The Stock Index Report by Carley Garner

[carleygarner]

September 2nd, 2008

Stock index futures fail to see follow through buying on post-Gustav rally.

The sun was shining brightly on Wall Street in early trade on the Tuesday following Labor Day, but the holiday spirit faded quickly and so did the major indices.

Swiftly dropping commodities ultimately wasn't enough to keep sellers away at lofty levels. Ironically, it was sharp declines in energy and natural resource shares that weighed on afternoon valuations.

Crude oil settled down nearly $6.50 on Tuesday marking the largest drop in terms of dollars since 1991. Keep in mind that at one point prices were in negative territory by about $8 per barrel. The direction of both equities and interest rates is highly dependent on the path that the energy markets choose from here.

Being somewhat of a contrarian, it seems as though crude oil will hold the $100 mark. This is based on the premise that a majority of market commentators are looking for sub-par trade in the coming weeks. There may be nobody left to sell...at least in the near-term. Also, today's spike low was likely an effective means of flushing out many of the weak longs and may suggest that we will see higher prices in the coming week or two. A bounce back to $115.77 and potentially $120.72 may be in the cards.

Here are a few examples crude oil bearish commentary; according to Chris Jarvis, senior analyst at Caprock Risk Management, "It would take a really major storm to change the direction in crude oil in the midst of its major correction since July, and Gustav is not it. Mike Wittner, energy analyst at Societe Generale noted, "If it were not for these storm threats, we would have been testing $100 already." Typically when the market is flooded with bearish sentiment it is time for a turn around, and that seems to be the case in crude oil. If I am right about this, the equity markets may be in store for sideways to lower action in the coming weeks.

With that said, equity market volatility is relatively low and due for a spike. That normally supports the bearish point of view. With uncertainly surrounding the election and the economy I believe that a retest of the annual lows is a real possibility. However, from a long-term perspective I am still a bull at heart. Premium is still a bit pricy to buy and too risky to sell. Waiting for better opportunities seems to be the play.

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


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

Position Trade - Flat

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


Dow Futures and Options Trade Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade - 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 Trade Recommendations
**There is unlimited risk in naked option selling and futures trading

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

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






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]

September 3rd, 2008

The Beige Book was a relative non-event.

The major stock indices were under pressure as the market continues to focus on economic growth, or the lack of. Traders seemed to spend much of the day waiting for the Fed Beige Book to be released and the remainder of the day ignoring its contents.



According to the Fed, the economy across the country has experienced slowing growth in recent weeks but has gotten some welcomed relief from commodity pricing. On a more positive note, the Commerce Department reported an increase in manufacturing orders of 1.3% in the month of July to beat analyst predictions.



Trade will likely be cautious ahead of the employment data due to be released Friday morning. In the absence of a major catalyst, we may be in store for sideways trade in tomorrow's session as investors brace themselves for what can sometimes be a violent reaction to the non-farm payroll release.



The CBOE's Volatility Index, commonly referred to as the VIX has been on a steady decline in recent weeks and seems due for a change of pace. It may be a good idea to get "long volatility" through the purchase of options; however, you want to be careful in how much you spend as most options are doomed to expire worthless. It doesn't make sense to spend a fortune on a lottery ticket.



If I am right, and we do see a sudden increase in volatility it may be a good opportunity to sell puts against the trend. Keep in mind that a spike in the VIX normally coincides with a large down move in the S&P. Thus, put premium will be at a maximum. However, there are no "free lunches" as the risk will also be elevated.



I would like to see the S&P at or near 1260 before even considering put selling, although I plan to be patient as there is a possibility for much lower prices. Some models are suggesting prices as low as 1200. A move such as this may be necessary in order to ignite buying and pull this market out of its current rut. I see support in the Dow at 11,300 but 10,700 isn't out of the question and would likely prove to be an excellent opportunity for the bulls.



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





S&P Futures and Options Trade Recommendations


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



Position Trade -



Flat



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




Dow Futures and Options Trade Recommendations
**There is unlimited risk in naked option selling and futures trading



Position Trade -



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 Trade Recommendations

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





Position Trade -



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



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







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]

September 4th, 2008


Equity market volatility ticks higher.



