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Morning Call: Greek Debt Anxiety, Profit Taking Weigh on Futures

January 24th, 2012

US stock futures point to a lower open Tuesday after a five-day winning streak for the S&P. Volume has been light in the up-move and yesterday the index rallied late to post a marginal gain, but today is the first sign of some real anxiety across the pond.

The latest talks to resolve the Greek debt crisis hit another stumbling block, and some overseas markets are pulling off more than 1% this morning. Euro finance ministers rejected the “final” offer from Greece’s private creditors, which many expected, increasing the threat of a disorderly Greek default.

This morning’s pull-in could also be a bit of profit taking after a strong start to 2012, the strongest since 1987 for the S&P (ominous sign?). A few sectors put in topping tails yesterday, especially the financials which have led the rally after earnings from several banks. Goldman Sachs (NYSEArca:GS) looks especially toppy after trading through Friday’s high and then back below into the close.


Investors will also be watching the two-day Fed meeting closely, although a recent improvement in US data would seem to tie the hands of the FOMC. The markets are starving for hints about more future quantitative easing, and the Fed has made a habit of disappointing ever since the end of QE2.

While there is a series of high-profile earnings reports today, the most notable is of course Apple (NASDAQ:AAPL). The tech giant, with a market cap that exceeds the GDP of the Greek economy, announced its first EPS miss in 12 quarters in its last report and will be looking to redeem itself. iPhone sales are expected to be blockbuster after consumers waited for the release of the company’s latest handset, which turned out to be the iPhone 4S. A strong run for AAPL in 2012 would seem to foreshadow a strong earnings report.

TECHNICAL TAKE

Some overseas markets pulling off 1%+ from monthly highs. There is no deal in Greece yet, and there is some anxiety over the two day Fed meeting, all combining to cause the futuresto take a breather this morning. A rest or pull back would be welcomed by most on the street as this type of slow, methodical, low volatility move that has traders a bit on edge.

I see two uptrends to watch. The first started on the October 4th reversal low and then put in a series of higher lows that held important Fibonacci levels during each correction that has created a nice gradual trend for macro dip buyers.

I also see a more accelerated uptrend that started in Late December that increased the slope of the rally, and has yet to be breached. We have been riding this one since the beginning of the year and will watch to see if it breaks and gives a move back to make a higher low in the more gradual longer-term trend of this market.

I will use the SPY to talk about the important areas that should be evaluated a bit closer. SPY $130.80 has been the three-day floor. A 60-minute close below this area opens the door for more downside action today. The markets can see $129.70-129.95, even today perhaps, but momentum traders would like to see this area hold. A daily close below the $129.70-129.95 would put the accelerated uptrend in jeopardy.

A daily close below that area opens the door for a test of the 21-day moving average, which stands around $128-128.20. That spot would be a gut check for midterm market participants. The macro line in the sand, which would be the macro higher low and the potential retest of the wedge break out, stands around $125.90-126.50.

Scott Redler
Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader. Scott Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Scott moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, he maintained his status as a top trader in the industry while working closely with all traders in the firm to dramatically increase performance. Scott has participated in more than 30 triathlons and one IronMan triathlon, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business and Bloomberg, and he has been quoted in the Wall Street Journal and Investor’s Business Daily among other publications. Scott produces much of the media and content available to subscribers and followers. T3LIVE.com is an online financial media network and education platform that provides active traders and investors with market analysis, real-time access to strategies, and in-depth training from real traders, real-time.

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*DISCLOSURES: Scott Redler is long (NYSEArca:SPY), (NYSEArca:OIH), (NYSEArca:XLF), (NYSEArca:X), (NASDAQ:LULU), (NASDAQ:CROX), (NYSEArca:WMT), (NYSEArca:VXX). Short (NYSEArca:DIA), (NASDAQ:SHLD).


NYSE:DIA, NYSE:OIH, NYSE:SPY, NYSE:XLF


 

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