Good morning traders,
- Strong followthrough day in Europe (Spain +5%, Germany + 2.2%), with all of Asia up as well (South Korea leading +1.4%). Also seeing good strength in Russia (+2.8% = 5 standard deviations… a big move for this market) and Greece (+5.7%). In fact, the only world markets flat to down are Dubai and Israel.
- Swing traders need to be on guard for potential failure of an upside breakout. It probably makes sense to “go with” such a breakout, but be very quick to admit you are wrong if it is reversed the next day.
- Some of yesterday’s decline in the AUD has been erased overnight (AUDNZD, AUDJPY). Canadian Dollar looks to be especially strong, with the USDCAD slipping below parity and to 2 year lows. Net impact on US Dollar Index is slightly negative this morning.
- Some energy futures made 52 week (roll-adjusted) highs overnight, and continue to trade up with the exception of RBOB. Watch the petroleum number at 10:30 today. Looking like some potential followthrough in precious metals, which were not quite able to put the move together yesterday I was looking for. Watch Platinum and Palladium for leadership on this turn. As I said yesterday, individual metals and mining names are not, for the most part, set up for clean moves. Foodstuffs (CSCE softs, Chicago grains) are also up across the board in early trading.
- Some individual names that may be in play early today are LULU, STD, LVS and CLF. Watch for some second day plays in Materials (especially Coal), and definitely worth keeping an eye on Financials as well. Lastly, Education names may continue to offer some opportunity today. This is a big list, so it will be important to narrow it down to what is really in play early on. I will tweet the SMB Radar’s in play list at 9:45 this morning, which always helps in that regard.
- The big wildcard today is Energy sector stocks. A continued rally in crude could really put the sector in play. Services names (OIH constituents) led yesterday, but definitely keep the whole sector on the radar this morning.
