The market once again shrugged off a terrible jobs number to end Friday’s trading substantially higher. Though the DOW and S&P 500 remain below their 30 day moving averages many sectors are starting to perform again. The rest of the basic resource sectors have joined the agriculture names with stellar gains recently.
Take a look at X for example. Analysts cut their estimates on on the steel maker last Monday, but the stock has rebounded over 10% since then. Coal stocks are climbing again, and as oil prices stabilize above $40 names like NOV and RIG are slowly moving higher. These stocks are moving as if the worst of the recession is already at hand (or past us). We’ll have to monitor their movement to see if any sustained uptrend can be maintained.
And for the market to move higher form its current levels the commodity names cannot falter. Outside of 3 or 4 financial stocks every banks looks poised to be nationalised. Only GS and MS are safe to own right now – though they should be paired with a short somewhere else.
Technology as a group is being pulled higher by RIMM, GOOG and now AAPL. But outside of these names technology stocks have too much risk to the downside.
Monday trading should be rather calm ahead of the bank bailout plan and stimulus bill. But don’t take that as a given. The VIX barely dropped Friday even as stocks exploded higher. Volatility is still in this market.
