Morning Call: Not a Time for Bold Calls

I think a lot of market participants are trying to figure out if we are living and trading in a normal environment. If you live in NYC and go to a Yankees game, it’s packed with people spending $50+ dollars for a few beers and hot dogs.  If you go to the mall, it’s hard to find a parking spot.  If you think you can walk into a decent restaurant without a reservation on any night besides a Monday, think twice.  If you take a stroll through Time Square, it’s packed with tourists and hard to get any elbow room (and yes, some are even Greek and Irish)! The S&P is up over 5% and the Nasdaq is up over 8%, so life seems pretty normal.

Then you turn on the T.V. and read the headlines, and it makes you think twice. Spain’s short term borrowing is hitting record levels this morning and Italy wants to abandon austerity. Greece doesn’t want to pay back its creditors, and there are some saying that Germany should leave the Euro! It makes you think twice about buying oil below $80, which is probably a good spot to nibble. It makes you think twice about a long term monthly plan for buying S&P funds for retirement or college education (which will probably pay off for those with a 10-20 year plan from here). There’s talk about the American Dream being dead, which is just plain wrong. It’s never been more affordable to buy a starter house now that prices have been cut by 30-40%.

This is not a time to have a ton of conviction, as we are holding onto the last Fib level to keep this  fledgling summer rally alive after IBD put us back into correction yesterday. Futures are up a bit as SPX 1306-1309 held. You can trade versus that level for now. Let’s see if the market can hold that level (however doubtful that may be), because if we can’t over the next few sessions, a test of the 1266 low can’t be ruled out. In the same way, some type of “summit” news could ignite another move higher. This is a time to keep it light and flexible, with no bold calls or big size.  It may not be exciting, but it’s simple!

Summer trading is usually range bound with multiple opportunities to clip a few percentage points out both long and short. The last two summers there were 6-8 moves both up and down between 5-10% before a direction was picked in early fall! This summer is not much different as the markets try to absorb complicated headlines out of Europe and in the U.S. Have a plan based on your risk tolerance and adjust it based on price action and market environment!

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 trading equities 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 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 investorswith 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:GLD).

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