The Stock Index Report by Carley Garner

[carleygarner]

December 9th, 2008


Stocks Digest, but don't give up.


Less than optimistic corporate outlooks and a lack of economic news set the mood for a digestive trading day. Coming into the session, stocks had posted gains in 9 of the previous 11 sessions to give some investors hope that there will be light at the end of the tunnel.

There is no question that the devastating economic data will continue to come but the question remains as to whether "all" of the bad news has been accounted for in share prices. It seems as though a majority of it has, but the market isn't convinced that there isn't something else lurking around the corner.

As disappointing as it is to see the market retreat from yesterday's highs, it is also encouraging. Although the S&P has made substantial gains in a short period of time, there has been significant bouts of back and fill trade. This is a positive indicator that in the long run, the markets are at minimum forming some sort of base.

I am still looking for the S&P to get to 935/940 area in the near term, but am cautious about the potential for a move as low as 855 in the coming days before the rally resumes. I realize that there is a big difference between a move to 940 and a sell off to 855 but unfortunately this is the world that we now live in.

Likewise, the Dow and the Nasdaq have gotten closer to my upside targets and may be setting up for another day or two of selling pressure. While I still believe that a larger rally is looming, we may see weakness in the Dow to 8,430 and 1160 before finding legs again.


The stakes are incredibly high for speculators, but with risk comes reward...supposedly. Base on my conversations with industry insiders, it seems as though both retail and institutions have suffered at the hand of unpredictable and volatile market conditions. Flailing hedge funds and discouraged individual traders have really taken its toll on trading volume and it may take years for things to get back to the way that they were.


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


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

Position Trade -

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300.

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


Position Trade -

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

Swing 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]

December 10th, 2008

Happy Holidays from DeCarley Trading!


Stock indices quietly higher ahead of automaker bailout...I mean loan.

There seems to be a subtle euphoria surrounding the pending automaker loan. However, it is difficult to tell which side of the isle Wall Street is standing on. Stocks gave up most of their gains on Wednesday following signs that the plan to bring U.S. automakers back from the dead could face considerable opposition in Congress. However, I can't help but think that some capitalistic equity traders are voting against the big three lifeline as stocks failed to break technical support even as details of a group of conservatives threatening to block the current plan were filling the airwaves.

Tight credit conditions and economic concerns don't bode well for merger and acquisition activity. Even after one of Yahoo's largest shareholders publicly urged the internet company's board to rekindle the Microsoft deal, both sides remained silent.

According to a survey conducted by Duke, nearly two-thirds of top-level executives anticipate that the current recession will last another year. Last year, the CFO survey accurately predicted the current recession...let's hope that this year they are off the mark and the economy recovers prior to next winter. However, according to John R. Graham, director of the survey and financial professor at Duke's Fuqua School of Business, "Throughout the history of our survey, CFO's have shown remarkable ability to predict future economic conditions" he added, "Therefore, the record pessimism CFO's are currently expressing is ominous."

Due to tight intra-day ranges, my technical outlook remains the same as noted in yesterday's newsletter:




I am still looking for the S&P to get to 935/940 area in the near term, but am cautious about the potential for a move as low as 855 in the coming days before the rally resumes. I realize that there is a big difference between a move to 940 and a sell off to 855 but unfortunately this is the world that we now live in.

Likewise, the Dow and the NASDAQ have gotten closer to my upside targets and may be setting up for another day or two of selling pressure. While I still believe that a larger rally is looming, we may see weakness in the Dow to 8,430 and 1160 before finding legs again.


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


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

Position Trade -

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300.

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


Position Trade -

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

Swing 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]

December 11th, 2008

Happy Holiday's from DeCarley Trading!


Equity Indices give up ground, but bulls aren't down and out.


The major stock indices traded within a relatively narrow range for a majority of the session, but late day selling managed to break support levels. I expect that the selling will continue into Friday but also believe that the bulls will regain power heading into next week.

