US stock futures point to a near flat open Thursday as investors await a deluge of economic data over the next two days. Because the first day of April falls on a Friday, tomorrow will bring both the non-farm payrolls & unemployment numbers and the ISM survey results. Today, we kick things off with weekly jobless claims at 8:30. If the non-farm payrolls number can come in below the 380,000 expected it will likely add more fuel to the rekindled bull fire.
Yesterday the market opened sharply higher and trended higher for most of the day before paring gains into the close. The fact that the large gap up held is further evidence that the bulls have a strong hold on this market. However, that doesn't mean that after a steep two-week climb the market can't rest and digest a bit before testing multi-year highs. The oscillators went from extremely oversold readings (-80) to pretty overbought at the current levels (+50) in about two weeks' time. Being that today is the last day of the quarter, it's not uncommon to see some strange things with stocks during the trading day. If you are trading actively, today could be a day to take some profits.
For more market and stock commentary, watch the T3Live.com Morning Call with Scott Redler below.
MOS Earnings Beat Reinforces Bullish Outlook for Fertilizers
In the agricultural group, last night The Mosaic Company (MOS) easily outpaced earnings estimates ($1.21 vs. $1.07 expected) but fell short on revenues ($2.21B vs. $2.3B expected), and the stock is set to open slightly lower this morning. Margins are growing tremendously for potash and phosphate fertilizer producers, and the CEO of Mosaic had this to say: "The world's expanding need for food reinforces strong, long-term demand for crop nutrients. We are executing our strategy to increase potash capacity, leverage our scale and improve operations. With robust earnings, healthy margins and a strong balance sheet, Mosaic is well positioned for future growth." We are likewise bullish on the sector, especially MOS and leader PotashCorp./Saskatchewan (POT). In the past these ags report earnings, open lower and then rip, and it is definitely possible that we see that scenario today.
Tech Still a Mixed Bag
Apple Inc. (AAPL) is a stock we watch all the time because it is often a barometer for the broader market (and a large component of several indices). However, right now AAPL is facing a slew of questions and not leading the market. But that doesn't mean it will not have its day once again. The stock is wedging right now, putting in a constructive pattern while working through some issues. There is some talk of iPhone 5 delays, iPad 2 delays and then Steve Jobs' health issues. So all in all, its hanging tough. As long as it stays above $343-345, Scott Redler thinks there will be a trade when it breaks it’s new downtrend for momentum around $352-353.
Yesterday we got some signs that leading stocks were a little tired, exemplified by pullbacks in previously strong Chinese stocks like Sohu.com, Inc. (SOHU). SINA Corporation (SINA) and Baidu.com, Inc. (BIDU) have been a little bit more resilient, but they still feel extended and require more time before they have a compelling pattern once again.
The trade in Amazon.com, Inc. (AMZN) has been an example of the power of getting long previously strong stocks out of downtrends. Amazon.com is a powerful brand and fast-growing company with significant opportunities for continued growth, so we felt you couldn't keep the stock down for long. The stock had been in a steep downtrend since mid-February, but as the downward momentum slowed, Marc Sperling of T3Live.com made AMZN his play of the day March 22. Since then, AMZN has gained more than 10%. It is another stock that you should look to take profits on and wait for to set up again.
LVS Investigation Sends Stock Down
Las Vegas Sands Corp. (LVS) was a dog after a weak Q4 earnings report, but has been one of the strongest bouncers of the past two-weeks. However, the stock has back under fire this morning after disclosing they are being investigated by the Hong Kong Securities Regulator for breaches of securities and futures ordinances. Although this is an unforeseen hiccup for the group laggard, it further reinforces the idea of only trading group leaders in lagging sectors, which in this case is Wynn Resorts, Limited (WYNN).
Clouds Starting to Recover
The cloud computing sector has fallen out of favor somewhat in 2011, with investors growing more cautious about lofty valuations after a series of painful earnings misses. As the market has perked back up, though, the cloud stocks are starting to look like they could go higher again. Yesterday we got a breakout from data storage company Rackspace Hosting, Inc. (RAX), and now we can look to more lagging names in the sector to follow suit. Former go-to stock for 2010 VMWare, Inc. (VMW) is one that has a great risk-reward set-up out of the downtrend. If VMW can hold up after a two-day bounce, look for a larger move in the near future.
Another cloud name that looks good out of a recent downtrend is perennial IBD favorite, Riverbed Technologies, Inc. (RVBD). RVBD has exciting growth potential, which is why it shows up at the top of IBD's list, and has been one of the hottest stocks in the market over the past few years. A move above $39 should see this stock go much higher.
Freeport-McMoRan Consolidating Nicely
Another stock that was a great trade over the last two weeks was Freeport-McMoRan Copper & Gold Inc. (FCX). After extending out of the downtrend, FCX has held in well and put in a constructive consolidation. It looks good for another move above $55.30-$55.80 level.
*DISCLOSURE: Scott Redler is long V, POT, BA, BAC, OIH, XOM, JPM, VLO, NYX, OVTI, SOHU, JDSU. Short SPY.
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