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September 27, 2011
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The markets continue to hold their gains today. The Dow Jones Industrial Average is trading higher by just under 300 points. Rumors are flying from Europe. It appears a major bailout plan is in the words and could be unveiled in days. While the bulls are jumping for joy, three stocks signal a warning to the entire market and the sustainability of this rally.
The bank stocks have been and will be the key to any sustainable rally in the market. They were the leading indicator on the way down and their push up over the last two days has taken the the whole market higher. Their exposure to the housing market and European situation has put them on the cutting edge of the next market move. JPMorgan Chase & Co. (NYSE:JPM) is known as the leader of this group. In today's action, JPMorgan is trading higher, but at the lows of the day while the S&P 500 hits the highs of the day. This is something that should be watched closely.
The NASDAQ is also soaring. As the technology index trades at the highs of the day, the two most important leading tech stocks are performing poorly. Apple Inc. (NASDAQ:AAPL) is trading at $406.34, +3.17 (+0.79%). While it is up, compared to the NASDAQ's gain of almost 3%, it is a poor performer. In addition, the second leading technology stock is negative. Amazon.com, Inc. (NASDAQ:AMZN) is trading at $227.61, -2.24 (-0.97%) . This is another warning signal on a market that continues to trade on optimism and joy.
While the rally is solid and must be respected, these leading stocks should be monitored. Smart traders are seeing a soaring market with no major leadership right now. The overall rally will not last without these three leaders participating.
Gareth Soloway
InTheMoneyStocks.com