Once again, all eyes are on Washington as lawmakers struggle to decide the fate of the auto bailout bill. The bill was passed by the House late Wednesday evening (early evening for those of us on the west coast) but questions as to whether the Senate is on board raised tension.

Most analysts are convinced that the bill will eventually be passed, but are frustrated with the dramatics surrounding the event. Neil Massa, trader at MFC Global Investment Management commented, "If this doesn't pass, the market would show it wasn't happy with that." He added, "There would just be many more people unemployed that would be a drain on society instead of a contribution, and that's never a good thing considering we're in a recession. I can't imagine they'd let that happen." Nonetheless, Republican opposition argue that any taxpayer support should carry significant concessions from the UAW and creditors. They also oppose stringent requirements regarding environmental product development. I will let you decide which side of the fence you are on, but for the sake of market stability I am hoping for a timely resolution. I think that the market will have a more negative reaction to a prolonged and chaotic decision-making process than it might a negative one.

On a side note, the U.S. Labor Department reported that jobless claims increased by 58,000 last week to 573,000. This is the highest reading in 26 years. Also, the Census Bureau noted that both exports and imports fell in the month of October.

We have been calling for a possible move to 855 in the S&P, and it seems as though it is underway. Our targets in the Dow and NASDAQ of 8,430 and 1160 respectively look to be likely in tomorrow's session. However, we aren't counting the bulls out. Historical statistics show that stocks have a tendency to trade higher in over the next two weeks. Additionally, it looks as though light volume may favor the long side as shorts continue to feel the squeeze.

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


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

Position Trade -

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300.

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


Position Trade -

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

Swing 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]

December 15th, 2008

Happy Holidays from DeCarley Trading!

Madoff stole money from his investors, and stole a possible rally from the market.

At the close of trade on Friday, it looked as if Monday was set to be a positive day on Wall Street. However, the dust cloud surrounding the Madoff ponzi scheme looks to have drained some of the already suffering market optimism. Traders know that without confidence in the system, the financial markets are nothing more than a house of cards. Accordingly, buyers were reluctant to enter the market.

As individuals and firms reveal their exposure to Madoff's fund, the extent of damage is unsettling. Investors in the fund ranged from ordinary households, to large corporations, to the uber-rich. Alan Gayle, senior investment strategist for RidgeWorth Capital Management, commented on the situation, "The investor psyche is already quite fragile. Scandals like this just add fuel to the fire."

Also wearing on confidence, the auto-maker bailout saga. The market seemed somewhat relieved to hear President George W. Bush claim "we're now in the process of working with the stakeholders on a way forward." Some analysts predict that a big three bankruptcy could result in as many as 3 million U.S. job losses next year.

Keep in mind that light trading volumes tend to magnify moves, that may be part of this morning's dramatic fall. However, it will also increase the volatility related to tomorrow's FOMC announcement. The market is expecting a half of a point cut in the overnight target rate, but will be eagerly awaiting any commentary as to how long the low rates may last and what the next move will be.

As long as the S&P continues to close above the support noted in last week's newsletters at 856 the bias seems to be higher. Likewise, support in the Dow can be found at 8,420 and at 1160 in the NASDAQ. However, a close below critical support at stated levels could be the pre-cursor to a much larger drop. Our upside targets remain intact at 931 in the March S&P, 9,065 in the Dow and 1253 in the NASDAQ.


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


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

Position Trade -

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300.

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


Position Trade -

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

Swing Trade -

Flat




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


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

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

 

[carleygarner]

December 16th, 2008

Happy Holidays from DeCarley Trading!

The Fed sets a target on the target rate.

Stock index futures traded within a tight intra-day range ahead of the FOMC announcement. As we previously noted, the light volume seemed to favor an eventful reaction as well as an upside bias. Today's post announcement trade left the shorts with little choice but to cover positions and step aside...for now.

