Before the jobs report this morning, I thought we could start to push towards new highs, but the dismal report has thrown a wrench in those plans. Non-farm payrolls came in at a measly 39k vs. 150k expected, while unemployment was 9.8% vs. 9.6% expected. The futures immediately got hit hard as concerns will now grow that the recovery has hit a snag. If we can shrug off this very weak report and push higher, I think that is all the evidence we need that this market wants to go a lot higher. I still think the writing is on the wall that we see 1245-1265 by year-end, but it could be trickier now.
Goldman Sachs gave everyone an early Christmas gift on Wednesday with their notes forecasting a move to 1450 for the S&P in 2011. Additionally, they named BKX. the big bank index, was one of their top five plays for next year. The bullish calls just added to the growing optimism in the market and I noted its importance prior to yesterday’s session on the Morning Call, and decided it was time to think about buying some financials like Bank of America Corp (NYSE:BAC), JP Morgan Chase & Co (NYSE:JPM) and Goldman Sachs Group, Inc. (NYSE:GS).
We are seeing good breadth to this move with sectors rotating as leaders. Big Cap tech stocks are taking turns making new highs. The oil group with Oil Service HOLDRs (ETF) (NYSE:OIH), Schlumberger Limited. (NYSE:SLB) and Halliburton Company (NYSE:HAL) have been extremely strong. Then yesterday we got a catch-up play with the financials.
Tech
Apple Inc. (Nasdaq:AAPL) has been very slow and choppy as it tries to push to new highs, and has relinquished its role as leader for the time being. Watch closely if it starts to approach new highs above $321.30.
Baidu.com, Inc. (Nasdaq:BIDU) has also taken a rest as a leader in the group and it remains to be seen which way this range resolves itself. Always watch this stock.
Google Inc. (Nasdaq:GOOG) has had a dismal few weeks after a strong earnings report sent it to a huge gap up. Investors seem to think they are overpaying for Groupon, and there is the anti-trust investigation out there in Europe as well. I’m watching for nothing more a than possible quick scalp long.
Amazon.com, Inc. (Nasdaq:AMZN) after putting in a doji on Cyber Monday it is holding in well and setting up once more. This morning’s weakness could pose problems.
Netflix, Inc. (Nasdaq:NFLX) had a great run but was a great two-day short if you had the stomach for it. That’s not my game. The stock now needs time to set up.
Research In Motion (Nasdaq:RIMM) has gotten back in the game after being in the tech dog house for while, but also needs time to re-set up.
Cisco Systems, Inc. (Nasdaq:CSCO) is still very weak but has a nice small lower descending channel that might resolve for a small trade. Keep this one on your radar.
VMWare, Inc. (NYSE:VMW) has finally started to gain some traction after a period of weakness following the October 6 cloud sell-off. The former leader looks good for higher prices eventually.
Banks
Goldman Sachs Group, Inc. (NYSE:GS) was a nice trade yesterday as it broke a lower pivot and still has a bit more room if the market can hold up after this jobs report.
JP Morgan Chase & Co. (NYSE:JPM) has been a great two-day trade here, I’m not convinced we can get a third now. Watch yesterday’s high.
Bank of America Corp (NYSE:BAC) and Wells Fargo & Company (NYSE:WFC) have also perked up in the last couple days and I feel eventually they can see a bounce.
Casinos
MGM Resorts International (NYSE:MGM) looks ready for higher prices, and was upgraded this morning as well. I would consider adding through yesterday’s highs to perhaps hold for a few sessions.
Las Vegas Sands Corp (NYSE:LVS) is an avoid until the news gets sorted out. Land they were eyeing in fast-growing Macau was not approved for another project, but there will be an appeal. It could be a dangerous situation for both long and shorts.
Commodities
Halliburton Company (NYSE:HAL) was an awesome targeted trade, and now I think it is profit taking time, and maybe an 80-20 trade if you want to get cute.
Schlumberger Limited. (NYSE:SLB) has worked great as well and could get another push, but I think there are better opportunities out there.
Oil Service HOLDRs (NYSE:OIH) has been super strong, I would take profits and maybe look for an 80-20 reversal.
SPDR Gold Trust (ETF) (NYSE:GLD) was stalling a bit after a bounce off big support, but got a nice bounce this morning after the weak jobs report.
*DISCLOSURE: Long AAPL, BIDU, JPM, MGM, BAC,
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