Today, the market opened higher, but, profit-taking immediately followed. Investors seemed nervous ahead of the "official" stress test results. Ironically, techs were the weakest, as Nasdaq lost 2.44%! Financial stocks were jittery as well, and most reversed their early gains to pretty substantial losses. However, after the market, when the stress test results were released, the financial sector rebounded. The results were better than what most have thought. More importantly, perhaps, there seems to be more clarity now.
In my earlier article today, I pointed out some financials stocks that jumped after the stress test results came out. Out of the 19 banks tested, 9 of them do not need any more capital. These include JPM, COF, STT, GS, which all traded higher in after-hours. COF added +3.4% on top of the +18.4% gain during the regular session. STT reversed its 3.32% loss during the day with a +8.62% gain after the market.
The Dow was down 102.43 points; SPX slipped 12.14 points; Nasdaq tumbled 42.86 points:
UNG (natural gas), which has been climbing for the past week, soared almost +7%! USO (oil) was slightly green. BTK (biotech) managed a small gain. Most other sectors were weak, with SOXX (semiconductors) leading the market with a 5.93% decline. XME (metals and mining) gave back 4.21%. XLF (financials) lost 2.88%. FXI (Chinese ADRs) fell 3.05%.
SPX fell 12.14 points to close at 907.39, staying above 900. The MACD was flat.
Nasdaq dropped 42.86 points to close at 1716.24, at its 10-day MA. The MACD went lower.
So far, the profit-taking has been healthy. Techs were really weak for the past 2 days. Some funds seem to be rotating into other sectors, such as energy and mining. However, Nasdaq did find support at its 10-day MA, and it is still above 1700. On the other hand, SPX also stayed above its support level at 900. VIX briefly went above 34 today, but, fell back below. With the bank stress test out of the way and favorable reaction after the market, the market looks towards the latest job reports tomorrow morning. If the job reports are better than expected, the market will likely resume the rally, especially with more shorts trapped in before the release of the bank stress test results.
Good night and HappyTrading! ™
Disclosure: JPM none, COF none, STT none, GS none