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Equity futures look strong

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Equity futures are looking strong this morning with S&P futures higher by 22 points, NASDAQ futures are up 42 and Dow futures are pushing higher by 137. Fair value for the S&P 500 is $8.12 and that price will not change during the session. Computer buy programs are set for buying at $10.10 and set for selling at $5.84.

Covering at the open

Subscribers of PremierMarkets know that I'm short to securities this morning and with equity futures looking higher, I'll be taking my lumps in the QQQs and shares of Read-Rite (NASDAQ:RDRT) RDRT as they are most likely to trigger my stops. Yesterday's high in the QQQs was $35.81 and my stop is placed just above that level at $35.85. My stop on RDRT is just above a recent 2-day high of $7.25, but I'm very willing to take the offer here in the pre-market at $7.10 and take a $0.04 loss per share on my entire position (which was 1/2 of what we normally short in a full position). We will let the QQQ trade play out and run its course.

Emulex Warns, but stock trades higher

Shares of Emulex (NASDAQ:EMLX) lowered its fiscal third quarter guidance due to a continuation of the downturn in storage network demand. EMLX said it expects to report revenue of $59-$60 million, down 15% from the sequential second quarter. Earnings for the period will be about 13 cents per share, compare with the average estimate of analysts polled by First Call of 19 cents. Shares of EMLX finished yesterday's trading at $12.50, but we are currently seeing trades take place in pre-market trading at $14.

Buy near support!

Traders that are looking long this morning should be looking to buy stocks that are near support. "Support" is a rather broad term for some traders so I'll try and define it here. I'm looking for stocks that have an upward trend in place and the distance from the attachment point is more than 2-hours old. One example might be shares of Wal Mart Stores (NYSE:WMT). It's upward trend on a 60-minute chart is about 7-hours old, but does offer a bullish trader an opportunity to be buying a stock that has recently broken a downward trend at $49.50 and can be bought with a stop just below upward trend at $48.50.

Jeff Bailey
Senior Market Technician

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