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Market Stages Impressive Bounce From Overnight Lows

Marc Sperling

US markets rebounded Monday after sharp pre-market losses following the news of potential complications in the Cyprus bailout. S&P futures were off as many as 25 handles on Sunday night following the news, and opened the session nearly 15 handles lower this morning, but buyers stepped in to nearly take the index positive. The comeback lost steam in the last hour and indices finished modestly lower, but given the the scene last night today's action could be considered a win for the bulls. The S&P finished down 0.55%.

The weekend's news and price action is just the latest reminder that the European debt crisis is a major issue for the world economy and markets. Any developments that could potentially destabilize the extremely fragile continent usually lead to heavy selling. On February 25th, Italian elections triggered the sharpest sell-off of the year, and over the weekend political turmoil the tiny country of Cyprus triggered a massive sell-off. Perhaps more than anything, the action is the latest indication that investors remain skittish even several years after the financial crisis as the Dow trades at all-time highs. Don't fall asleep at the wheel despite the strong start to 2013.

Apple (AAPL), after waking up last week, was the standout today. We talked extensively on the Virtual Trading Floor, in the Off the Charts newsletter and on Twitter last week about how the Samsung Galaxy S4 launch could be a "buy the news" event for AAPL. Bearishness had started to reach climactic levels in AAPL, and many expected the stock to sell-off as Samsung unleashed an extraordinary phone. The phone was OK, but nothing game-changing, and the presentation was corny and amateurish. AAPL gapped up the next day and has followed through nicely, which is not something we have really seen with the stock over the past few months. AAPL finished the day up 2.72% after gapping up in the face of the macro market news.

The banks are generally the most sensitive to any fresh concerns regarding the European debt crisis, and that held true today. The sector saw heavy selling overnight and was not able to stage as strong a bounce as the rest of the market, with the Financial Sector SPDR ETF (XLF) dropping 1.08%. Among US banks, Morgan Stanley (MS) was hit the hardest, dropping 2.54%, while European banks Barclays (BCS) and Deutsche Bank (DB) both finished down around 4%.

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*DISCLOSURES: Marc Sperling is long AAPL, VXX, GS, EBAY, DDD, FB, ANTH, REGN, SHOS. Long calls in the following stocks: AAPL, TBT, GNRC, UA, GS, BBRY, EBAY, DDD, F, S.