Futures are pointing to a much weaker open after Friday’s disappointing jobs info. But, the market’s composure already changed well before that “Good Friday Release”. Making it a bad holiday weekend for some, and for others an exciting time to embrace a correction that can provide endless opportunities for those not caught. Market went from “rally under pressure” two weeks ago (time to lighten up), to “Market in Correction” (another opportunity to sell or short) last Wednesday.
Now everyone is asking How Deep can we go? This weekend was full of Predictions from everyone across the map. From buy Monday and that will be the correction, to those calling for S&P 1100. At this point no one “really” knows. But if you handled yourself well in the last few weeks, you don’t have to. All you need is an organized plan in front of you with levels and “if then” scenarios. How do we handle certain technical levels, combined with action of leaders and the current news flow at the time. We Have earnings season starting soon, and we will have China GDP Friday and more rumblings out of Europe to deal with. It will be an interesting week.
I will say during the next two sessions. I think the probabilities are high, that Covering shorts and trading long in certain spots for cash flow will be a bit more prudent than selling equities and initiating shorts into this 1370-1375 S&P area. But that doesn’t mean we can’t see 1340 in the next month or so. But we need to cross each bridge as we get there. It all depends on your time frame and risk tolerance.
Many leaders went out on their highs late last week. We need to see how they handle themselves in the next few sessions, which will also give us clues to how deep or shallow this correction goes. (AAPL, BIDU, PCLN, LVS, MA, V, LULU etc.)
Last week the banks gave us clues that more weakness was coming as we sent out notes to sell banks once JPM lost its’ 10day on April 3rd in the $45.50 area. It you sold then, you have the luxury of testing it long on today open perhaps in the $42.90-$43.40 big support zone. It gave a small opportunity to do the same on Friday. (test levels vs. levels for cash flow until we get more data)
Commodities have been the weakest groups for months. They most likely are not the group to look to for that much opportunity.
Today we will need to see if anything goes green and can lead us off the lows. Can Leaders that avoided last weeks, weakness continue that trend.
Do we pause here for a cute bounce for cash flow, or does this 15 handle open turn into a down 30day. Have a plan and wait for the market to confirm it.
Look to my Morning call- I will go in more depth- as well as on my Price Point sheet ( You can see specific stocks with specific levels).
Disclosure: Scott Redler is long LVS DNKN JPM RENN. Short SPY.