US stock futures are marginally higher this morning as they look to continue their rally into Friday’s Fed announcement from Jackson Hole. The big story overnight was obviously the resignation of Apple CEO Steve Jobs. The visionary leader of the world’s 2nd biggest company (by market cap) has been largely responsible for the rise of a retail empire. His creative brilliance has come to create and define market segments, from mp3 players to smartphones to tablet computers.
Many forecast a “Steve Jobs crash” the day that he left his position with Apple (AAPL), but in fact the reaction has been rather muted. The stock was down around 5% last night when the news broke, but this morning investors are aggressively buying the dip and the stock is now down only 1.5%. Jobs’ ill health and possible resignation seemed to be baked into the stock price to some degree, and now clarity on the situation could free it to make a big run. On a fundamental level, AAPL is extremely undervalued.
As for the other major stories in the market, Gold (GLD) continued to pull-off last night after more margin requirement hikes, but has rallied a bit in the pre-market. When an asset makes such an extended run like Gold, it is frustrating not be involved in the trade, but the last thing you should try to do is jump in late. While this is on a much smaller scale, we saw a similar pattern play out with silver, which confounded traders by accelerating higher day after day before crashing. Gold has erased six days worth of gain in only two trading days. When/If Gold gets down into its 21-day moving average, that could be a spot to buy the dip.
In terms of the technical outlook on the market, the SPY has room to get up into the $120 area before Friday’s announcement, but I wouldn’t get greedy at these levels in this bipolar market. Precious metals seems to acting skeptical over the possibility of QE3 so soon, and the market may even view such a measure as a negative after the gains from QE2 were erased so quickly.
Traders will be watching complexion closely today in the T3Live Virtual Trading Floor, so make sure to stay tuned. Traders love the opportunity that this volatility brings, but you must be able to harness it in order to control risk.
By: John Darsie
Disclosure: Scott Redler is long AAPL, MGM, SPY, MS, BAC