It was role reversal day on wall street today. What kind of role reversal am I talking about? The recent high fliers took their lumps today, while the most beatup sectors bounced back nicely. The Dow finished the day lower by 40 points, while the Nasdaq gained 6 and the S&P ended essentially unchanged.
In order to illustrate the role reversal today on the street I will break it down by stocks and sectors taking their lumps and stocks and sectors coming back from the dead.
Taking their lumps- The recent high fliers who took their lumps today
First in this category certainly is the basic material sector. Basic materials finally sold off today after unrelenting gains of late. Gold stocks were foremost among the recent high fliers that were brought down today. Gold prices dropped to about $735 today, after trading above $755 just yesterday. Goldcorp (NYSE:GG) shares lost 3.08% on the day. Kinross Gold (NYSE:KGC) also lost 5.04% as part of a very weak gold mining group today. Fertilizer stocks that have had great runs of late also were weak today. Mosaic (NYSE:MOS) fell by 3.05% and Agrium (NYSE:AGU) dropped 3.33%.
The second major recent high flier that fell significantly today was the energy sector. Weatherford International (NYSE:WFT), which has recently showed up on our 52 week high list several times, fell by 3.57% on the day. Chevron Corporation (NYSE:CVX) fell by 1.99% as the major oil companies fell across the board today.
Coming back from the dead? Recently hated stocks that jumped today.
I cannot start this recap without mentioning the homebuilding sector first. Clearly this has been the most hated sector in the market for quite a while now, and for good reason. Housing numbers continue to be awful, but some now believe these stocks have just gotten too cheap. The sector as a whole gained today on strong volume. Toll Brothers (NYSE:TOL) gained 7.6% on double its normal volume. KB Home (NYSE:KBH) gained 4.93% on the day. Lennar Corporation (NYSE:LEN) gained 6.23% on the day. Interestingly, this is the first time in quite a while that homebuilders have had a two day rally, so we will see if it has legs.
Financials are the other notable sector that have perked up in the last couple of days. Morgan Stanley (NYSE:MS) led a strong brokerage sector today, gaining 3.27% on the day. Bear Stearns (NYSE:BSC) gained 2.45% on the day, though it was on light volume. Freddie Mac (NYSE:FRE) gained 2.89% on the day, as mortgage related stocks did pretty well today.
52 Week Highs:
- Ciena Corporation (Nasdaq:CIEN) shares gained 8.91% on huge volume.
- Ceragon Networks (Nasdaq:CRNT) shares gained 9.83% on triple their normal daily volume.
- Baidu.com (Nasdaq:BIDU) shares gained a staggering 12.56% on 3x their normal volume, continuing their recent huge run.
The internals of the market were actually pretty strong today with advancers outpacing decliners on the NYSE and the Nasdaq. Up volume actually outpaced down volume by a 63% to 36% margin on the Nasdaq today.
Time will tell if today's role reversal was just an aberration or if it will be a more significant development. Personally I do feel like some financial stocks are undervalued at this time and they may be ripe for some more gains, but the homebuilders I cannot recommend. The basic material and energy sectors likely are just taking a breather from their huge gains recently. I wouldn't count on those two sectors having large losses in the near term.
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