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Minyanville's T3 Morning Market Call: Absence of Greek Debt Deal Weighs on Market


Last week European officials expressed optimism that resolution was imminent, but there are still major hurdles to overcome as another deadline passes.

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US stock futures are lower Monday morning in the absence of a Greek debt deal. Last week European officials expressed optimism that resolution was imminent, but there are still major hurdles to overcome as another deadline passes. Greek politicians are hesitant to impose another round of harsh austerity measures, and Greeks are set for more major labor strikes this week in response to the proposed cuts. Futures are off overnight lows, but talk of a messy default will likely loom large this week until a deal gets done.

While the Greece situation can be considered the catalyst for this morning's lower open, a pullback would also be natural after a strong run in the market to start 2012. Friday's jobs number sent stocks to multi-month highs before the open, and they held that gap. The market remains in an accelerated uptrend that began on December 20, 2011. With no US economic data on tap, investors will likely be focusing on the Greece situation.

On the corporate front, Humana (HUM) is set for a lower open despite reporting an 86% rise in fourth quarter earnings and raising full-year EPS estimates.

Technical Take

Each time we've stair-stepped into a new S&P area, we seem to build a three- to seven-day floor to then continue off of it. Until this trend changes, there is no need to fight it. It's always good to trim some winners into excitement and put on some hedges like we saw in Friday's action. You want to be in a position to manage positions into soft openings like we have this morning.

The gap from Friday starts at $133.77 in the SPY. It will be important to see how much of Friday's gap holds, for composure and speed. The January 26 high was $133.40 with the gap being filled down to $133.02. The 10-day moving average is $132.17.


Apple (AAPL) has been a great macro hold-cash flow vehicle. The stock is still on the move with some light volume; I would like to see some type of extension. Perhaps above $460 and it gets going. Use a tier system to manage this one.

Google (GOOG) was a nice target buy around the 200-day MA for longer-term traders, and for momentum traders it was frisky into its earnings gap above $591. It still has room to fill more of the gap. Some bigger resistance comes in around $605-614. (AMZN) after earnings has been a straight up ride off the $170-173 support zone. It traded into the earnings gap Friday. Some negative news in Barron's could put a lid on it.

Netflix (NFLX) is taking a break and holding in well. I will look to see if it can go positive today. Perhaps it goes again if it can get through $127.50-129.50.

LinkedIn (LNKD) is on the move and looks like it can continue higher if it can trade through $80.50-81.50 for a move to $90 area.

Groupon (GRPN) can use a rest after our targeted move from $20.50-$24ish.

Zynga (ZNGA) -- frisky vehicle last week that can also use a break.

Pandora (P) -- some IPOs are acting better, maybe this one plays catch-up as I see a decent pivot to buy around $14. (CRM) woke up Friday and broke its downtrend.

Microsoft (MSFT) -- my surprise Mega Cap this year is over $30 and has been tradable.

Cisco Systems (CSCO) has earnings this week, so after a big move, you might want to take some caution.

Take a look at gold (GLD) and its potent down move Friday. It engulfed six days with no bounce. This is what I mean when you get a short-term complexion change. That was the type of day to switch gears or at least take a step back. If you rode the long side from the Fed day igniting bar, Friday was the first sign to pull some back. Improving economic data, especially Friday's great jobs report, hurts the argument and likelihood for QE3.

Until we see a day like that in equities, where we get a potent down day with no buying off the "important floor," stay the course, but don't fall asleep behind the wheel. I know we've been bleeding with some small hedges, but this is prudent as we try and hold multiple positions as we move forward. There still is headline risk out there.

The Shippers got some attention on Friday. I know it's a fundamentally poor group, but some volume came in. Perhaps we get a cash flow long off the bottom here.

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Scott Redler is long SPY, OIH, SLB, LULU, WMT, JPM, AIG, AAPL, LNKD, VMW, P, DRYS, DNDN calls, VXX. Short DIA.
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