By Nicholas Santiago on June 9th, 2010 3:38pm Eastern Time
Today the large major bank stocks are all slumping as the politicians meet in Washington and try to come up with a financial reform bill. While many traders and investors say that this is simply politics at its best as the politicians are fighting for their careers. Since the Gulf oil spill Washington is scrambling to try and show that they are going to be tough on all reform including oil drilling and financial reform. Therefore, these banks may not get what they want despite the massive amount of lobbying dollars they have in Washington.
Today J.P. Morgan Chase (NYSE:JPM) has struggled even when the market was in rally mode during the morning trading session. JPM will have intra-day support around the $33.30 - $37.00 level. Should JPM take out its recent low on the daily chart the stock could decline down to the $35.00 level rather quickly.
Wells Fargo & Co (NYSE: WFC) is another leading financial stock that falls into the “too big to fail” category. WFC is trading lower today by 0.56 to $27.20. The stock will have intra-day support at the $27.00 level. The daily chart will have support around the $25.00 area should it breakdown and close below yesterday's low.
Bank of America (NYSE:BAC) is another name that is very weak today trading down 0.31 to $15.00. If this stock breaks down below the recent low on a closing basis this stock could test the 14.00 level rather quickly.
It is important to remember that these large bank stocks can borrow from the Federal Reserve Bank at zero percent and they are still struggling here at this time. Therefore, traders have to be very cautious as Washington has the tendency to over regulate rather then under regulate in time of crisis and pressure. Many of the recent primaries have not fared well for the incumbent politicians. Therefore, these government officials will take drastic measures to save their own hides.
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By Gareth Soloway on June 8th, 2010 12:01pm Eastern Time
The markets are holding on to gains as the SPDR S&P 500 ETF (NYSE:SPY) are trading positive on the day. The markets have recovered from some steep selling after the Euro started to rally sharply and the U.S. Dollar fell off a cliff.
The PowerShares DB US Dollar Index Bullish (NYSE:UUP) has dropped sharply in the last hour, falling to $25.69 -0.14 (-.54%). This is a big drop for a currency that has been on a one way track going higher. The CurrencyShares Euro Trust (NYSE:FXE) has ripped higher as well. These two currencies will go in the opposite direct. As the Euro has soared, the markets have followed.
It looks like the Euro may been in for a short term pop. It is oversold technically and has a lot of negative sentiment which may result in the opposite move. In this case, a move higher. Keep a close eye on the close today and see if it confirms tomorrow with a higher close. A few positive days on the Euro and shorts may get squeezed. This would mean a short term pop in the market as well.
Gareth Soloway
Chief Market Startegist
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By Gareth Soloway on June 8th, 2010 12:13pm Eastern Time
The SPDR Gold Trust (NYSE:GLD) hit a new all time higher crossing the former top by pennies, then pulled back sharply towards the flat line. This may be a classic double top in the short term though long term shorting of gold is unwise. The former high on the GLD was $122.23. The high today was $122.45. Currently, the GLD has pulled back sharply to $121.69. It is possible we see some near term continued downside in gold off this level. As countries print more and more money, long term gold is going higher.
Gold stocks continue to mount gains. Newmont Mining Corporation (NYSE:NEM), Agnico-Eagle Mines Limited (NYSE:AEM) and Randgold Resources Ltd. (NASDAQ:GOLD) all having stellar days. To get more information on gold stocks, exact entries, exits, guidance and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
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By Nicholas Santiago on June 8th, 2010 3:20pm Eastern Time
Technology stocks have been hit very hard lately since the market top in mid-April. The tech heavy NASDAQ Composite is lower by nearly 15 percent since that 2010 high. Many of the leading technology stocks have sold off sharply and remain weak. However, there are a few key names that are holding up very well in this turbulent environment.
One key stock to watch is Akamai Technologies Inc (NASDAQ:AKAM). This stock just made a new 52 week high just four days ago at $43.50. The stock is trading lower today by 1.04 to $40.18. It is still trading above its daily 20 and 50 moving averages making the stock attractive on a technical basis. The downside support levels should the stock trade lower would be $36.50. If the market catches a bounce down here this stock could trade to its recent high and possibly to the $45.00 level.
Sandisk Corp (NASDAQ:SNDK) is another leading name that has held up very well in this major technology sell off. The stock is trading lower today by 0.85 to $42.45. This stock is still trading above its daily 50 moving average and could be viewed as consolidation on the charts. When a stock holds up this well in a major market correction this stock can be bought on any market bounce as it is showing relative strength.
In major down trends or market corrections it is best to find the stocks with strong relative strength. Akamai Technologies Inc and Sandisk Corp are both showing good relative strength. Therefore, on any market bounce these stocks can be bought as market leaders. However, should these markets flush lower even the strong names will get dragged down.
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By Gareth Soloway on June 7th, 2010 1:46pm Eastern Time
Gold continues to soar. The massive printing of money will ultimately make gold go higher and higher as the one true universal currency. SPDR Gold Trust (NYSE:GLD) is up another $2.01 (+1.69%) today. While gold gets more expensive almost every day, oil may just live up to its name as black gold and be the next store of safety and value.
In the next 10 years, there is little disagreement that oil demand will rise. China, India and other major emerging markets are using more and more each day. The fully developed world may be using slightly less due to the global slowdown and the major European issues right now, but that may just be the buying opportunity we have all been looking for. There is little doubt that in the next 10 years oil demand will only increase. This current global slowdown may last for a year or two but eventually countries will emerge. In addition, with Europe and the United States printing money by the trillions, a commodity like oil will rise in response, just like gold. The other benefit to oil is that it has true use. While gold is just a monetary denomination, oil is needed. This also gives it a safety side that gold may not have.
The key plays to look at will be stocks like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX) and even beaten down drillers like Transocean LTD (NYSE:RIG) and Anadarko Petroleum Corporation (NYSE:APC). There are many others as well. The key is to look for the first hint of inflation. As of now we are stuck in a deflationary environment. That means there is little near term risk of oil skyrocketing until global demand picks up. However, I expect that once global demand picks up, it will be a two headed monster as inflation will run wild as well. Once that happens, oil will act just like gold and run higher. $150 per barrel is a forgone conclusion in my mind. Most likely even higher when all is said and done. For more information, trades, guidance and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
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