The Stock Index Report by Carley Garner

[carleygarner]

May 21st, 2009


Red on Wall St.


Investors quickly reverted to pessimism following yesterday's late session reversal. Overnight weakness was propelled lower by signs of continued weakness on the jobs front and a reduced credit rating outlook for Britain. According to Rick Meckler, president of investment firm Liberty View Capital Management in NY, "The outlook downgrade of the U.K. debt is being taken pretty negatively." He added, "it sets a precedent for what could start to happen to a lot of the world, given the amount of spending that's going on."

Additionally, the Philly Fed's survey of mid-Atlantic manufacturing conditions shrunk for the eighth consecutive month. And provided traders with a reminder of yesterday's noticeably less optimistic view of the economy from the standpoint of the FOMC.

Stocks and bond traded side-by-side today, which is a stray from the norm. However, it can somewhat be justified by comments made by Pimco's Bill Gross suggesting that the markets fear that the U.S. is at risk of losing its AAA credit rating.

From a technical standpoint, the equity markets are teetering on their make or break levels. This combined with holiday volume, trading is tricky and should likely be scaled back or even stopped until Tuesday.

Coming into Thursday, we were looking for a possible pullback to 889 in the S&P and possibly even 886 but didn't expect weakness into the 870's. This leaves us "on the fence" in terms of market direction from here. If I had to pick a side, I would be cautiously and slightly bullish. Today's close in the June futures at or near our critical 889 leaves tomorrow highly uncertain but we do think that an overnight or early session rally extending to 902 is probable. The pivot point in the Dow is 8,293 above it the bulls have an edge and below the bears do....sidelines seems like the only comfortable position from here.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat




*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

May 22nd, 2009



Equities lingered in light trade


Based on my conversations with industry insiders and a quick glance at volume data suggests that few traders showed up for work this morning. As we have predicted in previous newsletters, traders took the FOMC minutes release on Wednesday afternoon as their queue to begin the holiday celebrations.

Today's trade wasn't a total disaster as is sometimes the case in pre-holiday trade; news events can pave the way for dramatic light volume price moves. On the contrary, the session as a snoozer and left very few clues as to what next week may bring.

We have been calling 889 in the June S&P our "magic number" and that continues to be the case (we are ignoring today's close as trade wasn't "credible"). As long as the market can continue to hold in this area and close above it or in its vicinity, we continue to lean slightly higher in the near-term. That is not to say that we are extremely bullish, we simply feel as though the odds favor a temporary continuation of the rally should our key support levels continue to prevail. Conversely, a close considerably below 889 suggests that the next resting point will be 850. Tuesday's trade will likely be more telling as to the immediate direction of the market from here. A similar pivot number in the Dow is 8,293.

While we don't have a strong feel for the direction of the markets come Tuesday, we will be awaiting opportunities to sell premium should implied volatilities increase dramatically. This may mean a drop to 850 in the S&P or a rally to 940. Either way, we think that the move will be sharp and provide the ability to collect top dollar for out of the money premium.

Sorry so short, have a great holiday weekend!




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat



NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat




*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

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.

 

[carleygarner]

May 28th, 2009


Indecision could mean large break-out


It was a relatively action packed trading session, with plenty of trade on both sides of the market. However, in the end the bulls came out on top. The major indices seemed to find comfort in a successful 7-year note auction and Bill Gross' endorsement of U.S. Treasuries. Normally it is the equity markets that drive interest rates, but as of late it has been the other way around.

Tomorrow morning should also be action packed, the release of first quarter GDP, the Chicago PMI and Michigan Sentiment will all offer guidance to a directionless market.

The U.S. greenback and commodities such as crude oil posted gains on the day suggesting that there are still some traders speculating on an economic recovery. In theory this optimism could leak into equities tomorrow and even early next week but we are having serious doubts as to the prospects of a sustainable rally.

Equities are going nowhere fast and it is easy to see the market's frustration; price moves in recent sessions have been quick and seemingly illogical at times. In my experience, this type of trade is typically a precursor to a large move. Direction? Great question; my best guess is that we are eventually headed lower. However, bears should be careful in getting too comfortable because my charts are still pointing toward a potential run at the highs before turning over. In other words, we could see one last "sucker's" rally to lure in the last Johnny come lately before the bears are finally rewarded once again.


Again, we can't make any predictions that we are comfortable publishing. Nonetheless, we are looking at 900 in the S&P as a critical pivot and see significant resistance near 924 and support near 876. In the Dow, we think that 8,370 is the make or break point and resistance lies at 8,540 with support at 8,200. The NASDAQ is stuck in a range between 1440 and 1392, but a break of support could mean 1342 in short order.


