Morning Call: Eyes Shift to Apple (AAPL) Earnings, Fed Meeting
US stock futures point to a higher open Tuesday, looking to bounce back from yesterday’s break of the mini-uptrend line started on April 10. Worries over the European sovereign debt crisis are ramping back up as borrowing costs in Spain rise. Also there is uncertainty in France, where incumbent President Nicolas Sarkozy faces an uphill climb to retain his position.
Earnings season rumbles on with one of the most anticipated reports of the season, Apple (NASDAQ:AAPL). A blockbuster report with enormous iPhone 4S sales ignited a monster rally for AAPL in Q1, and the company now has a lot to live up to with this next report. The stock has traded off sharply in the pre-market after initially pointing higher. Who knows what that means, but it will certainly raise some eyebrows.
The Fed’s FOMC will also begin a two-day meeting today after a wave of weaker economic data in the US. Most strategists believe, though, that data has not deteriorated enough to warrant any serious talk of QE3.
Netflix (NASDAQ:NFLX) is down 15% in the pre-market after another disappointing earnings report. The stock had climbed back over the $100 level in 2012 but is now set to open around the $85 level.
This is why you trade the markets. NFLX gave us a screaming buy signal on January 4th around $76-$77! It was our focus for about 4-6 weeks. Then gave a big Red Dog Reversal sell signal on February 7 around $130.59. There were also trades for cash flow in the middle, and now it’s back at $86.51. Everyone must learn how to enter and exit the markets. Today as I have no position there, I will look to see if we get a buyable strategy for cash flow. If not, I’m sure we will hear some takeover talk in the next few days to create small opportunities back at these lower levels.
For the right shoulder to continue to build with no concerns for the bears, I would think a lower high gets put in place and we don’t get a close above S&P 1376-1382. This spot should be an area to re-short or sooner. I think there is too much damage for the double bottom to stick, but I will let the market give me more conviction to lean that way.
A break and close below $SPX 1355-1360 will set the market in motion for a move down to the 1320-1340 zone.
Most leading stocks have been hanging on to their 50day by a thread. This has been a prudent action area for traders to cover shorts and look for bounces. I enter today neutral, but will look to “re-short” more SPY in the $137.60-$138.20 zone.
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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*DISCLOSURES: Scott Redler is long (NYSEArca:JPM), (NASDAQ:ZNGA), (NASDAQ:DNKN). Short (NYSEArca:SPY).