Morning Call: Stocks Set for Lower Open as Greece Fails to Form Government
Today is my first day back from vacation, so it’s time to dive back into the action! Most guys in my firm are embracing this down move as last week the Dots started to connect for further downside. I was stopped out of remaining longs from the Bahamas when the SPX broke 1390-1392, guys in front of their desk had more than enough time to press the keys. IBD went to Rally Under Pressure Thursday, and then Market Correction on Friday. Typically in the second quarter you get many misfires as it’s a historically tough time for stocks, especially after the gains we’ve seen from the first quarter.
Today we come in and the futures are down 7-9 handles right around support that sreated the April 10th bottom and then the March 23rd “Double Bottom”. Yesterday there was a quick and clean long set-up off this area for cash flow, but I’m not sure if today will be as easy! US stock futures are following European stocks lower as the inability of Greece’s conservative pro-bailout party to form a coalition government is causing some anxiety.
The big area in the S&P is 1355-1357, which we can use a pivot this morning. A daily close below this area and it should set market in motion for more downside action. The 1340 level is a very talked about area now, but I guess it makes sense since this is a previous point of reference from February and early March. 1322 is the 38.2% Fibonacci Retracement level that would be a compelling area to hold moving forward.
What’s going on in Europe will create a Summer of Headlines!
The markets liked a unified front fighting deficits and promoting austerity, but the people expressed their displeasure with that path in the recent elections and it seems like Europe wants a mulligan. Austerity didn’t even start and now they will be fighting over the potential outcome. Overspending broke down the system, and now they don’t want the medicine the Doctor subscribed. Not sure where this leads, but it will create volatility moving forward. It could be a Summer of trading levels vs. Headlines, which can be very profitable if done correctly. Market timing and knowing your timeframe will be key. Strong Bottoms typically don’t happen in May–July, they usually can be trusted a bit more in August or October..
Yesterday some high beta names acted okay. The likes of Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) will be on my radar to see if they can lead us off the lows. The banks will also be on my radar to see if they perk, and as is customary I will focus on leaders JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC).
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 BusinessDaily 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. This material is being provided to you for educational purposes only. No information presented constitutes a recommendation by T3 LIVE or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs.Visit the T3Live Homepage, Virtual Trading Floor, and Learn More About Us.
*DISCLOSURES: Scott J, Redler has no positions.