All major US indices fell more than 1% Wednesday, led to the downside by the S&P, which fell 1.43%. Financials and energy stocks were the biggest drag on the index, which saw each of its 10 sectors finish in the red. The pressure continues to mount on Spain’s banking system, with reports suggesting the country will need to tap into Eurozone bailout funds to recapitalize its third largest bank and largest lender, Bankia ES. A disappointing pending home sales number didn’t help the cause, either.
Apple (AAPL) was once again a standout, breaking above a key pivot and closing the day up 1.21%. AAPL’s strength helped the Nasdaq to limit some of the damage, but the index still finished down 1.17%. Former tech leader Priceline (PCLN) has started to weaken, and couldn’t match AAPL’s bounce today, finishing down 3.08%. The stock closed just below its 100-day moving average, and could be set for a bigger pull-in.
Banking issues across the pond inevitably weighed in US banks as well, with the Financial SPDR ETF (XLF) closing down 2.04%. The banks have yet to get any significant bounce since the JPM trading debacle was revealed, and on longer term charts the rally in Q1 2012 looks to be nothing more than a dead cat bounce. There is certainly nothing healthy about the financial sector right now, fundamentally or technically.
With major headlines hitting the market every day, we once again find ourselves in a whippy, volatile type from day to day. In this environment, we like to go to more cash and take trades more quickly. The market is in a bit of a no-man’s land after yesterday’s island candlestick, and it’s best to be a very select stock picker at this stage.
Disclosure: Scott Redler is long AAPL. Short QQQ, WMT.