What the Russell does from here is a coin toss, we see resistance at 511 and support near 470.






S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat






*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

May 29th, 2009

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Directionless, but it didn't last


Shrinking volatility and tight ranges in the equity index futures have left us with butterflies in our stomachs. The bulls and bears have been battling throughout May without a resolution. We have essentially watched the S&P trade in a 55 point range that was carved out early in the month. As boring as things have become, we can't help but feel as though June will be a different story. If the last 20 minutes of trade in May is any indication of things to come, we should all brace ourselves.

What seemed to be destined to be a sideways trading session ahead of a much needed weekend turned into one of the most volatile closes that we have ever witnessed. The S&P rallied nearly 20 points in the last 30 minutes of the day to trigger buy stops beginning above 910 and reaching the high 920's in the e-mini version of the contract. Other than light volume and stop running, there seems to be no logical explanation for the move.


In yesterday's commentary, we mentioned :


...this type of trade is typically a precursor to a large move. Direction? Great question; my best guess is that we are eventually headed lower. However, bears should be careful in getting too comfortable because my charts are still pointing toward a potential run at the highs before turning over. In other words, we could see one last "sucker's" rally to lure in the last Johnny come lately before the bears are finally rewarded once again.

Today's late session rally appears to be the move, or at least the beginning of the move, that we had been waiting for to become bearish. Unfortunately, it happened so quickly and unexpectedly, that selling calls (as was our original intention) was impossible. It is possible that today's seemingly illogical move may have paved the way for a move toward our key resistance near 940/950 in the S&P, so we will begin cautiously looking for bearish opportunities should the market continue moderately higher.

As it turns out, our resistance areas in each of the indices were achieved near the close of trade. However, they should still lure sellers back to the markets. Look for first resistance in the S&P near 926 with 940 within reach, 900 still offers considerable support. Dow traders should look for resistance near 8,560 and again at 8,850. Support can be found at 8,375. We think that 513 is the next stopping point for the Russell and the NASDAQ may see 1470 before turning back around.






S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat






*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

June 9th, 2009


Visit our websites to register for our upcoming FREE online seminar, Trade Like a Girl: How to Deleverage your Trading with Synthetic Options and Common Sense

Light trade favoring upside

It was a slow news day and an even slower trading day. The volume was light and so was the excitement; however, things should be heating up as the week progresses. What may end up being the most newsworthy event going into the weekend is the reopened auction of 10 and 30 year Treasuries. Without strong demand for U.S. debt, the market will begin to lose confidence in the government's ability to financed their recovery plan.

Despite giving the "ok" for 10 big banks to repay nearly $70 billion in TARP funds, the government and private analysts warn that the crisis isn't over...but most admit that there are some signs of improvement. In order to be granted permission to give the money back, they must have passed stress test devised by the Treasury. Whether or not the tests have any real bearing as to solvency and the ability to operate as a going concern is beside the point. Nonetheless, there are definite signs of improvement.

At mid-day yesterday we were bearish; however, the wild buying into the close and today's stable climb makes me feel like we may be looking higher in the near term. Perhaps a retest of Friday's highs and maybe even a bit higher are in the cards for the major indices. With that said, these are thoughts and not necessarily an encouragement to trade bullishly. We are cautiously approaching the next day or two leaning higher but with the plan of selling calls against a strong up-move. Similarly, day traders may look to buy on dips but because the market is near the upper end of the overall range, taking overly bullish stances is not recommended. Remember, in most cases...less is more!

Yesterday we were looking for 910 in the S&P, we now think that it is more likely that the market will test the 955/960 area again before trading lower. Likewise, the Dow could see 8,900 again before running into resistance. Believe it or not, the NASDAQ could see 1527 before finally trading toward our 1414 target.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

June 5th - Our clients were recommended to sell the June S&P 985 calls for $7, we were filled this morning on the spike.
• June 8th - Our clients were recommended to buy this back at $2 this morning to lock in a profit of $250 per contract (before commissions and fees) on the mini and $1,250 for those trading the big contract.


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat





*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

June 10th, 2009


Visit our websites to register for our upcoming FREE online seminar, Trade Like a Girl: How to Deleverage your Trading with Synthetic Options and Common Sense


Volatile yet unchanged


An impressive overnight rally was quickly reversed into what seemed to be the beginning of the end; sticking to the current theme the major indices gravitated toward the day's starting point.

