No surprises with Fed Funds policy

[carleygarner]

January 27th, 2010

Carley's new book, "A Trader's First Book on Commodities" is now available at all major book outlets!

No surprises with Fed Funds policy

As expected, the Federal Open Market Committee voted to leave overnight interest rates unchanged at approximately 0%. In addition, the Fed didn't throw any curve balls in regards to peripheral policies and programs. They confirmed that the Mortgage Backed Securities purchases would expire at the end of March and reminded the markets that the infamous TALF will soon come to an end. Last but not least, they continue to pledge that interest rates will remain low for an "extended period". That said, at least one member (Hoenig) was against keeping the "extended period" statement.

All in all, the Fed offered a positive outlook on the health of the economy. They note that the economy continues to "strengthen" and deterioration of the labor market is "abating". They also note that inflation is likely to be "subdued for some time".

Shares of Apple lifted the NASDAQ higher after CEO Steve Jobs introduced the new iPad. At $499 it was created to compete with Kindle and according to the tech giant is more "intimate" than a laptop.

The major indices have been beaten down in recent days, but what goes up must come down and vice versa. Assuming that the State of the Union Address doesn't give the market a dose of reality, we are looking for an eventual bounce from current or moderately lower levels.

1077 marks critical support in the March S&P futures, with the next significant area at 1061. However, for now we believe that the mid-to-high 70's will hold. Resistance will be found at 1100 but we think that the upswing will eventually see the low 1120's.

Similarly, the Russell appears to be holding our 608ish support and could be headed higher. We see resistance near 628. The NASDAQ could see the 1855ish area on a short covering rally.

* 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 can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.


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

Position Trade -

January 21 - Our clients were advised to sell the March S&P 1000 puts today following the drop in an attempt to capture the market volatility in the put premium. Fills were coming in from $8 to $9.


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 -

January 27 - Buy 1 e-mini NASDAQ near 1781



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

www.DeCarleyTrading.com
www.CommodityOptionstheBook.com



*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]

Stocks finally sizzle without the fizzle

February 1st, 2010

Carley's new book, "A Trader's First Book on Commodities" is now available at all major book outlets!


Stocks finally sizzle without the fizzle


The equity markets had several things going for it on Monday; it was the first trading day of the month, it was "mutual fund Monday" and it was technically oversold. The real test will come tomorrow.

After several early morning rallies that eventually failed and made way for further declines, equities finally managed to put together a green session in which gains were held into the close. According to our research, a majority of the small speculators are holding short positions and we believe them to be the most fickle of the classifications. Failure for sellers to come to market tomorrow, could lead to a surprisingly sharp short-squeeze. Consistent trade above 1083.50 in the March S&P futures might be what it takes to shake out the shorts.

The Institute of Supply Management's manufacturing index was reported at its best performance in five years. The news put a positive tilt on trade but the rest of the day's data wasn't quite as promising. According to the Commerce Department, construction spending fell in December much more than expected and personal spending increased at a slower than anticipated rate.

Thus far, the earnings season has been a relative success. Of all of the numbers that have been released, the overall performance has been 17% higher than analyst expectations. Ironically, the S&P is coming off its worst month in over a year. As we noted prior to the earnings season, it can be difficult to please a lofty market and that is exactly what we are seeing unfold.


The overnight low in the S&P was 1068 (a bit higher than our 1061 support) but perhaps close enough to justify being temporarily bullish. We aren't necessarily bullish...but we do think that this "bounce" could see prices in the 1120 range.

The NASDAQ on the other hand, has been the weakest of the indices and will need to break, and hold above, 1770 tomorrow if the markets are going to move higher in the next few sessions. If this happens, the March NASDAQ futures could see 1835ish. Look for a possible bounce in the Russell to 627.

* 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 can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.


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

Position Trade -

January 21 - Our clients were advised to sell the March S&P 1000 puts today following the drop in an attempt to capture the market volatility in the put premium. Fills were coming in from $8 to $9.


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 -

January 27 - Buy 1 e-mini NASDAQ near 1781




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

www.DeCarleyTrading.com
www.CommodityOptionstheBook.com




*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]

Panic selling in equities followed by panicked buying

February 5th, 2010

Sign up for our FREE webinar "Extreme Trading: Counter-Trend Option Selling"
http://www.pfgbest.com/webinar/eventSummary.asp?skey=338208184


Panic selling in equities followed by panicked buying


After melting through 10,000 with ease, the Dow clawed back on the close to settle slightly above. The March Dow futures contract failed to reach the milestone but it is clear that there will be no free lunches for the bears.

There are no shortages of hedge fund blowups and many believe that it was the liquidation of leveraged commodity and stock positions that enabled such a dramatic fall from grace. At one point today, the S&P was approximately 60 points off of yesterday's highs. We haven't gotten to the capitulation seen in 2008 fueled by fund and small speculator margin calls and the subsequent liquidation but this has certainly been a reminder that complacency has no place in these markets.

Market psychology has changed, most traders have adopted a "sell rally" policy but that doesn't mean that the market will go straight down. In fact, there were rumors of a large and well known bank buying a total of 600 S&P futures late on Friday. Assuming a value of 1050 in the March contract, that is about $262,500 per contract...I'll let you do the math.

In the January issue of Futures Magazine, we were quoted several times in reference to our opinion of "Hot Markets of 2010". In the article we predicted a large upside breakout in the U.S. dollar early in the year and later noted that such a move would put pressure on the metals and grains. In this newsletter, we have mentioned several times that a stronger dollar would be trouble for domestic stock indices. Unfortunately, we don't always follow our own advice...If you are following our short put option recommendation, we are growing slightly anxious but are not yet uncomfortable. Despite spikes in volatility and put premium, we feel as though a relatively large bounce is looming and this will be just what we need to exit the position favorably. Luckily, as an option seller your timing and price speculation doesn't have to be perfect!

Our weekly chart is pointing to 1020 in the S&P, but we think higher before lower. The last time around, the rally fell short of our targets...we will see how things pan out this time. We are looking for a rebound in the S&P to 1085 and possibly even a bit over 1100 if the news is supportive. If you are trading the Russell, similar levels are 604 and 615 and in the NASDAQ at 1773 and 1810.

On a lighter note... http://www.cnbc.com/id/15840232/?video=1405435640&play=1

* 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 can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.




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

Position Trade -

January 21 - Our clients were advised to sell the March S&P 1000 puts today following the drop in an attempt to capture the market volatility in the put premium. Fills were coming in from $8 to $9.


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 -

January 27 - Buy 1 e-mini NASDAQ near 1781
• February 3 - Place an order to exit this trade at 1830 OB


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


*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.