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Morning Call: Fed Fallout, Spain Worries Weigh on Futures

April 4th, 2012

Yesterday was a tough one as many traders got abused as market was weak most the day and intensified to the downside after the Fed minutes, then rallied in the last hour.  That last hour rally probably got some guys out of their shorts and baited in some longs to make today’s open a bit frustrating for most.  In the last week I talked about taking the foot off the throttle as this week had a lot of questions to answer.  As of now if we close lower than the morning open.  IBD would probably take us from “Market under pressure” to “Market Correction”.

“Minutes released yesterday from the March 13 Fed policy meeting signaled it planned to hold off from increasing monetary accommodation unless the economic expansion faltered or prices rose at a rate slower than its 2 percent target. Data later today from ADP Employer Services may show U.S. employment increased by 206,000 last month, according to economists surveyed by Bloomberg. China accelerated the opening of its capital markets by more than doubling the amount foreigners can invest in stocks, bonds and bank deposits.” -Mike Cohen


The other huge development overnight is rising borrow costs in Spain. We have heard rumblings that Spain was close to running into problems similar to Greece, but as of yet there had been no alarming rise in interest rates. Today’s debt auction marked the first test of demand since the new austerity budget was presented last week, and the results are not encouraging. Many investors had started to relax about Europe, but this could be the start of another wave of panic across the pond.

The risk-off environment this morning is also characterized by a fall in oil and gold prices. Gold futures dropped nearly $50 to $1,627/ounce, while crude dropped 72 cents to $103.29.

This morning we are down about 10 handles. S&P support is 1396-1402, and this has been the recent floor. That level on the (NYSEArca:SPY) is $139.64-140.20. Another spot is 1391, and a major, major area is 1386-1388 (SPY $139-$139.10, then Major, Major is $138.55ish).

On days like this, you look to see if anything can lead us higher. Any groups or sectors. Leaders acted okay yesterday as there was a lot of selling under the surface.  I will see if I can trade any of them to go positive for cash flow (we all know them).  If they can’t fill downside gaps, today can break this accelerated/intermediate uptrend. I got stopped out of lots of positions yesterday. We have stops for a reason, make sure to honor them!

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 tradersin 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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