Summer trading volume, historically significant economic news and high running emotions are all working to keep intraday volatility high in equities. At the same time, progress has been nonexistent in several sessions. Despite highs near 957 and lows in the mid-920's, today marked the 4th day in a row that the S&P has settled relatively unchanged on the session. One thing is for sure, this can't last.

The selling began with technical traders, but fundamental traders seemed to pressure the market on news of a weaker than anticipated 10-year note auction. The Treasury was able to sell $19 billion in notes but they did it at a rate of about 4%. Investors worry whether the government will be able to fund all of the proposed programs at such a high borrowing rate.

The Beige Book lured some buying back into the markets. The Fed announced that all twelve districts continue to display weak conditions but five of the twelve are moderating.

In yesterday's newsletter we stated, "Perhaps a retest of Friday's highs and maybe even a bit higher are in the cards for the major indices." Today's high of was pretty close...but we can't help but feel like there may be another round of buying before things turn around again. Some of the insiders we talk to are looking for prices as high as 980 in the S&P. We aren't quite this optimistic but it wouldn't shock us. That said, we like the idea of patiently looking for prices in the mid to high 960's to begin constructing bearish positions.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

June 10 - Sell 1 June NASDAQ at 1540 (we may have to roll this into September)






*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

June 12th, 2009


Visit our websites to register for our upcoming FREE online seminar, Trade Like a Girl: How to Deleverage your Trading with Synthetic Options and Common Sense


Quadruple witch around the corner


The VIX has been comfortably below 30 in recent days and things seem to have gotten back to "normal". However, we wonder if the directionless trade can last. The market seems to be setting up for a volatile move but picking an immediate direction is difficult. Our best guess is that we will see some type of temporary rally that manages to run the lingering buy stop orders, then reverse dramatically. We still feel as that the odds favor a relatively large correction of the rally from the March lows but we aren't convinced that it will occur before some sort of key reversal on the charts.

The U.S. consumer confidence index as reported by the University of Michigan suggests that confidence is currently at a 9 month high. However, the actual headline number was a slight disappointment relative to analyst expectations. Conversely, the report's indications of inflation expectations rose to the highest level seen in months. Undoubtedly, this has to do with the increased size of the Fed's balance sheet and its long-term implications.

It has been a painfully boring week. Not including Friday's session, the June S&P futures have closed near 940 in 8 of the last 9 sessions but nothing lasts forever. If you happen to be short premium in this market, I would recommend taking profits as it seems like there is a good chance for excessive volatility going into next week's triple witch. On the other hand, if you are an option seller on the sidelines (as we are), there should be some great opportunities in the coming sessions. We are hoping for a sharp rally in which we can sell call premium, current option volatility and option pricing doesn't favor sellers. In fact, I am not much of an option buying advocate, but some may consider buying a June915/955 strangle for about $450 or so on Monday

We are still waiting for what we believe will be a "bull trap" in order to begin getting bearish in this market. We think the S&P could see the mid 960's and the NASDAQ as high as the mid-1500's. Stay tuned for ideas....

**You should now be trading the September contract!!



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.



S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

June 10 - Sell 1 June NASDAQ at 1540 (we may have to roll this into September)





*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

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.

 

[carleygarner]

June 17th, 2009


Visit our websites to register for our upcoming FREE online seminar, Trade Like a Girl: How to Deleverage your Trading with Synthetic Options and Common Sense


Stocks bounce, but minimal


Stock index futures didn't let a near 50 point drop in four sessions influence trade. The market opened up weak and the bears quickly thwarted several attempts at a short covering rally. The direction from here is anyone's guess. Our charts and models suggest that the S&P should continue lower to the mid-870's but the fact that the turnover happened with a triple witch looming makes the move highly suspect. Therefore, I can't feel good about having (or more importantly, publishing) any strong opinions.

The major indices consolidated following several sessions of consistent selling pressure. The lack of ability to "bounce" suggests that this market may be heavier than many had previously thought. One has to wonder if option expiration is holding this market down, or if in post expiration trade we could see another bout of swift selling.

If this weren't expiration week, I would be looking for an up-move to the mid-to-high teens in the September S&P at which point I would become bearish. A daily chart is pointing toward 876 and a weekly toward 850. However, given the uncertainties surrounding this weeks events combined with light volume a safer place to be is on the sidelines. That said, I would become a near-term bull if the S&P trades near 875.

The September Russell is toying with its uptrend line but as long as the market stays below 507, the bears are in control. If we see a swift move lower, we will become bullish near the May lows (470's). The NASDAQ remains the broad market's shred of hope. Today's positive close, and above our major pivot near 1445ish, could be the saving grace for equities. Let's see what tomorrow brings.




