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Market Update: 5 Things We're Watching


Biotech, utilities, and other sectors are in play.

This article was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Things are looking up from what we saw in early trading:

1) The Russell 2000 (INDEXRUSSELL:RUT) broke higher and the Utilities SPDR ETF (NYSEARCA:XLU)  went lower -- always a good sign for the bulls.

The Russell is now outperforming the S&P 500 (INDEXSP:.INX) by a nice margin. This is constructive action.

2) The Technology SPDR ETF (NYSEARCA:XLK) is underperforming a bit on the disappointing Google (NASDAQ:GOOG) and IBM (NYSE:IBM) earnings reports.

However, there are some pockets of strength, notably in semiconductors. Many key momentum stocks such as GW Pharmaceuticals (NASDAQ:GWPH), Twitter (NYSE:TWTR), and Netflix (NASDAQ:NFLX) are up as well.

3) The iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB) is in the green and helping the Nasdaq outperform the S&P and Dow.

Note: There's a discrepancy between the XLK ETF and the Nasdaq because the latter is not all "pure" technology, as I explained back on April 8 (subscription required).

4) Investment banks Goldman Sachs's (NYSE:GS) and Morgan Stanley's (NYSE:MS) strong earnings reports aren't helping financials much. The KBW Bank Index (INDEXSP:BKX) is actually still flashing red, though it's gradually ticking up. The securities-centric banks are doing well (which makes sense), but many diversified names are struggling.

5) Housing isn't hot, with the iShares Dow Jones US Home Construction ETF (NYSEARCA:ITB) in the red.

However, please keep in mind that we've still got two hours to go before we take off for the weekend.

With the holiday-shortened week and today being options expiration, anything can happen between now and the close. For now, things are looking OK. It would be nice to see Google make up more lost ground from this morning's dip and see better action in financials and housing, but we're holding pretty steady.

In any case, it might be best for us to churn sideways into the close because we're heading into a mountain of earnings reports next week, and broader market valuations remain a bit stretched. Guidance for Q1 has been terrible overall, so in that regard, the bar is pretty low. It wouldn't be such a bad thing for it to remain low.

Twitter: @MichaelComeau

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No positions in stocks mentioned.
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