Morning Call: Futures Surge Amid Talk of Greece Deal, Diamond Foods (DMND) Drops 40%

US stock futures have surged to positive territory Thursday amid reports of a Greek debt deal. Small snags had been holding up the final approval of a deal between the Greek government and European finance ministers, and it appears those have finally been worked out. Also, the Bank of England, as expected, expanded its asset purchase program in an attempt to stoke the flagging British economy. Also, Chinese inflation data came in a little hot last night.


The market has been resilient this year, seemingly in anticipation of a Greek debt deal getting done. Yesterday the market had a morning pull in but it was met with dip buyers once again. Some strong stocks continue to power ahead as others consolidate and wait their turn. Visa (NYSEArca:V) and Cisco Systems (NASDAQ:CSCO) delivered beats on their earnings, and Groupon (NASDAQ:GRPN) fell flat.

Diamond Foods (NASDAQ:DMND) is the disaster of the morning. The company had been accused of accounting irregularities and confirmed restatements last night in management shake-up. DMND has a monster short interest, more than 40%, and those shorts have now been vindicated with the news and stock price collapse. DMND is down more than 40% this morning. The stock is likely to be in play this morning as shorts may look to cover.

In this type of market, try to stay with the trend as long as possible. In the last two days, I have made attempts to press shorts instead of adding to longs, which turned out to be the wrong approach. I thought that after such relentless strength in 2012, it might be time for at least a mild pull-in. However, I underestimated the underlying bid in this market. Stay flexible, but with the trend for now. When the trend changes, so will we. Anticipating is a tough game to play.

Keep an eye on the 20+ Year Treasury Bond (NYSEArca:TLT). Below $115.50 and you can see a sharp decline.

Support on the S&P is 1340-1341 from yesterday. The next area is 1333-1336, which is the recent upper floor to use as a bigger area. The 10day moving average is at 1329.

Resistance sits at yesterday’s high of 1351, above that then you have 1356 with the 2011 high at 1370.

There are still multiple set ups in this market that we isolate in the Morning call and in our “Off the Charts” newsletter.

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:SLB), (NYSEArca:JPM), (NYSEArca:AIG), (NYSEArca:WMT), (NASDAQ:LULU), (NASDAQ:QCOM), (NYSEArca:VMW), (NASDAQ:DRYS), (NASDAQ:DNDN), (NASDAQ:DNDN) calls, (NYSEArca:VXX). Short (NYSEArca:DIA).

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