**Seasonality is already be factored into current prices, any references to such does not indicate future market action.





S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat





*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

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.

 

[carleygarner]

June 17th, 2009


Quadruple witch disappoints


Many of the traders/brokers/analysts that we know took the day off as a precautionary measure; quadruple witching days can sometimes create unmanageable amounts of volatility. This time around, that was certainly not the case. In fact, I would argue that this was one of the most uneventful sessions we have seen in months. Nonetheless, those that avoided the markets today didn't miss much, so the "better safe than sorry" approach was appropriate.

In addition to a lack of participation, there were no economic reports to speak of. However, rumors and speculation over a U.S. Navy attempt to intercept a North Korean ship suspected of carrying illegal weapons attempted to get trader's attention. The news may have crippled the markets agenda to run near-term buy stops to extend the day's rally but wasn't enough to trigger a complete reversal. Also failing to get much of a reaction from traders was talk of a possible downgrade by Moody's of the state of California.

According to a Morgan Stanley analyst, the economy has put in a bottom. It was noted that the positive recovery is "subdued" but they believe that exceptionally low interest rates promoted by most of the major central banks will promote growth. Keep in mind that even if this is the case, the equity markets may have priced much of this in. It is possible that we could see a "buy the rumor" sell the fact scenario in which stocks struggle a bit despite confirmation of the recovery hitting the headlines.

We remain relatively neutral going into next week but feel as though the odds favor the downside. That said, we feel that any accelerated selling will run into heavy support near 879 in the September S&P with a potential for 850 if the bears really get carried away. Accordingly, we are patiently awaiting the chance to be bullish at better levels. If it turns out that we are wrong about near-term weakness we will look for an opportunity to turn bearish again near the recent highs.

In terms of the other indices, we will stick with our previous outlook until this market picks a clearer course of action:

The September Russell is toying with its uptrend line but as long as the market stays below 507, the bears are in control. If we see a swift move lower, we will become bullish near the May lows (470's). The NASDAQ remains the broad market's shred of hope. Today's positive close, and above our major pivot near 1445ish, could be the saving grace for equities.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat




*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

June 25th, 2009


"Commodity Options" is now available at TradersLibrary.com!


Stocks soar, but tomorrow may be different


After what seemed to be a quiet open, trade quickly turned into a mass of buy programs. According to our sources, short covering triggered buy stops then the sharp reversal triggered technical buy programs...and the rest is history.

The buying was said to be attributable to homebuilder and retail stocks. Homebuilding shares benefited from an announcement by Lennar Corporation reporting that orders for new homes had jumped 63% during the second quarter. Bed Bath & Beyond gave a boost to customer discretionary stocks after reporting that its first quarter profit climbed 14% thanks to overflow business from rival Linens N Things.

On the economic front, claims for unemployment benefits rose by 15,000 to 627,000 last week. More significantly, 1st quarter GDP was reported at a negative 5.5%. The print was better than expected but didn't paint a positive picture for the economy.

Some of the market volatility was likely due to the day's events in Washington. Ben Bernanke spent the day being questioned by Congress in regards to the Bank of America Merrill Lynch deal that cost taxpayers $20 billion. The Fed chair claims, "I did not tell Bank of America's management that the Federal Reserve would take action against the board or management", in regards to questions regarding the "forced" merger of the firms.

In our last newsletter we mentioned that the S&P can bounce as high as 920 without compromising the bears. Today's high of 917ish was significant, and while a retest of the highs and maybe even 921 are possible in Friday's session we feel as though failure to close above these levels will lead to another wave of selling going into next week.
We see strong resistance in the Russell near 507 and 8,544 in the Dow. The NASDAQ remains the strongest of the major indices, but we see resistance near 1482.

This report was written a little earlier than usual, but the analysis should still be relatively current. I am speaking at a CFA (Certified Financial Analyst) event tonight, so time is a little scarce.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat





*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

June 26th, 2009


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Consumers are confident, but not spending

Volume and excitement were on the light side ahead of the weekend, leaving me with very little to write about.

The University of Michigan reported a slightly higher reading in its consumer confidence reading but consumer income and spending data suggests that Americans are still tight fisted. As a result, investors found little incentive to continue yesterday's rally.

Personal income and spending numbers point toward the highest savings rates in years. I doubt that anybody was surprised to hear that the savings rate had increased. Consumers were overleveraged and it will take years for things to unwind. However, it is clear that the lack of velocity of money will act as a plow to the recovery. "The consumer is not going to completely hibernate although the consumer is not going to be the same force" as was the case when "coming out of the previous recession" noted Henry Smith, chief investment officer of Haverford Trust Co. in Philly. He added, "Ultimately, this expansion will be characterized as a below average, slower expansion."