You have likely heard that the Fed cut its Fed Funds target rate to the lowest level on record...essentially zero. Not only did they surpass expectations for a 50 basis point cut, but they exceeded the most aggressive forecasts of a 75 basis point cut. Coming into the day the target rate was set at 1%, it is now set at a target of 0% to .25%. This is highly unusual and extremely forceful but the market seemed to have liked it. However, one has to wonder whether or not the cheering will last beyond the "joyful" holiday season. After all, such action must mean that the economy is in critical condition. Additionally, this rally didn't have the momentum that some of the others have had following a surprise move by the Fed.

Along with the magnitude of the cut, they reiterated the eagerness of the situation by indicating that the low rates are here to stay. "The committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time."

We have been touting a rally in the S&P above 930 and it may finally become a reality in tomorrow's session. Given today's action, we have extended our expectations to 940. However, major resistance levels to warrant some caution for the bulls. Nonetheless, statistics show that equities will enjoy higher prices in the sessions to come.

The Dow is nearing our projection target of 9,065 and may be vulnerable to some back and filling trade. However, our new outlook is 9,140. Likewise, the NASDAQ's high of 1248.75 wasn't too far way from our target of 1253 and also may be the victim of buyer's remorse in the coming days but new highs may pave the way for a more meaningful rally. Let's see what happens.


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


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

Position Trade -

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300.

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


Position Trade -

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

Swing Trade -

Flat






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


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


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

 

[carleygarner]

December 17th, 2008

Happy Holidays from DeCarley Trading!


Back and fill trade, but seasonals point higher.

Enthusiasm over yesterday's rate cuts faded in early trade but light holiday trade looks to be favoring the upside anyway. The Fed is said to be "all in" and many are wondering whether there are any more cannons to fire, or if things are even worse than previously thought given the magnitude of the Fed's move.

Based on the pressure that the markets have endured in recent months, it is somewhat encouraging to see stability in the face of disappointing news. Larger-than-expected losses reported by Morgan Stanley could have meant trouble for the fragile equity markets, but in the end resiliency prevailed. The firm posted a loss of $2.37 billion, equal to $2.34 per share, for the fiscal fourth quarter. The news was a bit unsettling given Goldman Sachs first quarterly loss since going public in 1999.

OPEC agreed to slash 2.2 million barrels from its daily production on Wednesday, but the market didn't see to believe them. Remember, a cartel only works if all parties actually participate. Nonetheless, it was the single largest production cut on record. Additionally, outsiders Russia and Azerbaijan announced that they would be reducing the amount of petroleum that the put on the market. Energy traders continue to be more concerned with plummeting demand, than they are with the supply side of the equation. Along with sky-high energy prices came inefficient production and higher costs of production. Many analysts are looking for prices below production costs (now in the mid $30's I believe) before enough wells drop offline to allow for price stabilization.

The nonchalant trade in today's session leaves the near-term direction somewhat questionable. I am leaning higher, but wouldn't bet on either direction. There will likely be better opportunities to be a bear, so I don't recommend jumping in front of this light volume rally. Don't forget, the days surrounding Christmas are typically bullish. Also, many are saying that the "big traders" and fund traders have taken time off for the holidays and small specs are driving prices. This is theory of course, but I do stand by my assumption that lighter volume will translate in to equity market gains. My upside target in the S&P is 945 with the potential for 960 by sometime next week. Likewise, the Dow looks to be shooting for 9,170 and the NASDAQ 1273.

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


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

Position Trade -

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300.

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


Position Trade -

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

Swing Trade -

Flat






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

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

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

 

[carleygarner]

December 19th, 2008

Happy Holidays from DeCarley Trading!

Stuck in a rut, but a volatility spike may be in the cards for next week.

The Friday before the holiday trading week turned out to be lackluster in every way; economic data was sparse, trading volume was light, and the price ranges were relatively tight...with the exception of the late day selling. The early morning auto-bailout announcement kept the markets whole, but wasn't enough to spark buying interest. Much of the recent up-move in equities seems to have been the result of short covering. Accordingly, while the bias seems to be slightly higher there as the liquidity comes back to the markets in January the selling pressure may come with it.

