Morning Call: Stocks Unable to Hold ISM Gains, Crosscurrents Blowing in World Economy

Stocks are set for a down open Wednesday after bleeding lower yesterday afternoon. The strong ISM number gave the market a big boost in the morning, but stocks could not hold those gains and are back at yesterday’s low pre-market.

The cliché goes, “Sell in May and go away”. Will that hold true this year? There are some macro cross-currents in the market right now, with strong earnings but lingering economic concerns. Also, the Dow had led the market recently, showing a flight to safer stocks.

Traders never like when markets are lead by the Dow, it shows skepticism. Tech and the Russell both lagged yesterday and reversed hardest towards the end of the day, giving a sell signal.

Yesterday also felt a bit more like a short squeeze vs. real buying as traders have been trapped since last week.

ADP numbers today were disappointing, perhaps giving clues to Friday’s big jobs numbers, which could play a big part in determining short-term direction for the market. European unemployment hit a record since the launch of the Euro currency at 10.9%, blowing some growth concerns across the Atlantic.

The big area of support for S&P is 1390-1392 (SPY $139.30-139.40), then the line in the sand at $138.50-138.70.

Apple (NASDAQ:AAPL) is always worth watching even if you aren’t trading it because it often holds the key for the market. Yesterday AAPL spiked in the morning but showed relative strength in the afternoon to reverse into negative territory. The stock is continuing lower this morning and set to open below its 50-day moving average.

Coca-Cola (NYSE:KO) is one bellwether name that continues to impress with earnings and climb higher, even in the face of high commodity price headwinds.

Another blue-chip name performing well is American Express (NYSE:AXP), which had operating leverage for the first time this quarter.

Broadcom (NASDAQ:BRCM) is down slightly overnight after earnings, and is a stock we think can be bought on weakness.

Herbalife (NYSE:HLF) is trying to recover from yesterday’s massive sell-off, which was triggered by probing questions about the revenue model from famed short-seller David Einhorn. The stock has recovered 5% of those losses in the pre-market.

Gold futures are down this morning as well, following the markets lower, as investors continue to interpret the strong ISM number as discouraging for new QE3.

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 (NASDAQ:AAPL), (NASDAQ:MSFT), (NYSEARCA:GLD), (NYSEARCA:SLB). Short (NYSEARCA:SPY).

*DISCLOSURES: Scott Redler is long (NASDAQ:ZNGA), (NYSE:AGU), (NYSE:XOM), (NYSE:POT), (NYSE:SLB), (NYSE:BAC), (NASDAQ:DNKN), (NASDAQ:LNKD), (NASDAQ:LNKD) calls, (NYSEARCA:GLD), (NYSE:GM), (NASDAQ:MSFT). Short (NYSEARCA:SPY).

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