Day Trading & Forex Forum

carleygarner

September 12th, 2008


Quadruple witching and Lehman news looming....



Overall, trade was mixed on Wall Street as investors are trying to digest this morning's week retail sales data and the potential Lehman buyout. Luckily for the bulls, gains in utilities, materials and energy stocks helped to offset turmoil in the financials.



As Lehman officials are scurrying to line up a buyer or a source of liquidity, the market is battering shares of the firm. After falling over 40% on Thursday, shares experienced another double digit loss on a percentage basis. The market seems to be of the opinion that the number 4 investment bank in the country will have found a "deal" over the weekend. However, at this point it is all speculation as Lehman and the government are being relatively tight lipped.



Whether or not the market gets a boost from news of a Lehman deal is yet to be seen, but it is possible that investors will be asking "who's next" before getting to excited We now know that the relief rally following the Bear Stearns "bail out" didn't last.



In economic news, the largest drop in prices at the wholesale level (Producer Price Index) wasn't enough to entice retail buying. According to the Labor Department, whole sale prices dropped .9% last month. Much of the drop can be attributed to lower energy costs.



Some were hoping that lower energy costs would lead to looser wallets at our shopping malls. On the contrary, the Commerce Department reported that retail sales dipped .3% in the month of August.



It is Friday and I am exhausted...sorry so brief. Have a great weekend!







Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.








S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade -





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.






Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading





Position Trade -





September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.







Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.







NASDAQ Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading



Swing Trade -



Buy 1 December Mini NASDAQ at 1715



Position Trade -





August 1 - If you took our advice, you would be long the September e-mini NASDAQ 1670 puts for about 20 points or $400.





August 12 - Not off to a great start, but things may begin to look better from here.





September 4 - These may come back to life!





September 5 - Place an order to sell this put for 20 or better in an attempt to get your money back...








There is substantial risk of loss in trading futures and options.



Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

I do remember you mentioning 1700, good call.

Thanks for your encouragement. I was impressed with the integrity of this forum and am always looking to communicate with those that share an interest in the markets .

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

September 15th, 2008


Fannie, Freddie, Lehman, Merrill Lynch, AIG...I don't know how much more the market can take.


Believe it or not, today was considered by many to be a victory given the circumstances. In case you haven't already heard, Lehman Brothers filed for bankruptcy last night to squash all optimistic rumors regarding a happy ending. Friday's trade seemed to look like a market expecting a Lehman buyout or bailout, in the absence of neither stocks were left little buying interest on the open of trade Sunday afternoon. Most of the indices suffered losses of about 3%.



Perhaps the losses were somewhat mitigated as Wall Street sighed in relief over a forced sale of Merrill Lynch to Bank of America. B of A purchased the struggling investment firm for $50 billion in stock. However, the market immediately turned its head to AIG. American International Group Inc. is asking the Federal Reserve for emergency funding and plans to undergo a major restructuring. The news left butterflies in the stomachs of stock market bulls.



The selling was widespread and global. Many Asian markets were closed for a holiday, but Brittain's FTSE 100 fell over 3%, the German DAX fell nearly 3% and France's CAC-40 fell almost 4%. Both the Bank of England and the Swiss central bank made short term credit available to banks in an attempt to calm the markets.



While the markets were hopeful that the demise of Bear Sterns earlier this year would be the climax of the credit crisis, we now know that it was only the beginning. Nonetheless, the market began pricing in the implications of the crisis well before the brunt of the issues were ever felt. The forward looking nature of Wall Street may result in a market recovery prior to the credit markets regaining their health.



There is a lot of money on the sidelines and investors don't want to be left out of the long awaited equity rally. Once mutual funds and individuals finally begin putting their money to work in riskier asset classes, such as U.S. equities, the rally could be tremendous. The timing of it all and the magnitude of the current decline are in question, but I strongly believe that the outcome will eventually be positive for the domestic equity markets. After all, it doesn't pay to bet against history in the long run.



A wise trader said of today, "it is better to be a spectator than a speculator". The markets are treacherous and those without proper risk capital or the willingness to face the consequences should wait for calmer waters.





Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.







S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade -





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.

· Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading





Position Trade -









September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.



· September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.







Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.







NASDAQ Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading



Swing Trade -



Buy 1 December Mini NASDAQ at 1705



Position Trade -





August 1 - If you took our advice, you would be long the September e-mini NASDAQ 1670 puts for about 20 points or $400.