The story of the day was the Bush administration's pledge to offer $17.4 billion in loans to carmakers. The loans stipulate that the big three must conform to specific government standards in terms of business models and employee dealings. The initial reaction to the news was positive, but position squaring and a lack of buying interest lead to heavy trade in the major indices.

Some are optimistic about the outcome of the automaker resolution in that it is a loan and not a handout. Tim Ghriskey, Chief Investment Officer of Solaris Asset management in Bedford Hills, New York commented, "It's a relief for the markets". He added, "There was a feeling it was on its way, it is being dealt with and not in a way that opens up the pocketbook and says 'take what you need' "

On a side note, I heard rumors today regarding an oil company bailout. At this point they appear to mere speculation, but if you think about it the concept isn't that unbelievable...the financial windfall that oil companies enjoyed during the "hay day" of crude created inefficient extraction practices as budgets were all but thrown out the window. Now that cost consciousness is necessary to produce profits, the shift in corporate mentality may be too slow to keep up with the crunch.

Going into next week, we don't have a strong opinion either way for the major indices but are leaning lower in the near-term. 871 seems to be a likely target for the S&P during Monday's session. The direction from there could decide the fate of the market. If the S&P holds 871 we should see a bounce higher with 931 as the target. Failure at the noted level could easily translate into a slide to 811. A similar benchmark in the March Dow is 8,480.

I will be "working from the road" next week, and am available at my usual contact information. Keep in mind that Wednesday is a half trading day, the markets will be closed on Thursday in observance of Christmas and will be open for a full trading session on Friday. However, the volume will be extremely light and should probably be avoided if at all possible. This newsletter will be updated on a limited basis. However, you are free to contact me with questions.

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

Position Trade -

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300.

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


Position Trade -

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

Swing Trade -

Flat





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



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

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

 

[carleygarner]

Mid-Day December 23rd, 2008


Happy Holidays from DeCarley Trading!


Brutally light volume equates to poor trading conditions, sidelines.


Most traders, both professional and retail, have opted to spend time with their families rather than with the markets. We believe this to be the best method of defense against what has been and will continue to be choppy and unpredictable price action. Trading conditions may improve slightly on the Monday following Christmas, but ample trading volume typically doesn't return until January.

In the meantime, it seems as though the markets are destined for an upward drift. As we have mentioned in earlier newsletters, it seems likely that slow trade will entice the short traders to cover positions and in turn churn the indices higher. However, despite our upward bias going into the new year we believe that most are better off sitting on the sidelines. If you had a good year in 2008 there is no point in risking ruin, if you struggled throughout the year there is no reason to make things worse.

Stocks didn't seem to take the weak housing numbers to heart. In fact, equities traded higher immediately following the announcement. Both new and existing home sales slumped beyond analyst expectations but at this point anything less than devastation is seen in positive light. However, without a real estate recovery we won't have an economic recovery.

The third quarter final GDP data was reported as expected, in slightly negative territory. However, the markets and investors aren't looking forward to the fourth quarter growth data which is predicted to be well into negative territory.

876 in the March S&P looks to be the a magic number. Trade above this level supports a rally to 922 but weak trade below 876 will likely result in a pullback to 831. The Dow is similarly mixed when it comes to the technical picture; resistance can be found at 8,950 and support at 8,240 but the immediate direction is unpredictable. Once again...uncertainty is high and traders are best off sitting this one out.

Sorry so brief. I hope that you are enjoying the holidays and being with friends and family as much as I am.

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


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

Position Trade -

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300.

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


Position Trade -

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

Swing Trade -

Flat




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

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

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

 

[carleygarner]

December 29th, 2008

Happy Holidays from DeCarley Trading!

Low, make that no, volume...stay away from the markets.

There is a reason why brokers, traders and other industry insiders take their vacations in December; low volumes. It isn't difficult to imagine that given market volatility and a turbulent economy trading volume has never been so low. In overnight Globex trade before Friday's trading session there were barely 100 contracts traded. The day session wasn't much better, there were less than 500 NASDAQ futures traded on the day.