The markets made very little progress in either direction, therefore yesterday's projections are still valid:

In our last newsletter we mentioned that the S&P can bounce as high as 920 without compromising the bears. Today's high of 917ish was significant, and while a retest of the highs and maybe even 921 are possible in Friday's session we feel as though failure to close above these levels will lead to another wave of selling going into next week.

We see strong resistance in the Russell near 507 and 8,544 in the Dow. The NASDAQ remains the strongest of the major indices, but we see resistance near 1482.

Sorry so short, enjoy your weekend!!



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat








*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

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.

 

[carleygarner]

July 1st, 2009


If you like this newsletter, you will love "Commodity Options". Look for great deals on Carley's book through Amazon!

Stocks tepidly higher in pre-employment report trade

The day was chock full of mixed economic data, but equities found a way to trade higher. Coming into the day, statistics pointed toward a positive trading session as the first trading day in July has historically had good outings. Not surprisingly, it seems as though mutual funds were on the buy side of the markets in early to mid-session trade; however, the buying quickly dried up.

Richard E. Cripps, chief market strategist for Stifel Nicolaus commented on the day's action, "Some of the buying that wasn't' done yesterday is being done today," he added, "I'm a little surprised. There isn't a lot of convincing volume here to read too much into this."

News on the day included ADP's prediction of tomorrow's employment report. According to the payroll firm, the U.S. economy has lost over 470,000 jobs in the most recent month. Most analysts are expecting the government to report a number closer to 400,000. The ISM manufacturing index was reported slightly better than expected and so were pending home sales. The mixed news puts even more emphasis on tomorrows data.

It was apparent from the "get-go" that many traders have already begun their long holiday weekend. Those that did stick around for today's session, will likely make their departure after tomorrows employment report. Accordingly, tomorrow will likely see very little trading volume; scaling back on your trading is recommended.

Going into tomorrow, we aren't taking any bold stances. It seems as though there are equally likely odds that the market will go down tomorrow as there are that it will go up. On a larger scale, we see resistance near 950 and support at 890 in the S&P with the 920 area as the pivot...If we had to pick a direction, we would say lower from here, but we wouldn't be willing to put much more on the line than a friendly bet between friends.

Likewise, we see strong resistance in the Russell near 535 and support at 487 but have little opinion as to what the next day or two will bring. Resistance in the NASDAQ should be found near 515 and support at 1417.

If you have missed this newsletter in recent days, we apologize for the inconvenience. Unfortunately, we have limited time and sometimes have to prioritize. Keep in mind that clients of DeCarley Trading were, and are always, welcome to contact us for guidance above and beyond this newsletter. If you aren't already trading with us, perhaps you should be.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat




*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.



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.

 

[carleygarner]

July 2nd, 2009


If you like this newsletter, you will love "Commodity Options". Look for great deals on Carley's book through Amazon!


Stocks slump on jobs data


Equities suffered from low volume and poor economic news on the last trading session before the 4th of July celebration. Rumors of a possible North Korean attack on Hawaii, although not necessarily credible, also worked against the markets.

Our prediction that traders would disappear shortly after the release of non-farm payroll numbers seemed to be relatively accurate. Volume was at a bare minimum in post-announcement trade. The headline numbers weren't a big surprise; an estimated 467,000 jobs were lost last month to bring the unemployment rate to about 9.5%. It is important to note that the so called U-6 number, which includes those that have stopped looking for work or who can't find full-time jobs, has climbed to nearly 16%. Suddenly, the green shoots look a little brown. Nonetheless, most of this was expected well before today and therefore the initial reaction looks to be a bit exaggerated by the lack of market liquidity.

The major indices posted losses of nearly 2% by mid-session, while the Russell was down over 3%. The Russell is comprised of small cap stocks, which are often the market leaders. I wouldn't put too much credence into today's trade in light of the volume situation, but it seems that even if we see an oversold bounce on Monday the overall trend is lower. We think that the next target in the September S&P is the mid-to low 880's. In the case of the Russell, 2000 the mid-480's should be the next target and we expect that the NASDAQ could see the 1420 area again in the near future.

For the most part, the markets will be closed tomorrow in observance of the holiday. With that said, the CME Group Globex stock indices (e-mini S&P, e-mini NASDAQ and e-mini Dow) will trade overnight as usual but the session will be halted at 10:30 am Central.

Enjoy your holiday weekend!



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.





S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat




*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

July 7th, 2009


If you like this newsletter, you will love "Commodity Options". Look for great deals on Carley's book through Amazon!


