The market did well to recover much of yesterday’s losses, but the performance of the individual sectors was little changed from Monday. Crude oil reached another record high today, pushing the energy stocks higher with substantial gains. The drillers remain the best group within the energy sector; the OIH is nearly back to it’s all time high. The price of natural gas actually dropped today, but SNW, CHK ECA, APC and most other names still advanced.
With the price of oil reaching for the clouds, the solar names are back in favor. YGE, JASO and CSIQ are just a few names that spiked about 10% today. We’ve seen volatility dissipate over the past few weeks, and this should make owning one of the solar stocks easy to tolerate.
The US Dollar lost ground to most major currencies today, helping the precious metals recover some of their recent losses. Currently, I like all commodity stocks except the gold miners. Look at how AUY and AEM have rallied up to their resistance levels ($14 and $65, respectively). To balance some of you commodity trades (i.e., long steel, agriculture or coal) i would short one of these gold miners.
The financial names followed the pattern of FNM today as the company released horrid earnings for the past quarter. But as we have seen with most financial names over the past few weeks, FNM managed to rally and finish the session much higher. Shorting these names – despite the terrible balance sheets – just isn’t working anymore. Anytime names like LEH and MS fall back a few dollars, investors come in to purchase more shares at a lower price, and this momentum carries the stocks higher.
GOOG and RIMM dropped as the NASAQ gained, but we keep seeing beaten down technology stocks end their downtrend today. Two of the worst stocks, AMD and SIGM, have finally bottomed after gaining 17% and 22%, respectively, in two days. There is no news as to why these stock have been able to make such a strong moves. And there doesn’t have to be any news. I have been writing about the reversals in so many technology stocks over the past few weeks, and it’s becoming too dangerous to remain short.
Eventually the price of oil may start to shrink our economy at a faster rate, but the market has been able to shrug off daily record highs. If energy prices become a true headwind against most equity prices, the energy stock will still reach higher ground. Stay long with this strength.
