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Minyanville's T3 Morning Market Call: Futures Erase Afternoon Bounce as Fiscal Cliff Looms


This is not the type of action that traders want to see during the final few days of the year.

Netflix (NASDAQ:NFLX) held its 21-day moving average yesterday and is in a controlled mini-descending channel. It's another laggard stock that could benefit from the January effect. This is another name to watch if the market firms up, in my opinion.

The precious metals showed some life yesterday. Watch to see if that continues today with gold (NYSEARCA:GLD) and silver (NYSEARCA:SLV). Oil (NYSEARCA:USO) is also bouncing after a tough year overall.

This is not the type of action that traders want to see during the final few days of the year. S&P futures are down about 10-11 handles, erasing almost all of yesterday afternoon's rally that was triggered by news that the House will reconvene Sunday. Some shorts are probably frustrated about getting squeezed yesterday, and anyone who dabbled with longs yesterday thinking the afternoon rally would relieve some pressure are also stuck. At this point, there has been plenty of technical damage over the past few days that would warrant less risk and a more wait-and-see approach.

Over the past few sessions I have been stopped out of a few of my trailers, going from as many as eight long positions down to three now with a SPY hedge, as stocks have started to give up their intermediate support levels. Depending on the outcome of the fiscal cliff, this is the type of action we could see for the first couple weeks of 2013, too.

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Scott Redler is long AAPL, BAC, YHOO. Short SPY.
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