Waiting for earnings season...


It is a slow news week, but traders are gearing up for tomorrow's G-8 meeting and the upcoming earnings season. We will hear from Alcoa and Pepsi Bottling tomorrow but it is next week that traders are looking forward to.

Don't forget that the historical tendency for earnings season suggests that stocks outperform before and suffer from disappointment after the fact. This is similar to a buy the rumor, sell the fact type of scenario that often plays out in markets. However, it seems as though some of the selling has come early this time around and the price pressure may not over yet.

Crude oil dropped for the fifth consecutive day and seems to be dragging equities down with it. Nonetheless, it is difficult to see if the dog is wagging the tail or the tail wagging the dog. In both cases, we are approaching oversold conditions but this is more true of crude than equities. While our models are pointing toward the potential for a bounce from here, we still think moderately lower before this can happen. We have been calling for the mid-to low 70's in the S&P and despite today's valiant attempt at reaching our target, we feel like there is a bit more downside and will continue to look for such levels. Our clients were recommended to sell the August 760 puts for about $6.50 in late day trade.


If you are trading the Russell or the NASDAQ, we are still looking for 468 and 1390 in the September contracts. Because the NASDAQ was the strongest on the way up, it could be the hardest hit on the way down. We would refrain from overly bullish holdings in this market. However, aggressive Russell traders may look to put on bullish positions at or near our noted target.





**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat





*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.



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.

 

[carleygarner]

July 10th, 2009


If you like this newsletter, you will love "Commodity Options". Look for great deals on Carley's book through Amazon!


Weakness in Crude weights on stocks


Earnings jitters, a weaker than expected Michigan Sentiment index, and a lack of reasoning to be bullish allowed equities to creep lower for much of the day. This marks the fourth consecutive week of losses for the major indices. However, there is a bright side; the selling has been orderly. That doesn't mean that stocks won't continue to decline. In fact, we still think that the mid to low 800's are likely in the September S&P at some point in the next few weeks. However, it does suggest that investors are no longer in the same panicked state experienced in the fall of 2008.

While we have heard earnings reports from a few firms, the season will pick up pace next week. We will hear from Johnson & Johnson, JPMorgan, Google and others. Some fear that even numbers that beat expectations will fail to give stocks a lift. Nonetheless, I believe that the fact that equities spent the four weeks prior to earnings grinding lower the "buy the rumor sell the fact" disappointment may already be accounted for.

On a side note, General Motors Corporation rose from the dead today. Well...they have emerged from bankruptcy protection but many would likely argue that they still aren't showing many signs of life. CEO Fritz Henderson claims that the new GM will focus more on customers. He also mentioned a partnership with eBay in which visitors to the site will be able to purchase vehicles online via their auctioning platform. As a consumer, this doesn't strike me as being a good idea...

While we can't rule out a retest of the lows, or slightly new lows next week, our comments from yesterday are still valid:


We made a rather bold call yesterday, and today's lack of follow through was a bit disappointing. However, we are going to stick with our idea of a higher market...even if it means a retest of the recent lows before a longer lasting rally can ensue. We could be wrong, but we are looking for just under 900 in the September S&P, 500 in the Russell and 1450 in the NASDAQ.


**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat





*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

July 13th, 2009


If you like this newsletter, you will love "Commodity Options". Look for great deals on Carley's book through Amazon!


Stable crude, stocks rally


We have been pointing out the correlation between equities and crude oil and have mentioned that stocks will need a turnaround in the crude pit in order to get a rally going. However, as it turns out...all that the market needed was for crude prices to stop going down. With the August crude contract trading near unchanged for much of the day, a green light was given to buy equities ahead of the bulk of the earnings season.

It seems as though much of the day's buying was short covering and/or buy stop running. Accordingly, it doesn't necessarily mean that investors are expecting positive earnings, but what it does indicate is that the bears are a bit concerned over the possibility of less than horrific earnings.

Most stock market journalists and commentators are attributing the day's gains to comments made by market analyst Meredith Whitney who claimed that Bank of America shares are inexpensive based on the firm's assets. Whitney is highly respected by the bears in that she has offered one of the more pessimistic, and later we discovered accurate, assessments of the banking business. Accordingly, those short bank shares scrambled to exit their positions by buying the shares back. The buying frenzy bled into other sectors and light volume allowed the rally to extend beyond what many thought possible based on last week's trade.

