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Minyanville's T3 Morning Market Call: President Obama Returns From Hawaii to Work on Fiscal Cliff Band-Aid


While signs are not encouraging for a budget deal, volume and volatility could remain light through the end of the holiday-shortened week.

The first headline I see today is that US holiday sales growth is the weakest since 2008. US could head into recession as we head over the cliff. Obamacare tax hikes may just be getting started! And so on, and so on.

The financials remain a source of strength in the market and are helping the indices remain intact. The bank stocks that have underperformed for much of the last few years are now leading: Bank of America (NYSE:BAC) and Citigroup (NYSE:C). The former sector leaders - JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) - are lagging a bit but look like they could have more upside. Credit card companies Mastercard (NYSE:MA) and Visa (NYSE:V) were two of the strongest big cap stocks in the market in 2012, and there is no reason to believe that won't continue next year.

Apple (NASDAQ:AAPL) still has a lot to prove after its recent weakness. If $510.24 holds, perhaps bulls can make the case that we are seeing higher lows, but the stock still feels decidedly heavy. Let's see if holiday sales numbers for the company impress enough to give it a boost, or will they regret the introduction of the iPad mini.

Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) are more compelling longs right now, in my opinion. Amazon has been trending higher, but may need some rest before its next breakout. Still, with some patience the stock looks poised for a strong 2013. Google had a roller coaster year, but looks to be repairing its chart well.

Overall, traders view the current environment as having unfavorable risk-reward parameters. If you choose to actively trade during this holiday period, we believe it is best to be extremely selective, pare down size of trades, and perhaps have shorter holding periods. In choppy, headline driven environments, we feel you need to have either a long-term or ultra short-term perspective.

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