Stock index futures up against wall, where from here?

carleygarner

Well-known member
466 9
Stock index futures up against wall, where from here?


Stock index futures managed to hold on to yesterday's blockbuster gains, but climbing higher could be a challenge. The S&P is facing significant technical resistance near 1070 and a cloud of uncertainty surrounding the upcoming earnings season. Although I feel as though earnings will ultimately be a catalyst for stocks, it appears as though the market is vulnerable to pre-earnings jitters and this could promote some near-term selling.

If you are long this market you should be considering lightening the load a bit, tightening stops or even moving to the sidelines altogether. Price action in this area could make or break equities. In a perfect world, we would like to see a move lower from here as this would enable the bulls to re-establish positions at better pricing.

It has been a quiet news week. The only report released today was weekly jobless claims which beat expectations but wasn't enough to counter the weak data streak as of late.

We were provided with some interesting stats this morning by our execution brokers on the CME floor (Danny Riley & co.). Not only do they help with us to provide favorable fills for our open outcry options and futures (large S&P) trading, they have a good feel for the markets. According to their sources, including George Cavaligos, the last time that the SPX saw the "death cross" (2007), the market rallied seven consecutive days and then fell apart. However, taking a long position (not short) in the SPX at the time of each cross would have resulted in a profitable trade 73% of the time assuming that the position is held until the 50 SMA moves back above the 200 SMA. However, the other 27% of the time would have sustained large losses...30% or more!

In yesterday's newsletter we noted resistance in the mid 1060's but the possibility of a move to 1070. Today's high seemed to have met our objective and this leaves us relatively neutral. The Russell didn't quite see our 622 mark, but we think it was enough to fulfill the market's need to correct the down move.

Let's see what tomorrow brings...

* 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: 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 -

June 29 - Clients were recommended to sell the August S&P 880 puts for about $10

July 7 - Our clients were advised to offset their short 880 puts this afternoon. Fills were coming in between 4.70 and 4.35. This locks in a nice profit per contract and provides freedom to re-sell puts should the market drop.


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
cgarner@DeCarleyTrading.com
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.
 

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