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Minyanville's T3 Daily Recap: Market Wedging Ahead of Options Expiration, Important Weekend in Europe


Technically, after yesterday's somewhat concerning sell-off, today's action was very positive for the market.

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The back and forth action continues. Today the market opened slightly higher, sold off until noon ET and then bounced impressively the rest of the day. The S&P finished up 0.5%. News out of Europe continues to drive the action. Early weakness was due to reports that France and Germany remained at odds over how to increase the firepower of the European Financial Stability Fund (EFSF), and the midday bounce came after news that German Chancellor Angela Merkel and French President Nicolas Sarkozy would meet Saturday in Brussels to try to come to an aid agreement. The fund isn't seen as big enough to rescue Italy and Spain if the sovereign debt crisis reaches that stage.

Technically, after yesterday's somewhat concerning sell-off, today's action was very positive for the market. We never challenged Tuesday's low and are simply consolidating in front of the 100-day moving average until a bit more clarity emerges from Europe. It will likely take more than rumors and unconfirmed reports to push the S&P above that major level, which would coincide with a break out of the multi-month range. We have also seen the up days carry higher volume than down days this week, which has been rare over the past few months and is something to take note of. There has been two-way action for active traders, so in today's newsletter we will highlight mostly long set-ups, but also point out a few areas of weakness as well.

*Keep in mind that options expiration is tomorrow, which could bring some peculiar action and possible pinning. The big events from Europe will take place over the weekend, so tomorrow could be very quiet and hard to trade.

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Marc Sperling is long POT, BIDU, GS, GOOG
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