CHICAGO, Aug. 2, 2011 /PRNewswire/ -- Zacks highlights commentary from People and Picks Trader "inthemoneystocks".
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Debt Ceiling Deal Done, Will the Rally Hold?
This morning, the major stock market indexes are trading higher after a debt ceiling resolution was announced yesterday. The debt ceiling deal still needs to pass a critical vote in the U.S. Congress. Many traders and investors have already taken profits at the open this morning on any long positions that where bought last week. As a trader we simply want to be on the right side of the market, having an opinion simply just gets in the way.
Most stock sectors are bouncing higher this morning. The financial stocks are always a leading indicator, most financial stocks are catching a bid higher at the open. As long as the financial stocks continue to stay strong it is a good sign the rally can hold up for a couple of days. Should leading stocks such as J.P. Morgan Chase & Co. (NYSE: JPM), and Goldman Sachs Group Inc. (NYSE: GS) begin to fade or sell off then this rally could be in jeopardy.
Traders should watch the Chinese ADR's very closely today. Last night, the Shanghai Index failed to participate in the Asian stock market rally and this is a negative for the stock markets. Sohu.com Inc. (Nasdaq: SOHU) is a leading Chinese internet stock that is dropping sharply after reporting earnings this morning.
This leading Chinese ADR is declining by $6.45 to $83.62 a share. SOHU stock will have some short term intra-day support around the $82.00 and $80.00 levels.
Other leading Chinese internet stocks such as Baidu Inc. (Nasdaq: BIDU) and Sina Corp. (Nasdaq: SINA) have faded from their gap higher open. Traders must remember that the Shanghai Index usually leads the major stock indexes around the world. This important Asian index still looks fragile at this time.
Since the start of this article the major stock market indexes have already faded from the sharp gap higher open. Traders should continue to expect volatility throughout the trading session as there seems to be many problems with this rally. This stock market fade simply tells us that most traders and investors expected the stock market bounce at the open and don't really believe in the political fix for the stock markets.
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