Nonetheless, our predictions were surprisingly accurate...sometimes it is better to be lucky than good! We have reached our target in the S&P of just under 900 and nearly reached our target in the Russell of 500 and 1450 in the NASDAQ. From here we feel like moderately higher prices may be in store for tomorrow as the short squeeze continues but we can't help but feel as though the buying will dry up, at least for now.




**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat




*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.



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.

 

[carleygarner]

July 15th, 2009

Sign up for a free online webinar tomorrow to discuss Commodity Options vs. Stock Options, and other topics in Carley's book at PFGBest.com.


Nervous bears


Data suggests an uptick in inflation, the Fed declares double digit unemployment is looming but...according to the central bank the U.S. economic is predicted to shrink between 1 and 1.5% this year, and improvement over the previous 1.3 and 2%. The markets may have celebrated today, and we may even get a little more follow through tomorrow as the last of the bulls are suckered in and the bears squeezed out but I have a feeling that there will be some buyer's remorse in the coming days.

According to the Fed's minutes of the last FOMC meeting, it could take "five or six years" for the economy and the labor market to fully recover. However, for 2010 they expect that the economy would grow between 2.1 and 3.3%, instead of the previous expectations of 2 to 3% but I don't think that anyone is going to change their overall investment strategy for a few tenths of a percent.

Inflation is beginning to poke its head up, but the signs are still relatively minor. Nonetheless, the Fed worries that the public will begin to fear inflation in light of the Fed's recent policy of purchasing its own Treasury securities.

Today's rally began on the open of electronic trade on Tuesday evening following an upside surprise in Intel earnings. However, traders were already in a good mood following solid numbers posted by Goldman Sachs.

We really didn't expect the markets to rally this far, this fast but I don't think that anyone really could have predicted such a move. However, we seem to be near significant resistance areas. We think that 930 is critical for the S&P and feel as though aside from the possibility of a moderate overflow of buying into tomorrow's session, the near-term highs are looming. We are looking for a pullback with 916 and then 902 as our support levels. Dow traders may look for a correction that could result in prices near 8,300 should support at 8,420 fail to hold. The Russell on the other hand, looks like it may have a little more room to move on the upside than some of the other indices. We don't see significant resistance until the 520 area.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better

• July 15 - We advised buying this option back for $2 or less, you should be out of this trade with a respectable profit. Don't let this option sit!


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat






*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

July 20th, 2009

"I'm not even kissing up when I say it's about the best book on option trading I've read." ~ Aaron James, Eastside Financial Group in regards to "Commodity Options" now available through all major book outlets


Slow trade, squeezing bears


Even the bulls are likely a little surprised by the resiliency of the most recent broad market rally. A positive earnings season and a possible resolution to the CIT insolvency has managed to propel equities nicely higher from last Monday's early session lows.

CIT Group has apparently struck a deal with its bond holders to avoid bankruptcy. This comes after bailout funds requested from the fed failed to come through. The market was pleased with the news given the potential consequences of a failure to many small businesses. Some analysts point out that the fact that the government wasn't forced to intervene and CIT was able to secure private financing suggests that the financial markets are healing.

Earnings have been a pleasant surprise but the bulk of the numbers have yet to be released. Investors will likely be focusing on retail stocks, which haven't been represented as of yet. Poor retailer numbers could trigger a case of buyer's remorse and lead to a swift correction. On the other hand, should retailers have a good showing this rally may have more legs that we originally anticipated. The high 950's don't seem to be out of the question and some of our contacts on the floor note that even 1,000 is possible on the running of buy stops.

I am not convinced that we will see much higher this time around. I tend to favor the idea of, at minimum, a temporary correction that could bring the S&P back to the 908 area. However, the light volume makes for very one directional trade and I worry that the lack of liquidity will work in favor of the short squeeze.


We continue to fight against the grain looking for a correction in equities, but I am not going to lie...we are nervous bears. Last week we noted that a run to the mid 940's may be possible in the S&P and now that we are here it seems like the buying could extend to the mid 950's and maybe even 961. Nonetheless, I am having a hard time jumping on the bull bandwagon...at least for now.

We also pointed out resistance in the Dow near 8,850 and 1540 in the NASDAQ. These levels have quickly come into play, and moderately higher without a pullback is possible but we have to wonder how long this can last. Nonetheless, if this rally resumes the next stopping point will be 8,880 and 1580 respectively.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better

• July 15 - We advised buying this option back for $2 or less, you should be out of this trade with a respectable profit. Don't let this option sit!


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat





*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.

