(INDEXSP:.INX) futures are up about six handles this morning as the
bounce looks set to continue. Last week we got some erratic,
somewhat bearish action, but we have erased most of those gains
this week as some beaten down sectors have helped lead the
recovery. Homebuilders (NYSEARCA:XHB) have seen some impressive
snapbacks after they seemed to be headed back down following weak
existing home sales data Monday morning. Financials (NYSEARCA:XLF)
have resumed somewhat of a leadership role again, with
) emerging as perhaps the leader in the sector this quarter
following strong earnings.
With the S&P still hanging near all-time highs, it is
difficult, in my opinion, to confidently pile into broad index
funds, but rather with earnings season in full force there are
plenty of stock-specific opportunities.
Sector rotation has been the key to the macro uptrend in this
market, and now we are seeing some money rotate into mega cap tech
) exploded higher a couple weeks ago out of a lower level base, but
weak PC sales data and a big downgrade from
) erased all of those gains. However, after basing back near the
previous breakout level, MSFT has re-emerged and yesterday finished
with very impressive gains. With many value-staple stocks starting
to look extended, perhaps investors are drawn to MSFT's dividend
yield combined with growth potential, if it can ever become an
) has seen similar type price action as MSFT surrounding that
Goldman downgrade of the sector.
) sold off on earnings, but held the 50-day moving average and is
back at 52-week highs.
Money rotated out of some biotech names yesterday following weak
(AMGN). The sector had been red-hot this year, and it will be
interesting to see whether the weak AMGN report triggers a larger
correction in the group or whether weakness is contained. Both
(BIIB) reported earnings that topped estimates this morning, with
BIIB's report looking particularly impressive. The stock is up
around 4% this morning on light volume.
(AAPL) will continue to get a lot of attention after its polarizing
earnings report Tuesday. The company did placate angry shareholders
by announcing a hefty buy-back program and increasing its dividend
by 15%, but it wasn't a bold enough capital plan to really excite
value investors. Growth investors, meanwhile, are heading for the
exits due to continued margin compression and very weak guidance.
To trigger a big move in the stock, Apple may need to launch new
product lines, but I don't believe the stock will get much lower
Defensive value stocks have performed best this year as investors
still prefer less volatile, safer names amid uncertain economic
times, but those weakened yesterday, like the biotechs, because of
weak earnings from one of the sector leaders.
Procter & Gamble
(PG) disappointed analysts with its quarterly report and the stock
traded down almost 6%. Many other value names traded lower in
sympathy, and it will be interesting to see if they present buying
opportunities. I think if you do get any more downside in PG, it
could be a great buying opportunity.