Stocks bounced modestly Monday, although small caps - which we highlighted Friday as a bit concerning as they had been down over 2% for the week - rebounded smartly today with gains of 1.15% in the Russell 2000. The S&P 500 and NASDAQ posted more tame gains; 0.36% and 0.37% respectively. News was light on the day; later in the week we will get the first pass of GDP (Gross Domestic Product) for the third quarter, and employment data for the month of October. But unless both these points are tremendously strong, the Federal Reserve will remain on the sideline from any reduction in quantitative easing and for now, that is about all the market cares about. St. Louis Federal Reserve President James Bullard told CNBC television the Fed should not rush a decision to scale back its asset purchases because of low inflation.
August factory orders slipped 0.1 percent following a 2.4 percent drop in July orders, while September factory orders climbed 1.7 percent, in line with estimates, according to the Commerce Department.
The S&P 500 continues to hold above the trend line connecting the highs of the latter half of 2013 which is a positive. The NASDAQ has pulled back some below that upper trend line in a range it has been in all year so now has some room to advance and test it again if we continue higher.
In terms of sector rotation we saw a big move into natural resource type stocks today with the both the metals/mining & oil exploration ETFs (XOP / XEM) up >3%. Goldman Sachs analysts upgraded their view of the steel sector to neutral, in
addition to upgrading specific companies.
BlackBerry (BBRY) said it was abandoning a plan to sell itself. With Monday's drop, the stock is at levels unseen since October 2003.
After a two-month review of strategic options and talks with potential buyers that included Facebook, Lenovo and private equity firms such as Cerberus, BlackBerry said it will abandon a sale. Instead, it will raise $1 billion by issuing convertible notes to a group of long-term investors including its largest shareholder, Fairfax Financial Holdings. The only formal offer to buy BlackBerry - a tentative one - had come from Fairfax, which wanted to take the company private for $4.7 billion. But sources said Fairfax boss Prem Watsa had trouble financing the deal.
Solar stocks were back on the move again today as a group - this type of move in SunPower (SWPR) which had a harsh 1 day selloff but then recovers like this, is pure bull market activity.
Tesla Motors (TSLA) which also had been in a significant downtrend the past few weeks, surged. Tesla reports Tuesday so this could be short sellers exiting the stock in case it jumps massively again post the report.
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