Again on Wednesday, investors were struggling with the market’s next big move as the S&P 500 wavered near a seven-week high but on low volume.
Lately stocks have struggled around 1333, a level closely monitored by technicians because it represents a doubling from the low reached in March 2009.
If the S&P can close above that level technical investors may consider it a breakout, and it could trigger a new round of buying.
However, the rapidly approaching earnings season may present some serious headwinds.
"Next week it kicks off,” says Jack Ablin, chief investment officer of Harris Private Bank, “and that to me is a wild card. Costs have gone up (yet) analysts continue to ratchet profit expectations higher."
Do the bulls have enough mojo to push stocks higher? What should you be watching?
Instant Insights with the Fast Money trader
Pete Najarian has spotted a stealth sign in the options market that he considers bullish. According to the Pit Boss, a larger than usual volume of calls have been trading in the Russia ETF.
Upside bets in the RSX may seem extremely stealth, but Najarian explains that the ETF is largely made up of energy and materials companies. He takes the action as a sign of increased demand generated by stronger global growth.
And as confirmation of his bullish bias, he adds, investors are now making similar bets on the commodities heavy Brazil ETF.
”Activity is all looking to the upside,” says Najarian. “It all plays into global growth,” he says. In other words he thinks we’re seeing growing BRIC economies and as a result we should also see a rising stock market.
Trader Steve Cortes is far more cautious. Although emerging markets are doing well, he reminds the Fast Money desk that industrial metals are not confirming the gains, and that may be a problem. To illustrate his point, he says copper is still down on the year.
“I think China tightening is impactful.” In other words, he thinks a China slow down will ripple across markets. He’s looking to short copper as well as short Ford.
Trader Brian Kelly also expresses concern about the market’s ability to rally. However, he says long-term the real risk to the recovery is higher oil prices. “No doubt that higher oil prices are the major risk. When we have $4 gas, that will hurt the consumer, absolutely!”
Although he remains bullish, Najarian concedes to Kelly’s point. “True, $4 gas is a problem for consumers,” he says.
GOLD AND SILVER OFF HIGHS
Precious metals ticked lower in afternoon trade, however gold touched a new intra-day record earlier in the session.
What’s the trade?
Brian Kelly is sticking with what’s working. I’m long gold and long silver and I’ll remains long gold and silver,” he says.
Trader Steve Cortes is skeptical of precious metals. Largely investors turn to these trades because of inflation but “I don’t buy that there’s global inflation,” he says. “Here in the US we have deflating housing and stagnant wages and that’s not a recipe for inflation.”
ANALYZE THIS: SMITHFIELD
The traders also have Smithfield on the radar after the company said it was in talks to acquire a majority stake in European meat producer Campofrio Food Group for $715 million. The move would increase Smithfield's presence in Europe.
What should you make of it?