Yesterday’s intraday bounce was spoiled by a weak close, and then after the closing bell Apple’s (AAPL) weak earnings report had investors thinking – “here we go again.” Instead, stocks were able to shrug off the weakness in AAPL to stage a decent bounce today. The 0.61% bounce in the S&P is nothing to write home about, but we saw a host of individual stocks bounce back ferociously after multi-day sell-offs.
Apple (AAPL) finished the day down 7.91%, its worst decline in more than a year, as it was not able to sustain any sort of bounce into the gap during the session. The short-term technicals on the stock are now broken, but at least Carl Icahn revealed he bought $500 million more worth of shares. AAPL should be on the back burner for at least a few days as investors make sense of the poor guidance in last night’s report.
The same fate did not befall AAPL’s high beta tech running mates. Google (GOOG) staged a 1.98% bounce to reclaim the rest of its losses from yesterday. Amazon (AMZN) bounced 2.08% after closing well of its lows yesterday. After a few days of rest following its earnings gap up, Netflix (NFLX) got back in motion today, breaking out to new highs with a 6.73% gain. Tesla (TSLA) also posted an impressive 5.14% gain to get back above its 8-day EMA.
Social media stocks and recent tech IPOs also bounced back well today – Twitter (TWTR) +4.32%, Facebook (FB) +3.03%, LinkedIn (LNKD) +3.57%, Yelp! (YELP) +5.01% and Zillow (Z) +8.32% being a few examples. Stratasys (SSYS) is holding up best among the now-troubled 3-D printing stocks as it staged a 2.77% bounce today after closing well off its lows yesterday.
Solar leaders Solarcity (SCTY) and Canadian Solar (CSIQ) bounced 5.91% and 6.15% respectively.
Despite today’s bounce, traders are starting to get a little bit different feeling from the market this time around. After a raft of weak data from multiple countries and some isolated currency events, there are concerns about the state of the global economy once more, and this time around there isn’t the threat of more QE from the Fed. Tomorrow the FOMC is expected to taper another $10B from its monthly asset purchases.
The fact that select stocks dramatically outshone the indices today is evidence that there are significant divergences in the market right now, which is what we search for as stock pickers. Earnings season is a time to be more tactical, but once we emerge from the season I think there could be considerable opportunity to have a balanced book with both shorts and longs.
Disclosure: No relevant positions
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