August 12 - Not off to a great start, but things may begin to look better from here.





September 4 - These may come back to life!





September 5 - Place an order to sell this put for 20 or better in an attempt to get your money back...









There is substantial risk of loss in trading futures and options.



Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

September 16th, 2008


Sometimes when things look the worst, stocks begin to look good.


It has been a dismal 48 hours for equities at best. Market valuations reached levels near the July lows and market confidence seems to be even lower. The average investor has become frustrated with Wall Street and it shows. Unfortunately, this is exactly what the bulls need in order to pick up the pieces.



Much of the trading session was spent awaiting the Fed's interest rate decision. Unlike most meetings, analysts and investors were up in arms as to what the Fed may or may not do. Half were calling for a dramatic rate cut and the other half looking for another pause. After what was likely one of the most controversial FOMC meetings during Bernanke's reign, the Fed opted for another pause.



According to the Fed, there are "growing strains" in the financial markets and ongoing weakening in the labor markets. However, they expect that previous policy moves should begin to foster moderate economic growth over time. If you recall, the Fed has cut rates by 3.25% throughout the past year to leave the current Fed Funds rate at 2%.



The market's initial reaction to the failure of the Fed to act was negatively biased. However, as the implications of the decision sunk in investors began to see shreds of optimism. After all, the fact that the Fed isn't in "panic" mode does provide some confidence in the system. Whether this light at the end of the tunnel will translate into investor confidence in equities is yet to be seen, however it seems realistic that a large short covering bounce is looming.



Also offering minor comfort, there are reports that the Federal Reserve is considering extending a loan package to struggling insurer AIG. The source was listed as an unidentified person familiar with the negotiations, so the credibility is in question. Unable to gain financing in the private sector due to ratings downgrades, the firm may be forced to file for bankruptcy in the absence of government intervention.



If you follow this report, you may remember us looking for a sharp move lower in the indices. I mentioned the potential for 10,600 and 1182 in the S&P, while the market overshot one target and didn't quite make it to the other, it seems as though a reversal could be near. I hate to try to pick a bottom, but I think that we may have seen the lows, at least for now. There is potential for a sharp short covering rally in the S&P to 1260. The Dow may see levels as high as 11,381.







Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.







S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade -





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.

· Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading





Position Trade -









September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.



· September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.







Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.







NASDAQ Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading



Swing Trade -



September 16 - If you followed our recommendation, you would be long 1 mini NASDAQ from 1705.



Position Trade -





August 1 - If you took our advice, you would be long the September e-mini NASDAQ 1670 puts for about 20 points or $400.





August 12 - Not off to a great start, but things may begin to look better from here.





September 4 - These may come back to life!





September 5 - Place an order to sell this put for 20 or better in an attempt to get your money back...








There is substantial risk of loss in trading futures and options.





Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

That is a great question

Unfortunately, you never know how a market is going to react to fundamental news or technical trade, all we can do is make an educated guess. This is why I prefer to trade options and option spreads. Doing so allows for some room for error. I know that I am never going to be perfect in timing, so the strategy has to be robust.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

September 17th, 2008


Misery and despair is in the air, the reversal may be near...


You know that a big "bear market bounce" is looming when you dread getting out of bed out of fear of what equity futures may have done in the overnight session. I have been in this situation before, and will likely be in this situation again. History suggests that the equity markets need despair in order to find a bottom and judging by the press coverage and my own personal fatigue we will find a low shortly. For those caught on the wrong side of this move, it is important that you mitigate your risk to a manageable level. Being here to trade another day should be your priority.



Wall Street is in the midst of a credit crisis, but perhaps having more impact on the market is the "confidence crisis". The equity markets are based on trust, but investors are likely feeling lost in that large reputable firms that have been reassuring investors that they are financially sound are dropping like flies.



The result? The price of gold soared nearly $100 per ounce, Treasuries rallied from already lofty levels on a flight to quality and investors seemed to be pulling money from the stock market in droves. Bill Stone, chief investment strategist for PNC Wealth Management commented on the day. "People are scared to death." He added, "Who would have imagined that AIG would have gotten into this position?"



Not only are investors questioning the system, but they are questioning their trading models, and the "rules" of finance that were once believed to be carved into stone. This is something that cannot be fixed overnight, but the U.S. financial markets have survived similar debacles and Wall Street knows it. The difficulty will be in getting them, and others, to remember.



Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!



If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.

Each of these trades profit if the market goes down, they can be used to hedge bullish strategies or free standing if you are a bear. Have fun!







Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.







S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade -





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.

· Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading





Position Trade -









September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.



· September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.







Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.





NASDAQ Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading



Swing Trade -



September 16 - If you followed our recommendation, you would be long 1 mini NASDAQ from 1705.



Position Trade -





August 1 - If you took our advice, you would be long the September e-mini NASDAQ 1670 puts for about 20 points or $400.





August 12 - Not off to a great start, but things may begin to look better from here.





September 4 - These may come back to life!





September 5 - Place an order to sell this put for 20 or better in an attempt to get your money back...





September 17 - You certainly would have gotten your money back, if you saw this coming you may have even made a small fortune.








There is substantial risk of loss in trading futures and options.



Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

Hi Nine,

I appreciate all feedback, even from those that didn't take the time to review my post in its entirety. You will find trade recommendtations along with the dates in which they were made at the bottom of each post. Trade adjustments are also noted by date for all of the world to see, regardless of the results. I have just recently begun posting in this forum, but do post content on several sites. If you look at archived reports, the recommendations are given in real time and the "proof is in the posts".

I am a broket and make a living through commission. Only my clients are provided with more detailed information. However, I think that you will find my daily newsletters to offer more honesty, education and valid guidance than you will find with any other free service.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker

carleygarner

September 18th, 2008

Bailout and liquidity injection rumors capped Treasuries until Fed saved the day.

Many of the inter-market relationships that traders would normally rely on have completely lost meaning. Gold and treasuries used to share a positive correlation, but in recent month have become seemingly unrelated. Likewise, the Treasury bulls that bought fixed income securities and justified their purchase by the spring and early summer crude rally, refused to reverse course as energy dropped. With an abundance of confusion in financial arena, there is even more market volatility making speculation even more difficult than ever before.

Equity trade is dominating Treasury trade, but the negative correlation between these markets has faded. This often happens during times of elevated volatility on Wall Street. Bond traders aren't necessarily interested in keeping up with the whipsaw.

Insiders have noted that the market may simply be "too long". If all of the bulls are in (and the bears are out) there is nobody left to buy. That seems to be the largest obstacle to further gains.

Near the close of trade, the government announced that they may be creating an entity to hold banks' bad debt. The concept is similar to the Resolution Trust Corporation that was set up in the late 1980's and early 1990's. If you are interested in learning more:

http://www.fdic.gov/bank/analytical/...l/article2.pdf.

Until late this afternoon, attempts by the Fed to calm the nerves of investors seem to be doing just the opposite. Liquidity injections, the AIG loan package and rumors of a surprise inter-meeting rate cut all seem to have worked in favor of the bond bid as investors are worried about what may be on the horizon. After all, if the Fed was comfortable with the cards that have been dealt they would likely be less proactive by letting the "free market" work things out on its own.


Statistically, the long bond is trading well beyond two standard deviations from its 20 week moving average (even after today's selling). Under normal circumstances this would be considered a great opportunity to get short and overbought market, but there is nothing normal about this week. I suggest that if you are short calls in multiples, or futures, you look to mitigate your risk by offsetting positions on dips. Doing so will reduce your exposure should the market make another attempt at the highs but also provides potential for profit (or maybe regaining what was lost on the way up) should the market come back to earth. I am here for intraday guidance, contact me.





Treasury Option Trading Recommendations
**There is unlimited risk in naked option selling.

September 11 - This is a bit of a long shot, but certainly not out of the question should the volatility pick up in the next few trading days. Sell the October 124 calls for 20 ticks or better.

• September 15 - This order would have been filled in the overnight session, look to buy it back on a correction to 118'10 if we see it....preferably below 7 ticks. Contact me for guidance.


Treasury Futures Trading Recommendations
**There is unlimited risk in trading futures.

September 15 - Clients were advised to sell the 5 year note and purchase October 114 calls against the position. This morning, it was possible to sell the 5 year note for 113'29 and buy the 114 call for 51 ticks or $796.88. The maximum risk on the trade is $890.63, but the profit potential is unlimited. We are hoping for a quick move to the mid-112 area to take a profit on the futures and hold on to the long call option.





There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

__________________
Carley Garner

Senior Market Analyst/Stocks & Commodities Columnist/Broker