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Minyanville's T3 Morning Market Call: Growth Jitters Weigh on Futures


Apple, Facebook, and Goldman Sachs are in the news.

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Futures are down 5-7 handles with Europe in the news as usual. Most of the same themes exist: growth slowing vs. central planning/stimulus. When will Spain/Italy ask for funds? What types of budgets are they looking at? Can Greece finally conform? Will we see more pre-announcements as expectations for this earnings season are being lowered?

It's been a big run since the June 4 low, and even bigger since since October 4. The move has been supported multiple times by the 8- and 21-day moving averages. On August 3, the rally got a bit stronger; then on September 6, most shorts started getting taken out on stretchers as the rally accelerated. On September 13, Big Ben took the markets higher once again, bringing us to the most overbought levels we've seen this year on September 14. At that point, we were about +60 on the oscillators with screaming RSI readings, which is a good time to add some hedges and sell the exuberance.

As rallies progress, you always need to measure the speed and the composure in order to manage positions. Last week, the markets digested above the 8-day moving average, but there were some flaws. The oil down move was much more potent with a small feeble bounce indicating lower prices to come. Plus the banks also acted weaker than some of the other sectors. On Friday, markets opened up and closed near the lows of the day. Another short term signal that markets needed more time to pullback/digest. Gold (NYSEARCA:GLD) opened up and basically closed near lows giving us a topping candle for short term traders to use as a "rest signal/sell signal."
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Scott Redler is long AAPL, FB, TGT, LNKD, STX, VMW, YELP, GRPN. Short SPY.
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