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Market Retests Broken Intermediate-Term Trendline Ahead of Jobs Report (Morning Call)

Scott Redler
Feb 7, 2014, 10:15 AM

There are green arrows around the world this morning as the market continues its snap-back. Europe is holding yesterday's gains and up small while the Nikkei gets a 2.1% bounce (but that doesn't mean much yet).

S&P futures were up 4-5 handles prior to the all-important non-farm payroll number. The number was expected to come in at 150,000-175,000 (some consensus estimates were even at 190,000) job adds for January, but instead the number came in light for the second straight month at 113,000. Stock futures have reversed and are down 7-8 handles as Gold and treasurys surge. At least bad news can be interpreted as bad news for stocks and things are a little bit more straight forward for traders.

We are now on Day #3 since the Red Dog Reversal Tuesday morning at 1740ish. Now we are a bit above the intermediate trend line at 1770ish. Let's see what today brings. Most participants don't know if "that was it" or whether this is just an oversold snapback to be sold. If the bears want lower prices they probably don't want to let the bulls reclaim 1798-1808 (which most would already be in a pain trade).

The best set-up, in my opinion, would be a bit of a retracement, make a higher low and then allow us to scoop up some favorite names. Holding 1755ish would be best.

Apple (AAPL) should be in focus today after news that the company has been undertaking a $14 billion share buyback since its recent earnings report. The stock is up 1.42% this morning due to the revelation, which is sure to please share repurchase advocate Carl Icahn.

We have seen some wild volatility in individual names. Twitter (TWTR) fell 24% yesterday after its lackluster earnings report, while Green Mountain Coffee (GMCR) finished up 26% on news that Coca-Cola (KO) is taking a 10% stake. 3-D printers have been whacked. A macro pattern to watch after a 12+% move yesterday is iRobot (IRBT). If you are looking for short-term opportunities there are a host of recent big movers you could look at.

Keep working to find the relative strength as this correction has been a good chance to separate the haves from the have nots.

Last Updated ( Friday, 07 February 2014 11:00 )