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The T3 Morning Market Call: Futures Green to Start Q3

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Are the summer lows in?

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The Minyanville - T3Live Morning Market Call is brought to you by T3Live.com. 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©. Learn more.

Chinese markets are responding positively to last night's mixed PMI data, despite the fact that there are ongoing concerns about the legitimacy of the country's economic data. Japan is having another nice day; buying the dip on that 20% pullback would have proven to be a great opportunity.

S&P (INDEXSP:.INX) futures are up 7-9 handles this morning at a pretty interesting spot. Last week we got our "window dressing" bounce back from 1560 up to retest the 50-day MA & broken trend line around 1620ish. With the second quarter in the bag now behind us, will the buying interest continue this week. In the first few days of a quarter, managers often have funds to allocate, so it will be interesting if they use it here.

I'm going to continue to approach this market tactically and treat this area carefully. Friday we put a low in at 1601, which is a spot to potentially make adjustments you are a short-term trader. If we fail to hold this level, there is a bigger area that needs to hold at 1587-1592. Beyond that, we have the 100-day at 1582ish with the pivot low at 1560. We have resistance at 1615-1620, and if we get a 30/60 minute close, or especially a daily one, above that level, shorts will have to make some tough choices. After that there is a gap to be filled up to 1628 with a truly hefty line in the sand around 1640ish.

The metals provided opportunity on Friday as we stated there could be enough "blood on the streets" to look for a calculated long entry. Early Friday, there was really nice relative strength divergence in the gold miners (NYSEARCA:GDX) and silver (NYSEARCA:SLV) to cue entries for traders. Both ETFs filled the recent capitulation gaps and posted around 5% gains going into the weekend. Gold (NYSEARCA:GLD) did lag a bit and then played some catch up midday. All of them are getting a bit of follow-through this morning. Trim and trail, but keep some as this could be an intermediate-term bottom.

Let's look at some sectors and some high beta names for opportunities.

First, we will check temperature of the sectors heading into July.

The Financial Sector ETF (NYSEARCA:XLF) saw a strong snap back after bouncing off the 100-day at $18.60. The ETF already reclaimed its 8- and 21-day moving average on Thursday and saw a healthy rest above its 50-day on Friday. Some work above $19-19.22 would be constructive to keep its bullish momentum intact.

The Retail ETF (NYSEARCA:RTH) also showed strong resilience after holding up well above the 100-day last week. RTH is already back above its 8- and 21-day and resting nicely above its 50-day moving average. If it continues to find support along this key moving average, we could see a move back to highs at $53.44.

The Homebuilders ETF (NYSEARCA:XHB) got hit hard during the market's pull-back and saw a retest of the 200-day MA, where it held. Then it saw a small bounce last week which brought it back to the 100-day at $29.84. Holding higher above $28.80ish would be constructive for some continuation to the upside to reclaim the 100-day as this is the first obstacle on its way up.

The Consumer Staples ETF (NYSEARCA:XLP) is a bit weaker as it put in a series of lower lows and lower highs so far. Although it has poked its head back above the 100-day at $39.85ish, it still has some overhead resistance from the 50-day at $40.80ish.

High beta tech is still a mixed bag.

Amazon (NASDAQ:AMZN), after seeing a healthy bounce off its 100-day on Monday, saw a strong move back to the upside and took its turn to show some leadership in this high beta tech group. AMZN is already back to near highs. If it can get back above $280ish, it could gain some momentum for a run at new highs.

LinkedIn (NYSE:LNKD) held up well as it put in a series of higher lows since early June. It's already back above all key moving averages after last week's snap back. Some continuation above Thursday's highs of $182.25 would keep momentum intact.

Google (NASDAQ:GOOG) has lost some steam as it was hovering around the flattening 8- and 21-day moving averages last week. It needs to get above $885 to get some momentum. Recent support has been the 50-day, which is standing at around $866.

Netflix (NASDAQ:NFLX) failed to pare some losses from the most recent sell-off as the stock couldn't break above its 50-day at $217ish and continued to trade below its 8-day. There is a bearish flag pattern in place signaling a potential break lower if it continues to get pressure from the short-term moving averages. Use the most recent pivot low of $207.56 as the new point of reference as a break below this could bring in more sellers.

Apple (NASDAQ:AAPL) traded inverse to the market again on Friday, as the stock closed in the green with 0.70% of gains. It's still trading in a downtrend since May 31's topping tail. We did see a "RedDog Reversal" around $393 after putting in a small double bottom. For this to get out of the "danger zone" it would need to reclaim and close above $402-403.

Tesla (NASDAQ:TSLA) broke above the downtrend resistance that has been in place since May 29's pivot high after the four-day rally and seeing a healthy rest above its 8-day. Holding this key short-term moving average at $104.50ish could show some commitment for a potential move back to highs at $115.

Onyx Pharma (NASDAQ:ONXX) is up big this morning and could give a lift to this group. A bidding war could supposedly develop for this name. Check out other names in this group: Regeneron (NASDAQ:REGN), Amgen (NASDAQ:AMGN), Sarepta (NASDAQ:SRPT), ACADIA (NASDAQ:ACAD), Vertex (NASDAQ:VRTX), Biogen Idec (NASDAQ:BIIB).

Interest rates have backed off a bit. The iShares Barclays 20+ Year Treasury Bond ETF (NYSEARCA:TLT) has bounce back a bit and ProShares UltraShort 20+ Year Treasury ETF (NYSEARCA:TBT has backed off. If you missed the recent move here, I think we could take a look to "buy back" around $70.80 to $71.55. The spot where you could look to re-short could be $112-114.

At this point, I think a little less is a little more. We have a lot of economic news this week with jobs report on Friday as we have a short week. Then, we have earnings season starting next week. There will be more than enough to do starting next week. Right here I'm in neutral. I do think we close the year higher than we are now, but I'm not sure if the summer lows are in.



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Scott Redler is long SLV.
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