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Minyanville's T3 Morning Market Call: Greek Debt Anxiety, Profit-Taking Weigh on Futures


The latest talks to resolve the Greek debt crisis hit another stumbling block, and some overseas markets are pulling off more than 1% this morning.

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US stock futures point to a lower open Tuesday after a five-day winning streak for the S&P. Volume has been light in the up-move and yesterday the index rallied late to post a marginal gain, but today is the first sign of some real anxiety across the pond.

The latest talks to resolve the Greek debt crisis hit another stumbling block, and some overseas markets are pulling off more than 1% this morning. Euro finance ministers rejected the "final" offer from Greece's private creditors, which many expected, increasing the threat of a disorderly Greek default.

This morning's pull-in could also be a bit of profit taking after a strong start to 2012, the strongest since 1987 for the S&P (ominous sign?). A few sectors put in topping tails yesterday, especially the financials which have led the rally after earnings from several banks. Goldman Sachs (GS) looks especially toppy after trading through Friday's high and then back below into the close.

Investors will also be watching the two-day Fed meeting closely, although a recent improvement in US data would seem to tie the hands of the FOMC. The markets are starving for hints about more future quantitative easing, and the Fed has made a habit of disappointing ever since the end of QE2.

While there is a series of high-profile earnings reports today, the most notable is of course Apple (AAPL). The tech giant, with a market cap that exceeds the GDP of the Greek economy, announced its first EPS miss in 12 quarters in its last report and will be looking to redeem itself. IPhone sales are expected to be blockbuster after consumers waited for the release of the company's latest handset, which turned out to be the iPhone 4S. A strong run for Apple in 2012 would seem to foreshadow a strong earnings report.

Technical Take

Some overseas markets are pulling off 1%+ from monthly highs. There is no deal in Greece yet, and there is some anxiety over the two-day Fed meeting, all combining to cause the futures to take a breather this morning. A rest or pullback would be welcomed by most on the Street as this type of slow, methodical, low-volatility move has traders a bit on edge.

I see two uptrends to watch. The first started on the October 4 reversal low and then put in a series of higher lows that held important Fibonacci levels during each correction that has created a nice gradual trend for macro dip buyers.

I also see a more accelerated uptrend that started in late December 2011 that increased the slope of the rally, and has yet to be breached. We have been riding this one since the beginning of the year and will watch to see if it breaks and gives a move back to make a higher low in the more gradual longer-term trend of this market.

I will use the SPY to talk about the important areas that should be evaluated a bit closer. SPY $130.80 has been the three-day floor. A 60-minute close below this area opens the door for more downside action today. The markets can see $129.70-129.95, even today perhaps, but momentum traders would like to see this area hold. A daily close below the $129.70-129.95 would put the accelerated uptrend in jeopardy.

A daily close below that area opens the door for a test of the 21-day moving average, which stands around $128-128.20. That spot would be a gut check for midterm market participants. The macro line in the sand, which would be the macro higher low and the potential retest of the wedge break out, stands around $125.90-126.50.

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Scott Redler is long SPY, OIH, XLF, X, LULU, CROX, WMT, VXX. Short DIA, SHLD.
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