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Morning Call: Market Could See End of Quarter Profit Taking

March 29th, 2012

We are now going on day three of the slide that started Tuesday afternoon. After a big move from the December 20th Gap and Go selling some longs into the end of the first quarter#1 made sense. There is always a re-shuffle that goes on from Qtr. to Qtr. so the market needed to prove to me that a portfolio approach still made sense.  Overseas markets continue to slide as China slowing fears continue to rise and sovereign debt chatter continues to make rounds about Spain and some other European nations.

As of now, this is the same “type” of correction we’ve seen during this multi month move. The question is, will it be different this time? Investor’s Business Daily put the “Big Picture” in “Rally Under Pressure”,  this is the first time they’ve done so since December 20th.  So If you didn’t respect my warnings on Tuesday afternoon, you should acknowledge their perspective.  One more distribution day and then it turns into “Market Correction”, so the next 1-4 sessions will be important to watch also considering we get to see what the “Composure” feels like once this first quarter is in the books.

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Micro Support on the S&P is yesterday’s low of 1397, the corresponding level on the SPY is $139.64. The 20-day moving average for the S&P is 1387 (SPY is $138.94).

S&P is now the 10day moving average at 1404 (same level for SPY is $140.46).

Late afternoon yesterday the banks and some very strong high beta tech like Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) helped to take us off our lows. See if any strength returns there.

Retail (NYSEArca:RTH) looks a bit tired as well. I would watch this group closely to see if they can maintain their leadership composure.

I do think the prudent thing now is to be very flexible.  I will just actively trade both long and short until I get more clarity on what the next bigger move will be. Depending on your time frame, I feel you should do the same. Longer-term swing traders should be in tier 1 at most right now.

Momentum and intermediate trend watchers who can make quick moves should have went to cash or net short with me Tuesday.

The McClellan Oscillator is on -10ish – so we are not “very oversold” yet.  But if you didn’t cover some shorts yesterday this down open would be a decent spot.

Zynga (NASDAQ:ZNGA) is a stock I’ve played a few times, and they priced their secondary at $12. I will see if there is an opportunity to buy in that area for a active trade or a swing long.

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all tradingstrategiesfor 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 tradingequities for more than 10 years and has more recently received widespread recognition from the financialcommunity 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 tradersin 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 Businessand Bloomberg, and he has been quoted in the Wall StreetJournaland Investor’s Business Daily among other publications. Scott produces much of the media and content available to subscribers and followers.

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NYSE:RTH, NYSE:SPY


 

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