carleygarner
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Options expiration halts stock index futures rally
A number that used to be considered a C in terms of merit and validity has become a market-moving event. Weekly jobless claims (yes, that's right the volatile weekly number that was previously nearly irrelevant) has been receiving increasingly more attention.
Initial jobless claims measure the number of filings for state jobless benefits and is known for being relatively volatile. Today's reading came in much higher than expected at 500,000 and brought the 4-week moving average to 483,000. The number not only suggests the jobs market is sluggish (pointing out the obvious) but it is implying that things are getting worse. Although leading indicators didn't follow suit, a horrific showing in the Philly Fed index shot a moderate amount of fear back into the marketplace. However, where there is fear there might also be opportunity.
It feels like everyone has simply given up on stocks...or risky assets in general. Investors young and old are moving funds into Treasuries without regard to potential return. Similar stock avoidance has been seen a few other times in history and has eventually produced a long-term buying opportunity. That said, as a futures (or options on futures) trader, we are looking much more at the short-term.
The concern voiced in yesterday's newsletter over options expiration enabling further gains turned out to be reality but we haven't given up on the upside. It feels as though the money has already been made on the short side, and the next "good" trade will be from the long side. We see a large band of support in the September S&P futures ranging from 1060ish down to the low 1050's. If these prices are seen, they could very well be a great opportunity for the bulls. If you are short, we suggest tightening stops, taking profits or placing hedges. The lows might not be in quite yet, but they will probably come fast and so could the reversal.
Similar support in the NASDAQ futures lies at 1790ish and about 595 in the Russell.
* 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 factored into current prices, any references to such does not indicate future market action.
Please note: An e-mini S&P and e-mini NASDAQ chart are used because they 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.
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.
Options expiration halts stock index futures rally
A number that used to be considered a C in terms of merit and validity has become a market-moving event. Weekly jobless claims (yes, that's right the volatile weekly number that was previously nearly irrelevant) has been receiving increasingly more attention.
Initial jobless claims measure the number of filings for state jobless benefits and is known for being relatively volatile. Today's reading came in much higher than expected at 500,000 and brought the 4-week moving average to 483,000. The number not only suggests the jobs market is sluggish (pointing out the obvious) but it is implying that things are getting worse. Although leading indicators didn't follow suit, a horrific showing in the Philly Fed index shot a moderate amount of fear back into the marketplace. However, where there is fear there might also be opportunity.
It feels like everyone has simply given up on stocks...or risky assets in general. Investors young and old are moving funds into Treasuries without regard to potential return. Similar stock avoidance has been seen a few other times in history and has eventually produced a long-term buying opportunity. That said, as a futures (or options on futures) trader, we are looking much more at the short-term.
The concern voiced in yesterday's newsletter over options expiration enabling further gains turned out to be reality but we haven't given up on the upside. It feels as though the money has already been made on the short side, and the next "good" trade will be from the long side. We see a large band of support in the September S&P futures ranging from 1060ish down to the low 1050's. If these prices are seen, they could very well be a great opportunity for the bulls. If you are short, we suggest tightening stops, taking profits or placing hedges. The lows might not be in quite yet, but they will probably come fast and so could the reversal.
Similar support in the NASDAQ futures lies at 1790ish and about 595 in the Russell.
* 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 factored into current prices, any references to such does not indicate future market action.
Please note: An e-mini S&P and e-mini NASDAQ chart are used because they 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.
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.