There was very little economic news to guide trade, unfortunately Middle East tensions filled the void. Continued violence overseas didn't give investors confidence going forward as the markets will have to overcome economic shortfalls as well as geo-political.

Like last week, the trading hours will be limited as we enter the New Year. Some of the markets will trade an abbreviated session on Wednesday; however, the stock indices will be open the entire session. Thursday, on the other hand will be dark (for those of you that don't live in Las Vegas, dark is synonymous with closed). All futures markets will be open for a full day of trading on Friday, but I suspect that there won't be too many traders there to participate.

I don't have a strong opinion in the direction of the market in the coming days and prefer to wait until volume picks back up to begin making predictions. With that said, my friends on the floor are looking for the lack of liquidity to support a drift higher in the indices...and they tend to be right much more than they are wrong.

Look for resistance in the S&P near 870 and again at 912; major support should be found near 842. Heavy support in the Dow won't be found until 8,290, in the meantime resistance is near 8,480 and then again near 8,875.

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


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

Position Trade -


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 Jones 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





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

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

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

 

[carleygarner]

December 30th, 2008

Happy Holidays from DeCarley Trading!


Boring trade leaves indices range bound.

It was another quiet day on Wall Street in terms of market participation. Those trading futures on the CME in Chicago were likely just as bored as insiders note a lack of retail order flow and highly reduced levels of institutional trade.

Stock index futures caught a moderate bid following an announcement from Washington that vowed to provide $5 billion in financing to General Motors Corporation's financing arm GMAC. The money was said to be an allocation from TARP and is intended to make it easier for consumers to receive credit when purchasing an automobile. Jack Ablin, chief investment officer at Harris Private Bank, commented; "This is trying to slow down the economic train wreck." He added, "Investors are taking a step back, and realizing that this will enable auto buyers to finance their cars and add liquidity to the market."

On a side note, I think it is interesting to point out the magnitude of panic that has filtered its way onto "Main Street". A contact of mine expressed interest in purchasing silver bullion bars as an investment in which he intends to hold for the next several years. After making a few phone calls, I was shocked to discover that metals bullion is in such high demand that investors are paying very large premiums to get their money out of the greenback or dollar based assets. The dealer that I spoke to mentioned that some of the buyers that he had worked with were selling their homes and putting six to seven figures of the proceeds into gold and silver bullion in which they are storing through their own means...garage (if they still have one)? He also mentioned that some are paying premiums as high as $8 per ounce to purchase silver. In other words, if silver futures are trading near $11 it would cost you nearly $19 per ounce plus shipping and handling to purchase the bullion. What is even more shocking is that the premium only accounts for half of the bid/ask spread, how much could one expect to get for selling the metal? I didn't get a quote, but my guess is that it would be far less than the $11 market price...plus shipping and handling. In my opinion, this phenomenon is even more disturbing than investing in T-Bills with a negative yield, after all the price of silver would have to double, or more, just to get your investment back. I think this is far more telling than the consumer sentiment index released this morning at a record low.

Look for resistance in the S&P near 870 and again at 912; major support should be found near 842. Heavy support in the Dow won't be found until 8,290, in the meantime resistance is near 8,875.

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


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

Position Trade -

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 Jones 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





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

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

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

 

[carleygarner]

January 2nd, 2009


Equities soar despite ISM.


On the heels of the weakest consumer confidence data in history, stocks enjoy an optimistic start to 2009. However, the question in the back of everybody's mind is whether or not a rally sustained on light volume will be enough to return confidence to the equity markets.

The market rallied despite the lowest level in 28 years in the ISM manufacturing index. The December ISM was calculated to be 32.4, a few points lower than expectations and well below the 50 mark which indicates contraction. Investors already low expectations for economic data has paved the way for higher stock prices in the face of weak numbers, but one has to wonder how long this can go on. Not all analysts are skeptic, "We like to see the markets shrug off the bad news. That typically is a sign that we're forming a bottom," stated Eric Thorne, and investment adviser at Bryn Mawr Trust.

