Big Banks See Big Decline
The market dipped slightly yesterday, but it managed to recoup most of the morning loss by the end of the session. Volume was frighteningly low as the indices consolidated.
Low volume consolidation is good, but after a 2% decline to bank stocks yesterday, one has to wonder if Thursday was merely consolidation or a prelude to something significantly worse.
Yesterday, big bank stocks were hit hard. The decline followed a bland earnings report from big banking leader, JPMorgan (NYSE: JPM), which promptly resulted in similar declines to big bank competitors: Goldman Sachs (NYSE:GS), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC). Fortunately, the big banks were the only sector to display strong selling pressure on Thursday.
The 1220 zone on SPX continues to be a difficult area for the bulls to breakthrough. But unlike in past rallies that ended near 1220, this current rally has the leadership of technology and small caps to lean on.
Additionally, I haven't seen the same kind of strong selling occur near resistance zones. Although the market could top at any given day near this difficult resistance area, there hasn't been any indication yet that such a scenario is likely to occur.
Accordingly, until I see selling pressure pick up, or technology fail to provide leadership, I will bias our trades long. And yesterday, the TradeMaster portfolio added three new positions, which offer good upside so long as the market does not decline. I will also review each of those trades in my weekend video to TradeMaster subscribers.
The bulls will have help today, especially the technology segment, following the great earnings report from Google (Nasdaq: GOOG) yesterday afternoon. Google absolutely destroyed analyst estimates last quarter. The GOOG reported $9.72 EPS and $7.5 billion in revenue.
Analysts expected revenue of $7.2 billion and EPS of $8.74. Shares of GOOG immediately popped higher by 5% to $594. The leadership from GOOG today should push the Nasdaq higher and also help other risk groups like commodities (copper, silver) or biotechs (ONXX, EBS).
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