Many are questioning why equities struggled, especially ahead of a big event such as the employment report. The bottom line is that, stock trade was simply getting too complacent and the market was due for an uptick in volatility. Treasury bonds have been enjoying a flight to quality bid that seemed to discretely signal that investors weren't quite comfortable with other asset classes.



The day's data certainly didn't help the bulls case; retail data and ADP estimates on tomorrows jobs data were lackluster and failed to ignite bargain hunters. The nation's largest retailers reported that shoppers seemed to have diverted otherwise discretionary spending toward food and energy. The light at the end of the tunnel was better than expected earnings from retail giant Wal-Mart. However, luxury chains and teen shops underperformed. While the Wal-Mart data gives some hope, it also paints a telling picture of the economy. During times of low consumer confidence and or spending power shoppers migrate to discounters and bypass high end retailers. That is clearly what we are seeing here.



Similar to Treasuries, stocks look to have priced in the worst when it comes to tomorrow's employment report. Unlike Treasuries, however, I am not convinced that stocks are at an extreme enough level to find a long-term bottom....not yet anyway.



If you follow this newsletter, you know that we had been calling for an uptick in volatility and today seems to have delivered. The CBOE's VIX index has krept to the mid-20's and may have some room to move yet.



The question now becomes whether or not this was a one day event or if there will be some follow through. As much as my heart would like to see equities recover from these levels, my gut tells me that this isn't the time. While this is highly dependent on tomorrows news events, I see the potential for a drop in the S&P to 1200 and maybe as low as 10,700 in the Dow. Option sellers should be looking to sell puts but patience will be key. Early entries could be fatal.





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






S&P Futures and Options Trade Recommendations



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



Position Trade -



Flat



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






Dow Futures and Options Trade Recommendations

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



Position Trade -



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 Trade Recommendations

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





Position Trade -



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



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



September 4 - These may come back to life!








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]

September 5th, 2008


Volatility reigns again.


The complacency in equity trade has been eliminated once again. Some are attributing the recent volatility to the fact that a lot of mutual fund money has been moved to the sidelines in an attempt at capital preservation. In the absence of this typically long term investment funding, the market is said to be more susceptible to aggressive short term hedge fund trading. Accordingly, the market is seeing violent swings in both directions and that is exactly what we have witnessed.



Also hedge fund related, a massive amount of redemption letters (client requests to withdrawal funds) have been received by struggling hedge fund managers. Selling in stocks and commodities, in my opinion, seems to be the direct result of funds honoring these redemption letters and liquidating positions accordingly. If this is true, we may be getting near the end of this wave of selling. Hedge funds typically have 5 days to release funds once a redemption letter is received and that is the approximate length of the latest bout of selling pressure.



Despite the market's immediate sell-off following the employment report, the data alone didn't seem to be enough to trigger such a reaction. As noted above, hedge fund liquidation along with stop running seems to be a better explanation of the move. Nonetheless, the employment report was less than impressive and failed to provide comfort to investors.



According to the Labor Department, the domestic payrolls shrank by 84,000 last month. Most economists were looking for 75,000, so the number wasn't a complete miss. However, the unemployment rate rose to a five year high of 6.1% and this seemed to be the deal breaker in the eyes of the market.



This is the opportunity to sell puts that I have been referring to in this newsletter. I am not convinced that we have seen the low of this move, therefore I recommend placing limit orders that will take additional weakness to get filled. Depending on what Monday morning looks like, I will likely be recommending the September S&P 1160 puts for $4 or better and the Dow 10600 puts for 50 or better.



Have a great weekend!





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






S&P Futures and Options Trade Recommendations



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



Position Trade -



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



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






Dow Futures and Options Trade Recommendations

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



Position Trade -



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





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






NASDAQ Futures and Options Trade Recommendations

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





Position Trade -



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



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



September 4 - These may come back to life!



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






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



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

 

[carleygarner]

September 8th, 2008


Stocks higher, but choppy.


There were intraday dips, especially in regards to the NASDAQ; however, the bulls were certainly on top at the end of the day. Whether or not the rally will continue is another story. Based on my analysis, today's highs in the indices correspond with significant resistance points and may have simply been the digestion before another drop. For the sake of my retirement portfolio I hope that I am wrong, but in terms of trading I will be shopping for opportunities to sell stock index puts.



While many were enjoying their Sunday dinner, futures traders were glued to their computer screens in awe. The S&P gapped higher on the open of electronic trade and didn't give up ground until much later in Monday's session.