I am awaiting trade early next week before I am comfortable in making any bold predictions. However, the major indices seem to be at or near relatively meaningful resistance. Nonetheless, tighter volatility in recent weeks may have been what the market needed to shake out some of the shorts. A weekly chart in the S&P suggests that if buy stop running begins to take over trade at some point next week we could get a swift move above 1,000 before the market finally succumbs to weakness once again. Without the short squeeze scenario, the indices may struggle to get much higher than current levels. We see 930 as resistance and a strong possibility of back and fill trade early next week with support at 883.

The Dow is also up against resistance and may see some selling pressure early next week. Support lies near 8630 with resistance at 9,180. NASDAQ traders may see prices retreat from overbought levels. The first area of support is 1203. Once again, I have a sneaking suspicion that short covering could take this market much higher. Look for the possibility of a quick rally to 1408.

Don't forget about the January barometer; you have likely heard the adage, "As January goes, so goes the year". According to the Stock Traders' Almanac, the January barometer has an accuracy rating of approximately 75%.

It was also noted that (prior to 2008) the last 36 years in which the S&P was up in the first five trading sessions, full-year gains followed in 31 of the years. On the other hand, the Stock Trader's Almanac also states that the 21 years in which the first five days were down were mixed with 11 up years and 10 down.



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


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

Position Trade -

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 Jones 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





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


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

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

 

[carleygarner]

January 5th, 2009


Cautious trade was met with moderate buying.


Equities suffered from some back and filling trade following last week's impressive New Year rally but buying stepped in. Aside from construction spending data that was reported to be slightly better than expected, the news story of the day was the December sales numbers for Ford, GM and Toyota.

Ford Motor Company reported a drop in sales to the tune of 32%. Even worse, Toyota sales plunged about 37%. Massive discounting and incentive packages have yet to entice consumers to open their wallets for large item purchases. Although, some sources note that the problem isn't necessarily with a lack of demand for automobiles but rather a lack of available financing. The truth is probably somewhere in between.

Also in the news, speculation over Obama's economic stimulus plan and a possible $300 billion tax cut plan seems to be keeping equities afloat. However, we worry that the markets are unreasonably optimistic in regards to the Obama administrations ability to quickly revive the economy. We all know that significant economic improvements take time. Unfortunately, there isn't an "easy button" to solve the housing and credit issues still plaguing the economy. While the bias is higher now, we wonder whether it will be able to maintain the upward momentum as we approach mid-January, or maybe even the inauguration. Buy the rumor sell the fact?

There is a small string of economic reports tomorrow, but the bulk of it being much later in the week (Friday). As previously mentioned, there are a significant number of buy stop orders above the market and shorts could be getting frustrated at the lack of bearish trade. Accordingly, there is risk of a sharp temporary rally; however, it seems as though failure for the market to find a catalyst for higher prices tomorrow will likely lead to lower stock indices. In the absence of a trigger to the short covering rally, we are looking for 888 in the March S&P while the first area of resistance remains in the high 930's. The path of least resistance in the Dow seems to be toward 8,652. The NASDAQ, on the other hand, could see prices near 1209 in the coming sessions.


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


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

Position Trade -

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 Jones 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




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


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

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

 

[carleygarner]

January 6th, 2009


FOMC minutes kept traders on edge.


The bias was higher for much of the day as investors seem to be eerily complacent and the shorts have grown increasingly uncomfortable. In my opinion, much of the buying witnessed in recent weeks has been at the hand of bearish traders liquidating positions; fortunately for the bulls there may be a little more where that came from.

It has been noted that the are a flurry of buy stops above the market which could bring the S&P to the 950/960 area. In an extreme case of momentum, I see potential for just under 1,000. With that said, without an immediate catalyst the massive short squeeze may not materialize as the major indices are up against significant technical resistance.

