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Minyanville's T3 Morning Market Call: Does the Market Trust Washington?

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The banks remain a source of strength in this market, and are holding the market up despite weakness in Apple.

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Futures are higher this morning ahead of the next round of fiscal cliff negotiations. President Obama is focused on trying to get a partial budget deal done. The Treasury Department said yesterday the US is on track to hit the debt ceiling by the end of the year, which adds another element of uncertainty to the market. We also have a slew of economic data on tap this morning with jobless claims, home sales, and consumer confidence.

The market remained weak yesterday with the S&P breaking below its mini two-day pivot. Volume was very light yesterday, though, and futures are firming up a bit this morning as Washington resumes fiscal cliff talks in earnest. With the clock ticking down on 2012, there should be urgency from lawmakers to get a deal done, but with our polarized electorate, anything is possible.

Apple (NASDAQ:AAPL) is opening higher this morning, but remains choppy and heavy. Use yesterday's high and low as your short-term pivot. Key support is $510.24, as long as we hold above there and bounce bulls could try to make a case that higher lows are being put in place.

LinkedIn (NASDAQ:LNKD) saw a push-through failure yesterday that may slow momentum into the end of the year. The stock is still the cream of the social media crop and is holding above all major moving averages. If LNKD can get back above yesterday's high, it will be "no harm, no foul" on the breakout failure.

Amazon (NASDAQ:AMZN) has been methodically trending higher, not necessarily creating explosive action areas for active traders but rewarding swing traders and macro investors. However, following the weak holiday sales figures yesterday, the stock plunged through upper level stops. The key support level to watch now is $246.65.

We continue to see some lower level stocks ignite as potential "January effect" type plays. Baidu (NASDAQ:BIDU) has a bearish-looking macro chart, but ignited out of a lower base yesterday before closing just back below the pivot. See if BIDU can continue to squeeze shorts today.

Research In Motion (NASDAQ:RIMM) had been bouncing well from lower levels until late last week, when weak earnings sent the stock down 20%. However, after some follow-through weakness in Monday's half-session RIMM bounced strongly yesterday, finishing up more than 11%. See if the stock can now reclaim last Friday's high and the 21-day moving average. BlackBerry 10 is being released in January.

The banks remain a source of strength in this market, and are holding us up despite weakness in AAPL. Bank of America (NYSE:BAC) extended higher again yesterday, but now it is difficult to add to longs after the recent move. JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) are lagging the sector, but could play some catch-up.

Among the precious metals, gold (NYSE:GLD) is a little stronger than silver (NYSE:SLV), which sits precariously on an island after recent weakness. The metals are explosive movers, so be wary that a break of key support levels could lead to much deeper retracements.



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Scott Redler is long BAC, WFC, FB, YHOO, TASR, RIMM. Short SPY.
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