World markets are green this morning as Japan stands out with a very impressive week. The impetus for yesterday’s rally in US markets and then the follow-through in world markets was Janet Yellen’s smooth confirmation hearing yesterday as the new Fed Chairman.
The person in charge of the bolder-than-ever US Federal Reserve has been called the most powerful person in the world, and Yellen looks set to extend current dovish monetary policy indefinitely, if not introduce more aggressive policy. While acknowledging that QE does carry some inherent risks, she stated several times that she believes the Fed could be doing more to stoke the economic recovery.
Gold, Bonds, rate sensitive sectors (homebuilders, utilities) and emerging markets are the biggest winners from Yellen’s appointment and comments, so watch to see if those sectors continue to improve into the New Year.
The prevailing characteristic of the 2013 market continues to be resilience. Last week we had a potent sell-off that some expected to lead to a correction, but instead we reversed back in one day to erase those gains and set us on a path to new highs. While the action has been choppy at times over the past few weeks, we have gotten some clean breakouts over the last two days in stocks we have highlighted in our Off the Charts newsletter.
S&P futures are up 3-4 handles this morning and a pebble’s throw away from 1800, which I don’t think anybody could’ve fathomed at the beginning of this year.
A couple names to watch today based on news last night:
JC Penney (JCP) has finally found some friends over the last few weeks and provided some calculated opportunities. Last night we learned that well-respected hedge fund manager David Tepper has bought a stake in the troubled company, and JCP is up over 1% so far this morning pre-market. The vote of confidence could trigger a further squeeze in the stock today.
Tepper, along with Leon Cooperman’s Omega Advisors, also revealed a new stake in Freeport McMoran (FCX) that could have some residual effect on the entire basic materials group. We have seen stocks like US Steel (X) and Cliff Natural Resources (CLF) perk up of late, and perhaps they could put in another leg higher.
The 3-D printing sector remains on fire, but might be too hot buy at this stage. If you are a short-term trader, though, these have been the place to be as they offer tremendous volatility.
We listed Voxeljet (VJET) as a long idea in our Off the Charts newsletter when the stock was in the $30s, and this morning it is opening up another 9% at $57 after earnings. Again, it’s hard to chase up here, but worth keeping an eye on for two-way action and perhaps future opportunities.
Several other names improved yesterday as well, and Off the Charts provided a great roadmap with long ideas like Western Digital (WDC), Yahoo! (YHOO), Boeing (BA) and several others that look very constructive.
Continue to obey the technicals. While the market has run a long way this year, it doesn’t seem like easy money policies are going anywhere and there seems to be little in the way of the market rallying through the end of the year.
Disclosure: Scott Redler is long GOOG, AAPL, JCP, FSLR, TGT, C, BAC, XLF, LVS, GERN. Short SPY.