After a massive gap down triggered by the deteriorating nuclear crisis in Japan, US markets have bounced in the morning trade. Pre-market the S&P touched the 1255, opened at around 1261, and is now about 10 handles off the low. While the bounce in the market has been somewhat muted, many individual stocks were very strong this morning, with several even going green!
Strength in Tech Leaders
Netflix, Inc. (NFLX) actually opened slightly higher this morning, demonstrating remarkable strength in the face of a broad and deep market sell-off. That relative strength gave traders an indication that it would be one of the stronger stocks during the session, and that notion held true. NFLX is up more than 5% on the day and continues to act very strong. Elsewhere in high beta tech, Amazon.com, Inc. (AMZN) opened sharply lower but has nearly closed the entire gap. Baidu.com, Inc. (BIDU) and Apple Inc. (AAPL) have not been quite as strong but have bounced nicely as well. Baidu held the lower end of it recent range, a strong sign that higher prices are on the horizon for the Chinese search leader.
PotashCorp. Finally Gets a Bounce
PotashCorp./Saskatchewan (POT) is our favorite stock fundamentally in the fertilizer group, but has been the weakest in the sector during a tough stretch over the last few weeks. The stock opened this morning more than 20% off highs from mid-February, and nearly 5% from yesterday’s close, but has rallied to go green during the session. Today’s extreme strength is the first indication that POT can take back some of its recent losses and climb back toward highs.
Ford Picks Up
Another stock that rallied from sharply lower to positive is Ford Motor Company (F). The supply chain of American automakers will likely not as affected as that of their Japanese counterparts, so common sense told Scott Redler of T3Live.com that Ford could be due for a bounce. The play was a day early, but now F looks like it will break out of its month and a half long downtrend.
Precious Metals Slammed
Gold and silver fell sharply overnight along with stocks, and are turning south once again after bouncing during the morning. iShares Silver Trust ETF (SLV) touched its 21-day moving average this morning before bouncing, and Tim Kelleher of T3Live.com believes this could be a great buying opportunity in silver.
Banks Weak
If you looked at a basket of stocks, you might wonder why the indices are not up more during the session. But there are some sectors that did not participate as heavily in this morning’s bounce, including the banks. Group leader Goldman Sachs Group Inc. (GS), which hasn’t been much of a leader recently, opened sharply lower and followed through to the downside before finally bouncing above its opening price later in the morning. More recent leader JP Morgan Chase & Co. (JPM) continues to trade lower during the session, down more than 2% today.
After a nice push this morning, traders are now wondering whether we have put in a low or this is just a brief bounce. Redler believes this is not the area to buy in heavy for macro trades, and that traders should be content with quick cash-flow profits this morning. There is still a great deal of uncertainty in Japan regarding the nuclear situation and more headlines coming out of the Middle East where Saudi troops have entered Bahrain to crack down on protests. The market is trading on headlines right now, not on fundamentals, so there will be a spot to buy for larger swing moves, but now is not the time to get greedy across the board.
*DISCLOSURE: Scott Redler is long SPY, AAPL, POT, GLD, SLV, NYX, F. Tim Kelleher is long SLV.
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