MV Weather Report: Hailstorm for Big-Name Tech
Rain or shine, we review the day's biggest stock stories.
Today was a wacky day in tape town. The financials led the early upside move on news that Barclays (BCS) was shoring up its capital position. There was also a rumor (though we don't do rumors in the 'Ville) that gave banks a lift.
Here's what Todd Harrison said on the Buzz.
"There's (unconfirmed) chatter around that the government is in the process of "de-hypothecating" shares they own in the financials, which means they wouldn't allow any shares owned by the government to be borrowed (and subsequently shorted)."
Buy the rumor, sell the fact? Well, this never became a fact - but the market started to sell off around 2 p.m. EST. Tech led the downside move, and names like Intel (INTC), Microsoft (MSFT) and Amazon (AMZN) traded lower.
"The tape just felt weird today," said Terry Woo. He noticed the positive 2-to-1 market internals as the sell-off ensued late in the day.
What happened to this morning's gains? Was this just profit-taking? Is the bear-market rally now over?
The easy answer to all these questions: Profit-taking and exhaustion. A good example of this is the BKX, the Bank Index, which was up 40% over the last 5 days. Many bank stocks are up 70% to 100% during that time.
Take a look at Bank of America (BAC), Wells Fargo (WFC), JPMorgan (JPM) - these all made monster moves. If I bought these near the lows, I would consider selling them here.
Tomorrow will be an important day - not because it's Turnaround Tuesday, but because it can be seen as a pause day for the market. I'm curious to see if buyers come back into the market. Smita Sadana had an excellent Buzz today about the S&P 500's recent attempts to recapture its 50 DMA:
"In early Jan 2009, S&P's momentum's was so great that it actually pushed through the 50-dma and stayed above it for a few days.
"Since then there have been 2 attempts at the 50-dma but SP-500 has been unable to overcome that serious resistance.
"The question that comes to mind is given that the lateral resistance and the 50-dma would probably collide soon, will SP-500 be able to close above it? "
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It will be a battle if and when the 50 DMA comes into play. As for tomorrow, traders will be watching economic data before the bell - the Producer Price Index, Housing Starts, and Building Permits, all of which are out by 8:30 a.m. EST.
Well, Minyans, I'm off to fill out my Minyans March Madness bracket. More to come later in the week.
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