Monster Bounce, However, There Are Pockets Of Weakness
Today, the major stock indexes are staging a very good rally. The advance higher in the market is broad based as most leading stock sectors are trading higher. However, there are pockets of weakness in the market that cannot be ignored today. These weak trading leading stocks could be signaling that today's move higher is nothing more than an oversold technical rally.
One sector or group of stocks that is not participating in today's rally is the financial stocks. These stocks have lead the advance higher since late November 2010. Leading financial stocks such as J.P. Morgan Chase & Co.(NYSE:JPM), and Well Fargo & Co.(NYSE: WFC) are struggling to trade positive today. These two financial stocks have been market leaders and this tells us that while today's rally is strong point wise these leaders are telling us something else.
Amazon Inc.(NASDAQ:AMZN) has been weak as of late as the company battles many state governments over sales tax. In any case this stock is a major part of the NASDAQ 100 and is declining sharply lower today by $2.63 to $162.15 a share. On a trading session where euphoria is dominating the sentiment Amazon stock should be trading better.
Other leading stocks that are lagging the markets today are Walmart Stores Inc.(NYSE:WMT), Adobe Systems Inc.(NASDAQ:ADBE), F5 Networks Inc.(NASDAQ:FFIV), Juniper Networks Inc.(NASDAQ:JNPR), and Salesforce.com(NYSE:CRM). When market leaders fail to rally with the overall markets this tells us that there is still a lot of weakness in the market and today may not be much more than an oversold rally.
Traders and investors must also keep an eye on oil very closely. High oil prices are a direct tax on these that use the product. Spot crude is trading back above the psychological $100.00 level and that is certainly not a positive for the major stock indexes going forward. Traders must take this market one day at a time.