell (DELL), Cisco (CSCO), and Oracle (ORCL) have seen little to no stock appreciation in the last 10 years, Apple is up something like 3,500%. Apple has been the consumer technology successful story of the 21st century and the company to be emulated with respect to innovation, brand loyalty, and customer service. And it’s all because of Steve Jobs.
Gold has been seeking a foothold this week after its precipitous fall. It rallied in a traditional flight to safety on…
