The S&P opened below the lows from the last two days, but has rallied back above and looks poised for an oversold bounce. The indices are oversold at these levels, and the market has been unable to follow through to the downside. Leading stocks, like Monday, are acting better and could lead the market out of this hole.
Our favorite relative strength play, Netflix, Inc. (NFLX) got a boost today following comments about increasing partnership from Facebook CEO Mark Zuckerberg. At the eG8 Conference today in Paris, Zuckerberg state that Facebook has been talking a lot with Netflix about developing social tools. The news woke up Netflix, pushing right up against all-time highs at $255. The stock is holding that bounce, and looks like it could be set to squeeze shorts and make a big momentum move. Here is an article from March about possible Facebook-Netflix integration.
Silver has continued higher after gapping up again this morning. The precious metal was firmly in the doghouse, and margin requirement increases sucked some of the volatility out of the trade, but after being sold off so hard at the beginning of May, it is finally bouncing. The easy bounce is over, and it is probably worth taking a good portion of profits here if you were looking for this move.
Apple Inc. (AAPL) has also been strong again, providing leadership for the market. Concerns about Steve Jobs future have played a large part in the stock staying down, and there are growing indications that his health may not be as tenuous as once thought. The bounce target for now is the 50-day MA around $341.
After taking a day to rest following a break of the long-term downtrend, CF Industries Holdings, Inc. (CF) has exploded once again. A series of upgrades to start the week in the fertilizer sector have alerted investors to a very bullish fundamental story. Technically, CF has always acted best and is the one worth focusing on. With the stock up 4% today, you could look to wait for a dip, but this stock seems to want to go much higher.
Wynn Resorts, Limited (WYNN) is another strong stock we like to watch during market bounces, and it is up strongly today. The stock has held the $140 level several times despite a weak market, and is up more than 1% today. Definitely still room for this one to run in its range.
A weak earnings report from Polo Ralph Lauren Corporation (RL) that has sent the stock down 8.5% today has weighed on much of the retail sector, but Lululemon Athletica, Inc. (LULU) remains seemingly immune from the ills plaguing the group. The yoga-inspired apparel maker is another strong stock we turn to in bouncing markets, and is holding up well today.
Looking for a stock on the short side? The Chinese Internet stocks looks weak as investors grow skeptical of anything growth out of China, even GS which issued a bearish call on China Growth this morning. The most sickly among them is definitely Youku.com Inc. (YOKU). The stock has seen some heavy selling, and has been unable to hold bounces. A break of the $42.60 pivot low would trigger momentum to the downside.
By: John Darsie
Disclosure: Scott Redler is long NFLX, SLV, POT, SPY, AAPL, OIH, BAC, MGM.