The buying frenzy was sparked by news of a Fannie and Freddie government bailout. The Treasury Department announced on Sunday that it would be seizing control of the companies which are involved with nearly half of the nation's mortgage debt. The news eliminated much of the looming risk of a spike of bad debt forcing the firms to become insolvent.



The government's plan to inject $100 billion into each of the firms are hoped to put pressure on mortgage interest rates and perhaps even buoy the overall economy. In theory, the move could entice banks to be a little looser with their lending practices.



There are mixed emotions on what the final impact of the move will be, but there is some dissention. Others simply look at is as a band-aid but not the saving grace for the market. Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, claims that "It saves Armageddon from happening." he added, "If you think about it, this helps the financials, this helps the housing market. Tech took a huge hit last week. Does this really affect tech? I don't think so."



Jim Dunigan, chief investment officer for PNC Wealth Management in Philadelphia, noted "This isn't a magic want. We're probably going to see another couple bank failures."



I can't help but lean to the downside here. My target in the S&P is now 1194 and the Dow could go as low as 10,655. The NASDAQ on the other hand, seems to have less room to move on the downside. I see the next area of support about 20 points beneath the market near 1740.







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






S&P Futures and Options Trade Recommendations



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



Position Trade -



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



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






Dow Futures and Options Trade Recommendations

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



Position Trade -



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





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





NASDAQ Futures and Options Trade Recommendations

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






Position Trade -



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



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



September 4 - These may come back to life!



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








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



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

 

[carleygarner]

Thanks for your comments!

Thanks for your comments! I am glad to know that I wasn't the only one sitting at my desk on a Sunday night. Days (or in this case nights) like never fail to impress me.

I am a little less bearish in the NASDAQ than I am the S&P and Dow, but if the others break the NQ could follow. However, a large dip will likely prove to be a good buying opportunity in the long term.

Good luck!

 

[carleygarner]

September 9th, 2008


Investors had buyer's remorse following the largest government bailout in history.


There was a down-draft on Wall Street and the selling may not be over as the path of least resistance seems to be lower for the major indices.



Our contacts on the floor claim that there are sell stops below 1240.80 in the S&P down to 1237.50 and S&P futures trade seems to do a good job of running many of the stops before reversing course.



The market traded weaker most of the day but the nail in the coffin was a sharp decline in the share price of Lehman Brothers. The sigh of relief heard after the Fannie and Freddie bailout didn't last, the market still has Lehman Brothers to deal with. The slide began with rumors that talks between Lehman and Korea Development Bank had ended. As this newsletter was being written, shares of the stock had experienced a 40% drop on the day. Adding fuel to the fire, Bloomberg reported that Standard & Poor's had put Lehman on "Watch Negative" based on beliefs that the firm may have incurred a significant third quarter loss.



In yesterday's newsletter I stated:





I can't help but lean to the downside here. My target in the S&P is now 1194 and the Dow could go as low as 10,655. The NASDAQ on the other hand, seems to have less room to move on the downside. I see the next area of support about 20 points beneath the market near 1740.



Today, this looks to have been accurate so I will stick with my original analysis. However, although I am looking for additional weakness in the near term I feel as though we may see some sort of low later this week. Option sellers should be looking to short put options! A look at an intra-day option chain suggests that there are a lot more retail traders buying puts than there are selling puts. The increased demand along with the increased volatility should lead to overpriced options. Assuming that your entry isn't considerably early, this added premium should pad much of the risk. However, this is what I like to call an "extreme trade". The risk of being exposed to such a market in such a way is high, but in my opinion the overall odds are in favor of the put seller. See specific recommendations below.



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






S&P Futures and Options Trade Recommendations

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



Position Trade -



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



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



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





Dow Futures and Options Trade Recommendations


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



Position Trade -



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





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







NASDAQ Futures and Options Trade Recommendations


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





Position Trade -



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



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



September 4 - These may come back to life!



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







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



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

 

[carleygarner]

September 11th, 2008


Short covering allows for a positive close, but bears control trade.


Between Fannie, Freddie and Lehman issues at hand, there is very little room for positive market sentiment. However, it is often when the market becomes the most bearish that a recovery is near. I happen to think that we are getting much closer to a near term bottom, but the lows may not be in just yet.



