US stock futures point to a higher open on Wall St, boosted by a solid earnings report from JP Morgan Chase & Co. (JPM) this morning. Earnings per share came in significantly higher than expected ($1.28 vs. $1.16) while revenues were in a little light at $25.22B vs. $25.3B expected. Yesterday the market continued down after opening lower, but found support at the 21-day moving average. With today’s bounce, bulls are regaining some control of the proceedings. If yesterday’s low holds, this four-day pull in can be considered nothing more than a healthy technical pull-back. Watch to see if the market holds the gap up for the first hour, which will signal firm interest in longs at these levels.
The solid earnings report from JP Morgan should provide somewhat of a boost to a weak banking sector. Investors have been cautious with banks due to uncertainty about what new regulations will do to earnings, and today’s report should assuage some of those concerns. The other banks are nearly matching JPM’s 1% jump pre-market, and it will be interesting to see whether this news will ignite the sector.
For more commentary watch the T3Live.com Morning Call video with Scott Redler and Alix Steel, below.
As a market starts to bounce, even from just a multi-day pullback, traders will be looking for stocks and sectors that have shown relative strength. One such stock is Netflix, Inc. (NFLX) which sold off nearly 25% from Valentine’s Day to mid-March, but has rebounded back to near the highs. After testing those previous highs, however, NFLX turned down as the market has been weak. However, the new media leader put in a great 80-20 RedDog Reversal trade yesterday that usually leads to upside follow-through. The stock is opening higher again this morning.
Another hot momentum stock that was extremely strong in a weak tape yesterday was Chipotle Mexican Grill, Inc. (CMG) , which was boosted by news the company is set to open a chain of Southeast Asian inspired restaurants called ShopHouse. Using the quality fast-food model that has made Chipotle such a rage, the company hopes to expand its revenue streams. Investors cheered the news, and CMG is getting back near highs. Look for more upside from Chipotle if the market holds the gap this morning and pushes higher.
Fertilizer stocks have made a habit of harsh pull-ins followed by resilient bounces, and we could have another one of those sequences on our hands. The ferts were crushed during the Japan earthquake induced pull-in in the market, but have rebounded well back toward highs. Once again, though, the ferts have staged a steep six-day drop, but found some footing yesterday. Group leader PotashCorp./Saskatchewan (POT) is opening up nearly 1.5% this morning after pinging support Tuesday, and could get some follow-through a reversal doji candlestick yesterday. Others in the group are CF Industries Holdings, Inc. (CF), Agrium, Inc. (AGU) and The Mosaic Company (MOS).
Finally, you can’t forget about Apple Inc. (AAPL). The market leader has been weighed down by concerns about Steve Jobs, the supply chain in Japan and index rebalancing. Apple remains grossly undervalued, so traders and long-term investors should feel good about entering the stock here.
A lot of today’s trading decisions will hinge on the action in the first hour, so make sure to tune into the T3Live.com Virtual Trading Floor during the day to listen to live trader radios, see real-time position updates, and interact with a community of experienced professional traders.
*DISCLOSURE: Scott Redler is long INVE, JPM, SPY, AAPL, REE, ROYL, GLD. Short SLV.
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