 

[carleygarner]

July 21st, 2009

"I'm not even kissing up when I say it's about the best book on option trading I've read." ~ Aaron James, Eastside Financial Group in regards to "Commodity Options" now available through all major book outlets


Stocks pull back, but losses minimal


The major indices finally broke their winning streak but the selling pressure was moderate. This may suggest another retest of the highs, or slightly new highs, are in the cards. Despite today's minor digestion, we feel as though a larger correction is looming at some point. However, we also can't rule out a continuation of the squeeze to elect buy stops in the 958 area of the September S&P. If this happens, we could see 960/962 before running out of buyers.

In the meantime, investors are focused on Fed Chairman Bernanke's congressional testimony. The "grilling" started today and will extend through tomorrow. However, the topic of discussion doesn't seem to be anything new and exciting. Although, Bernanke did mention that inflation doesn't seem to be a threat in the coming few years and claims to have the "tools" needed to fight that battle once it begins to emerge.

The market continues to see the CIT story as a positive sign that the economy has turned the corner from government subsidies to private equity financing. However, it has been corporate earnings that have made this rally possible. Caterpillar beat analyst expectations and announced and improved profit forecast for 2009. Due to Caterpillars role in the expansion of industry, it is considered to be somewhat of a bellwether of the global economy.

Either we are early, or we are just plain wrong but we still think that a near-term top is in the cards for the major indices. We are sticking with yesterday's call of an extension of the rally to the mid 950's or possibly the low 960's but at such levels we are highly bearish. That said, there is still a lot of cash on the sidelines and if there are shorts looking for a way out of the squeeze, we are hearing that there are buy stops running all the way to 1,000. Be careful!

If you want to play the downside with limited risk, we like lottery ticket plays such as buying the August 880 or 885 puts. Fills were coming in for the 885's this morning near $6.50.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -


July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat





*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.



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.

 

[carleygarner]

July 27th, 2009


"I'm not even kissing up when I say it's about the best book on option trading I've read." ~ Aaron James, Eastside Financial Group in regards to "Commodity Options" now available through all major book outlets


Stocks consolidate


After an astonishing two-week rally that lifted the major indices approximately 11%, stock market bulls finally took a breather. Perhaps it has come to realization that the positive earnings have been posted on expense cuts rather than strong revenue figures. Nonetheless, the most recent round of earnings reports weren't as optimistic as those released last week. RadioShack Corp. beat analyst estimates (admittedly on cost-cutting) but Aetna Inc. and Honeywell International failed to meet expectations.

What may have been the glue to hold the markets together today, the Commerce Department reported that new home sales rose 11% in June to 384,000 figured on an annual basis. This is the strongest pace since November of 2008, but is still a historically low number. Don't forget that not too long ago this number was near 2 million. Also, sales seem to be the result of price discounts as opposed to a rebounding market. However, sales are trending higher...and this is better than the alternative.

A painful reminder that we are still in a recession, Verizon reported a 21 percent drop in earnings and announced that it plans to cut 8,000 jobs. Adding insult to injury, the firm's COO Denny Strigl stated, "We probably will not have large-scale hiring until we're out of the recession."

For those with extremely long-term views, there are glaring positives. In fact, Fed Chairman Ben Bernanke stated on Sunday that "The silver lining in this whole thing is that people are starting to save more, since they saw what happened with 401(k) investments." He added, "People are adopting good habits, so not only will we be back on track, but the economy will be stronger than it had been before this started. However, if you are viewing the market with a much shorter horizon (as many futures traders do) it seems obvious that this rally has gotten a bit overheated. An "obviously" overbought market doesn't always translate into a correction as one would expect; the bottom line is that the market will do what it needs to do regardless of what you or I think that it should.

With that said, I think that the risk is in being long this market. In recent sessions the rally has been reduced to an annoying grind higher but will be facing significant resistance near the 988 area in the September S&P. In the meantime, even if the rally resumes the market seems vulnerable to a large one to two day pullback and I would hate to be on the wrong side of that. Of course, it is also uncomfortable to be on the wrong side of the rally and that (short covering) has been much of the catalyst for price gains. Even so, there are likely a lot of sell stops lining the downside, if the market cracks and stops are elected it could be a quick move.

Resistance in the S&P lies at 988 and then again near 1,000. Support, on the other hand, should be found near 961 then 940. We see strong resistance in the Dow near 9,163 with support at 8,950 and again at 8,755. NASDAQ traders may look for resistance at 1615 and first support near 1568.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better

• July 15 - We advised buying this option back for $2 or less, you should be out of this trade with a respectable profit. Don't let this option sit!


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat

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

Position Trade -

Flat


Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
[email protected]
1-866-790-TRADE
Local : 702-947-0701

Stock Index and Bond Futures Trading
- Commodity Broker Redefined


*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.


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.