Investors haven't been given a reason to buy, instead short sellers have simply been enticed by large profits to lock in their winnings. Thus, each upswing in the market is being met with short selling.



Recent economic data has done little to sooth the nerves of stock market bulls. The U.S. trade deficit soared to its highest level in 16 months to $62.2 billion in the month of July. Wall Street was looking for a number under $60 billion. The difference is said to be due to record crude oil prices in the month of July. Fortunately, this information lags reality. Today's news didn't provide as much impact as it may have had crude oil prices not experienced the dramatic drop in recent weeks.



The VIX has been creeping higher, as we predicted that it would. However, my gut tells me that there may be more to come. With that said, option expiration has had a bit of a calming effect on the market. It seems as though much of the volatility associated with expiration has been seen in the week prior to. If that holds true, a temporary low in the S&P may occur as early as tomorrow. I am leaning toward lower prices for now, but the bounces can and will be fierce. Caution is warranted.



If you weren't filled on the S&P short option recommendation the last time around, you should have been filled this morning. I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.





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







S&P Futures and Options Trade Recommendations



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





Position Trade -





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





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


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







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





Dow Futures and Options Trade Recommendations

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





Position Trade -





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







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







NASDAQ Futures and Options Trade Recommendations

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



Swing Trade -



Buy 1 December Mini NASDAQ at 1715



Position Trade -





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





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





September 4 - These may come back to life!





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






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





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

 

[carleygarner]

September 12th, 2008


Quadruple witching and Lehman news looming....



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



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



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



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



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



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







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








S&P Futures and Options Trade Recommendations




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





Position Trade -





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





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



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



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





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






Dow Futures and Options Trade Recommendations


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





Position Trade -





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







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







NASDAQ Futures and Options Trade Recommendations


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



Swing Trade -



Buy 1 December Mini NASDAQ at 1715



Position Trade -





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





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





September 4 - These may come back to life!





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








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



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

 

[carleygarner]

I do remember you mentioning 1700, good call.

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

Hi Carley, I called the newest low on the nasdaq, nearly 1700 like I thought! You might not remember my post, but I swear!

how about dinner? I'll pay with my profits
Just kidding of course!

Thanks for the report, I am also feeling exhausted just like you!
ps-I think I've browsed through Stocks & Commodities magazine..good work! How did you end up in these forums?

 

[carleygarner]

September 15th, 2008


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


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



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



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



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



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



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





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







S&P Futures and Options Trade Recommendations




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





Position Trade -





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





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



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



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

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





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





Dow Futures and Options Trade Recommendations


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





Position Trade -









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



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







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







NASDAQ Futures and Options Trade Recommendations


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



Swing Trade -



Buy 1 December Mini NASDAQ at 1705



Position Trade -





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





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





September 4 - These may come back to life!





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









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



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

 

[carleygarner]

September 16th, 2008


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


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



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



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



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



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



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







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







S&P Futures and Options Trade Recommendations




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





Position Trade -





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





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



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



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

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





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





Dow Futures and Options Trade Recommendations


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





Position Trade -









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



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







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







NASDAQ Futures and Options Trade Recommendations


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



Swing Trade -



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



Position Trade -





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





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





September 4 - These may come back to life!





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








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





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

 

[carleygarner]

That is a great question

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

Very interesting thoughts and Is it going to make any impact on the stock price.

index

 

[carleygarner]

September 17th, 2008


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


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



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



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



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



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



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

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







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







S&P Futures and Options Trade Recommendations




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





Position Trade -





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





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



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



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

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





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





Dow Futures and Options Trade Recommendations


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





Position Trade -









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



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







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





NASDAQ Futures and Options Trade Recommendations




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



Swing Trade -



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



Position Trade -





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





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





September 4 - These may come back to life!





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





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








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



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

 

[carleygarner]

Hi Nine,

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

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

Are you going to stop posting the historical "didn't I do well" rubbish (how many failed to create one didn't I do well stream) and post real time recommendations?

If you don't then you are an unwelcome spam advertiser and should leave now and never return.

 

[carleygarner]

The Bond Bulletin by Carley Garner

September 18th, 2008

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

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

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

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

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

http://www.fdic.gov/bank/analytical/banking/2005jul/article2.pdf.

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


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





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

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

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


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

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





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

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

 

[carleygarner]

September 18th, 2008

Wall Street mixed on Fed Moves.


