Morning Call: Market Enters Correction Mode!

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April 5, 2012 9:49am NASDAQ:QQQ NASDAQ:QQQQ

Markets have been under pressure since Tuesday when the Fed released minutes stating that they would be less accommodative with monetary policy. It doesn’t help that Spanish yields are rising and European negative headlines are growing  louder. Last week I mentioned


that IBD put the Big Picture in “Rally Under Pressure”.  This always gets me lighter and more flexible.  Combine that with a new quarter and it made sense to get the foot off the throttle entering this week. This morning IBD changed the technical picture to “Market Correction”.

Some have asked, what does that mean?

A “Correction” is a loosely defined term”  as 3%-5% decline from the recent high is big enough to be a correction.  So is a decline of 10% to 19% (an intermediate-level correction) or a drop of 20% or more(the typical definition of a bear market)  No one knows what type of correction this will be, this is why I will measure Technical levels along the way for composure and opportunities. (ibd big picture) I DON’T Think we get the 22% move off the highs like we saw last year.  But I put 75% odds we see 1370-1375 and 50% odds we see 1340.  These are big technical spots.

Today, the Futures are down about 8 handles as the McClellan Oscillator is -50ish ** Getting to levels where intermediate shorts should be covered and we can get some type of oversold bounce.

We’ve already broke the upper momentum trend. Today we will be testing the Intermediate Floor. Now 1386-1388 is a big area.  I think if you are still short from Tuesday- this would be a good spot to cover the remainder.  I will cover the rest of my SPY short below $139. The 1370-1375 level is the prior breakout level from late February and also has the 50day moving average. This will be first spot macro investors should look to add to longer term positions (I don’t think we see this today).

See how the leaders act today, to see if we can get some type of oversold bounce as some might try and flatten out as we have a long holiday weekend combined with a Jobs Friday.

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.

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 Redler is long (NASDAQ:AAPL), (NYSEArca:JPM), (NASDAQ:DNKN), (NYSEArca:LVS). Short (NYSEArca:SPY).


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