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Minyanville's T3 Morning Market Call: Futures Follow European Gains After Decent Spanish Bond Auction


This is a time to stay with your macro/longer term ideas, and not get overly scared.

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European stocks rose for the third day in four as Spain's auction saw decent, but not great, demand. At this point it appears all we need is decent rather than drastic news out of Europe and our markets will respond well. Yesterday we saw some very specific stock action, but markets did hold at least half of Tuesday's gains, which is constructive.

We had some more earnings out last night. eBay (EBAY), VMware (VMW), and Halliburton (HAL) are all responding well, while Qualcomm (QCOM) is on the opposite end of the spectrum. We've had more strong reports this morning from financials, with Bank of America (BAC) and Morgan Stanley (MS) adding around 4-6% each. That's the way it's been through this earnings cycle -- very stock-specific results.

Earlier in the morning futures were up six to nine handles in front of US claims and some other data, but we have pared most of those gains. At this stage Nasdaq (^IXIC) is around 3% off the highs and the S&P 500 (^GSPC) around 2%. We've seen very tradable action, not a devastating correction as of yet.

I do think today is a bit important. Can we open up above recent resistance and hold? Or do they sell this up open (although it has weakened)?

S&P resistance is 1390-1392, then 1397-1402. I do see a mini rising channel within the overall macro pattern, but as long as we keep making higher lows, you should not try and fight the tape. I hear lots of opinions out there, and that's what they are -- opinions. They have no place in trading. You should trade based on the price action alone, taking necessary hedges when the situation requests it.

I would use 1370 as an important line in the sand. If we break that or close below it, I would get more bearish/short for a retest of the 1357 low. The major support zone is 1320-1340.

The Nasdaq ETF (QQQ) held the 50-day and has a nice descending channel in place, typically a bullish formation. It will be interesting to see how it plays out. It was above in the pre-market earlier; let's see if we see 60-minute commitment as well as a daily close above $67-$67.25. That action would be another feather in the bulls' cap.

This is a time to stay with your macro/longer term ideas, and not get overly scared. If you're an intermediate trend/momentum trader, there is more than enough action from both the long and short side that you don't need to risk much to make money.

Example: Shorting Apple (AAPL) below $620-622 as it plunged 40 points, you could have made nice cash flow to the downside. Same goes for buying it on the reversal strategy around $578, as it then bounced almost 40 points. Both trades were covered in detail on the T3Live Virtual Trading Floor, the long by me and the short by Evan Lazarus. There is something for everyone -- pick your spots.

Know your time frame and risk. Since being back from the Boston Marathon, I'm maintaining a short-term approach both long and short for cash flow. I'm not ready to re-commit to a portfolio approach which did well for us from December 22 through mid-March!

Check out's Virtual Trading Floor to follow these traders and their live portfolios on real-time throughout the day! Take a free trial.
Scott Redler is long DNKN.
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