If you have been following the equity markets, you are likely exhausted; I know I am. The CBOE's volatility index was said to have it a six year high in today's session, it peaked at 42.16 intraday. A couple of weeks ago I had mentioned that the market "felt" like it was ready for an explosion in volatility but I wasn't prepared for this. I don't think that anyone was. Even those short the market during the plunge, likely had difficulties due to the very large short covering rallies.



With the broad market near the day's lows, I have to admit that even I was beginning to give up hope in the markets. My heart was telling me that these levels should hold, but my eyes and ears were telling me otherwise. The magnitude of the emotions within the market and within myself leads me to believe that this may have been the capitulation that we have all been talking about and waiting for.



In yesterday's report, I mentioned that we needed an "event" to bring confidence back into the system. Perhaps today's report that the government will create an entity to take over the bad debt of banks was it. According to CNBC, Treasury Secretary Henry Paulson is considering the possibility of creating an entity much lat that of the Resolution Trust Corporation that was set up during the savings and loan crisis of the late 80's and early 90's. If you are interested in the details of such a plan, read this:



http://www.fdic.gov/bank/analytical/banking/2005jul/article2.pdf.





If we get follow through buying tomorrow, the rally could be substantial. I am holding my breath...





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







S&P Futures and Options Trade Recommendations




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





Position Trade -





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





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



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



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

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

· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





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





Dow Futures and Options Trading Recommendations


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





Position Trade -









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



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

· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





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







NASDAQ Futures and Options Trade Recommendations


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



Swing Trade -



September 16 - If you followed our recommendation, you would be long 1 mini

NASDAQ from 1705.

· I have not enjoyed this, and if you participated you likely haven't either. However, I think that the bounce could see the index above 1800, place an order to sell this position at 1790 GTC.



Position Trade -



Flat










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]

September 19th, 2008


A Day that will never be forgotten.



Days like today make it very difficult to be a market analyst or commentator. How could anything that I write ever compare to the entertainment value of simply looking at a price chart of any of the major indices?



There are very few times in which I am at a loss of words, but this is one of them.

You are likely aware of the fact that the government is putting a rescue plan in place to save banks from billions of dollars in bad debt. Chances are that you have also heard that there is a new ban on short selling in nearly 800 financial stocks.



One thing is for sure, none of us will ever forget the events that have transpired over the last 48 hours, nor should we. I sincerely hope that the followers of this newsletter were able to avoid the wrath of such a market move. I am not the type to "toot my own horn" but I feel that our market analysis and trading recommendations during this time were relatively remarkable given the circumstances.



I will be the first to admit, that some of our trading advice was later proven to be slightly premature in the entry, but had you followed the guidance in this newsletter you would have come out nicely ahead. Are we perfect? No. However, after speaking to my contacts on the trading floor, many have not fared as well. The markets have wreaked havoc on a lot of trading accounts. If you were one of the victims of this move, perhaps you should be trading with us. I can't guarantee that we will call it as well the next time around and past performance certainly isn't indicative of future results, but I can tell you that we take your money as seriously as we take our own. We are on your side.



What happens from here? Your guess is as good as mine. I am leaning to the upside with targets of 1320 in the S&P, 11,825 in the Dow. With that said, there is a good chance that the market will see some back and filling on Monday and Tuesday. The NASDAQ reached my target, so I don't have an opinion ether way in this market.



Have a nice weekend!



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









S&P Futures and Options Trade Recommendations




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





Position Trade -





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





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



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



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

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

· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





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





Dow Futures and Options Trade Recommendations


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





Position Trade -









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



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

· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





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







NASDAQ Futures and Options Trade Recommendations


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



Swing Trade -



September 16 - If you followed our recommendation, you would be long 1 mini

NASDAQ from 1705.

· I have not enjoyed this, and if you participated you likely haven't either. However, I think that the bounce could see the index above 1800, place an order to sell this position at 1790 GTC.

· September 19 - The limit at 1790 would have been filled, making the trade profitable by $1700 before commissions and fees. What a relief!!



Position Trade -



Flat







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]

September 22nd, 2008

The selling continues.


Nobody new quite what to expect on the Monday following one of the most volatile trading weeks in history, but it is safe to say that there was a moderate amount of "buyer's remorse" following the Thursday and Friday frenzy. It is hard to be a bull in the face of a nearly $20 rally in crude oil, therefore active traders were prompted to take profits on long positions.



