This week expect investors to remain squarely focused on Japan.
First and foremost, Wall Street is keenly aware of the heartache stemming from earthquake and resulting tsunami.
On Monday a slew of firms including Goldman Sachs, Morgan Stanley JPMorgan and many others announced plans to donate millions to emergency relief efforts.
But like it or not, the tragedy is more than emotional. For investors it also requires cool and strategic decision making in an attempt to protect and profit in an environment of uncertainty.
What should you be watching? How should you position now?
JAPAN IMPACT: STOCK MARKET
World stocks hit a six-week low on Monday driven by a 7.5 percent slide in Tokyo shares. Both the Dow and S&P also traded lower though the sell-off here in the US was not nearly as severe.
What's the trade?
Fast trader Steve Grasso is watching key technical levels on the S&P. “If we break 1288 the next key level is 1275, the Egypt bottom.” And if that doesn’t hold the next level to watch is 1257, “that’s flat on year,” Grasso says.
Jon Najarian suggests being greedy when others are fearful. “A breakdown toward 1258 is a buying opportunity,” he says. Looking at fundamentals, he thinks Japan will be back on it feet “faster than most people think.
Jeff DeGraaf, institutional investors top ranked technical analyst for the past six years agrees. “The trend of the market is still higher," he says. "Add to positions at oversold levels,” he says. (Click here for our entire conversation with DeGraaf.)
Trader Guy Adami is on the other side of the trade. "I think the market is broken technically," he says. "My level in the sand is 1300, so I think we’ve broken down. Tuesday may be a critical day and I favor the downside."
When making broad market bets, trader Stephen Weiss says to also keep an eye on other catalysts. “Austerity measures by the ECB could crimp demand,” he says. “And the Mideast is still in flux. “Too many mixed currents,” he concludes. I’d pause.”
JAPAN IMPACT: TECH
Tech shares were among the hardest hit on Monday with investors running for the exits on concerns that weakness in Japan will harm this sector, most.
Meanwhile, the desk has a few key names on the radar after UBS released a report showing companies that derived a substantial amount of revenue in 2010 from the Asia-Pacific region.
Net App 10%
Brian Kelly thinks the tech trade may be breaking down for 2011, broadly. He points to a number of signs such as anecdotal evidence from Finisar and Texas Instruments.