4:30 pm ET: We mentioned yesterday that without some good economic piece of news to flame last week's rally, the market will likely drift for a while. And that's exactly what is happening today. Market action appears to be lackluster but don't let this sideways motion fool you; beneath the surface there's some active sector rotation going on.
The big standout, noted yesterday, is in the biotech space which has been rapidly expanding since the 2009 market low. Some of the best performing stocks in this group include Biogen Idec (NASDAQ:BIIB), Ariad (NASDAQ:ARIA), Alexion (NASDAQ:ALXN), and Infinity (NASDAQ:INFI). On the flip side, the consumer discretionary sector seems have had its bubble burst judging from last Friday's topping tail on the consumer discretionary etf (NYSEARCA:XLY). Individual issues have been tumbling since with Decker's Outdoor (DECK--the maker of Ugg boots) and Zumiez (NASDAQ:ZUMZ) being among today's biggest losers. (At one point, Zumiez traded beneath $26.50 strong support but managed to close above it. A close beneath that--especially a close under $26--would be a very bearish sign for the stock.)
Regional banks continue to do well and are still in the nascency of their recovery. This means that there's a lot of ground that needs to be regained but two words of warning before jumping in with both feet: fiscal cliff. Should Congress not deal with this important issue before the end of this year, the US could be sent into a recession thus putting the kibosh on bank and financial stocks. If you'd like to participate in this space but don't want to choose among the many individual issues, the regional banking etf (NYSEARCA:KRE) would be an excellent alternative. The stock just broke $29 resistance, has fairly liquid options, and a dividend yield of 1.6%.
Note to Subscribers: I'm researching several new Stock of the Day candidates and if any pan out, I'll be posting the writeup today or tomorrow. Stay tuned!