In the absence of the crude oil move, Wall Street may have been far less pessimistic. Oil prices experienced the largest one-day rally ever. At one point, the front month contract was up over $25 per barrel. Contract expiration likely played a big part in the move, but traders are also noting anxiety over the government's $700 billion bailout and a weak dollar. However, in my view there is not fundamental explanation for that size of a move. There are clearly other behind the scene factors coming into play; including short covering and a massive short squeeze.



There seems to be a hint of relief in the marketplace in regards to the Fed's attempts to stabilize the credit markets and indirectly calm the equity markets. However, there is also a great deal of doubt and uncertainly surrounding the final outcome. Axel merk, portfolio manager at Merk Funds commented on the day's action, "This is not an 'all is clear' signal that we have now."



As part of the "save the markets" crusade, the Federal Reserve announced late Sunday that Morgan Stanley and Goldman Sachs have approval to change their status to bank holding companies. Goldman and Stanley are the nations last two major investment banks. The status change will allow each of them to establish commercial banks to accept deposits but come with increased regulatory scrutiny.



Event risk makes picking a direction in this market extremely difficult. As a result, the sidelines may be the wisest position. The S&P should find support near 1177 should it continue its path lower but resistance can be found at 1250. I don't recommend trading at current levels but a dip to 1177 may be an attractive area to begin looking at the long side of things.



The Dow has potential to trade as low as 10,800 with resistance at 11,300; once again I prefer to wait for a clearer opportunity.



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







S&P Futures and Options Trade Recommendations




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





Position Trade -





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





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



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



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

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

· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





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





Dow Futures and Options Trade Recommendations


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





Position Trade -









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



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

· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





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







NASDAQ Futures and Options Trade Recommendations


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



Swing Trade -



September 16 - If you followed our recommendation, you would be long 1 mini

NASDAQ from 1705.

· I have not enjoyed this, and if you participated you likely haven't either. However, I think that the bounce could see the index above 1800, place an order to sell this position at 1790 GTC.

· September 19 - The limit at 1790 would have been filled, making the trade profitable by $1700 before commissions and fees. What a relief!!



Position Trade -



Flat









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]

September 23rd, 2008


Not even Bernanke and Snow could "bail out" the market today.


Wall Street experienced another bout of selling pressure as investors are beginning to have second thoughts about the government bailout plan. Additionally, the sense of urgency seems to be lacking and that doesn't sit well with traders. On the bright side, the selling seemed relatively orderly and a late day comeback to levels near unchanged suggests that the market is in "wait and see" mode rather than shear panic.



Economic news was sparse but data likely would have been ignored anyway. Most were eyeing the Senate Banking Committee hearing. Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and the SEC Chairman Christopher Cox all testified as lawmakers are working out the details of the bailout. A line of pessimistic questioning resulted in market unrest.



According to the Fed Chair, failure to act could result in a recession as businesses and consumers will be unable to borrow funds as needed. However, we are in uncharted territory and there is no telling what the damage or benefit will be should action be taken.



With so much uncertainty surrounding the valuations of the bad debt in question, lawmakers are wondering if it will be necessary for additional taxpayer funds to be thrown at the problem down the road. According to Jim Herrick, manager and director of equity trading at Baird & Co., "There's skepticism about whether the $700 billion number is the right number."



This is a relatively tough market to call. Other industry insiders that I share market ideas with are equally confused as to which side of the market to be on. The path of least resistance seemed to be lower based on technical factors. However, there is a substantial amount of event risk surrounding the bailout. Thus, a large and sudden rally cannot be ruled out. You may want to sit this one out.



Support in the S&P lies at 1172 while resistance is near 1243, I am a bull at or near support but neutral at current levels. Similarly, the Dow should find support at 10,758 and I believe it to be attractive at this level.







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







S&P Futures and Options Trade Recommendations




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





Position Trade -





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





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



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



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

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

· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!

· You should have an order to buy this back at $1.50.



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





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





Dow Futures and Options Trade Recommendations


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





Position Trade -









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



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

· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!

· You should have an order to buy these back at 15.



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





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







NASDAQ Futures and Options Trade Recommendations


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



Swing Trade -



Flat



Position Trade -



Flat







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.