US stock futures point to a lower open Monday as Japan continues to survey the full scope of the damage done by the massive 8.9 magnitude earthquake last week. The Japanese markets plunged 6.2% Monday, its worst one-day performance in more than two years. The main issue in focus at this time is Japan’s nuclear reactors, which experts fear may be poised for complete fallout after an explosion at a second reactor. Companies with ties to the nuclear industry in Japan (i.e. uranium stocks) were among the hardest hit, most down more than 20%. On the flipside, many stocks with links to renewable energy sources (i.e. solar power) are up as much as 10% this. Protests in Saudi Arabia also never got off the ground Friday, allowing the market to bounce despite the horrific tragedy in Japan.
With the lower open Monday the market finds itself within a two-day range, and traders will be watching closely to see if we test either the high or low from yesterday. The focus is still on Japan, where economists harbor some concerns that the cost of rebuilding Japan might derail the global recovery. However, with a massive rebuilding project on the horizon, it would be prudent to key on companies that could benefit. Traders will be tracking the situation closely to see what stocks, besides the solars, could lift due to the Japan situation.
For more market and stock commentary, watch T3Live.com’s Morning Call with Scott Redler below.
Tech
Tech was relatively weak during the past few weeks, but over the last few days several leading stocks have set up well for moves. Apple Inc. (AAPL) was down more than 10 points overnight over concerns about iPad 2 delivery, but has pared nearly all of this losses this morning. AAPL still seems buyable after bouncing off its 50-day moving average like clockwork Friday morning.
Baidu.com, Inc. (BIDU) is also down slightly overnight, back down near its 21-day moving average after breaking out of a multi-week range last week. The pre-market dip actually should make traders feel more comfortable about getting long BIDU for the next move through Friday’s highs. BIDU, like AAPL, is starting to pare losses from overnight.
Amazon.com, Inc. (AMZN) has been the weakest high beta tech stock, holding in a nearly month-long downtrend since putting in a double top at just above $190. Traders will be watching AMZN for a break of that downtrend, which provides terrific risk-reward parameters. The stock is also down slightly this morning but is knocking on the door of that break higher after a nice move Friday.
The action could be choppy during Monday’s session as the market figures out how it wants to handle the situation in Japan, so we will not look to get involved aggressively until a break above or below Friday’s range. There should be opportunity out there in the market today though with all of the headlines, so stay tuned to the T3Live Virtual Trading Floor to get the action as it happens.
*DISCLOSURE: Scott Redler is long AAPL, POT, BAC, GLD, SLV; Short SPY.
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