Based on recent economic reports, it doesn't appear that the catalyst will come in the form of data and the window of opportunity seems to be closing. According to the National Association of Realtors, pending home sales fell to the lowest level on record in the month of November. Additionally, the Commerce Department claims that factory orders declined by 4.6% in November. On a lighter note, the ISM's Services index contracted at a slower than expected pace last month.

Friday's non-farm payrolls data could be a critical factor in the near term direction of the markets. We continue to point out seasonal weakness as mid-month approaches. Should short covering managed to break technical barriers on the upside, it is likely that the party won't last. Look to be a bear on what we believe may be a bull trap break out.

The first level of support in the S&P will be found at 880, with the next being around 850. 8,670 marks the first level of support in the Dow.

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


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

Position Trade -

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 Jones 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




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


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

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

 

[carleygarner]

January 7th, 2009


Stocks turn over...and should continue lower.


The indices missed their opportunity to extend the rally as many of the buy stops above the market went untouched. Accordingly, it seems that the path of least resistance will be lower for the indices in the coming sessions. Friday's jobs data may be the wildcard that could make or break the market.

Profit warnings and horrendous predictions of the non-farm payroll report by ADP were enough to bring the equity markets under pressure. Time Warner, Intel and Alcoa all shared bleak forecasts. This comes after Alcoa reported yesterday that it would be slashing its annual output by 18% and in turn cut its global workforce by about 13%.

Despite ADP's lack of accuracy at predicting non-farm payrolls, their prediction was so egregious that investors took it to heart. Economists are calling for a decline of nearly half of a million jobs last month but ADP is looking for a number closer to 700k. To put the discrepancy into perspective, a miss of 200,000 would dwarf the average total monthly job loss or gain. Suddenly, a reading in line with expectations (although devastating) will seem like a relief and could provide some sort of floor in pricing in the near term. There are high stakes and low expectations going into the numbers and this could breed volatility.

Now that the euphoria has been put on hold, it looks like the major indices will make their way lower in the near term. My first area of support in the S&P is at 890. Failure at this level, should keep pressure on stocks and lead to a print at or near 850 in the coming days. We noted 8,670 as support in the March Dow in yesterday's report and we could see a moderate bounce from this level. However, heavy trade leads me to believe that we will see 8,330 by sometime next week.

Support in the March NASDAQ lies at 1,215 and could trigger temporary short covering. Nonetheless, major support won't be found until 1,162. Even a pullback to such levels wouldn't violate the overall uptrend that began in November.

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



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

Position Trade -

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 Jones 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






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


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


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

 

[carleygarner]

January 8th, 2009


Equity bias lower, but temporary bounce may occur.


Disappointing sales figures from Wal-Mart sent stocks sliding in pre-market trade and so went the day. Prior to this morning, discount retailer Wal-Mart was believed to be one of the few companies that were semi recession-proof.

It is clear that there is no hiding from the economic debacle. The nation's largest retailer claimed that same store sales in the month of December rose for about 1.2%, less than analyst expectations; accordingly, sales forecasts for fourth-quarter earnings. I am sure that a majority of retailers would be ecstatic to have positive sales data. Nonetheless, shares fell more than 7% in early trade.

President-elect Barack Obama delivered a speech today in order to rally support for his spending proposal. He pled, "In short, a bad situation could become dramatically worse" without the help of Congress.

Opponents, and perhaps even supporters, argue that he has yet to lay out a detailed plan. With a price tag that could reach nearly $775 billion in tax cuts and spending there are a lot of uncertainties. Inflated confusion and the realization that, regardless of the policy, the economic trench will take years to climb out of, could prevent further equity gains in the near term. Although, there could be a short lived bounce from immediate support levels, look for the March S&P 500 to find its way lower to 850. Likewise, the Dow should trade below 8,370 by sometime next week. If you are a NASDAQ trader, a break of 1216 should pave the way for a move near 1160.

With that said, expectations for tomorrows jobs numbers are bleak at best. After ADP's prediction of a negative 700k jobs number, anything in the vicinity of 500k could be seen as positive (scary I know). Thus, an early morning bounce in tomorrow's session following the announcement could be an opportune time to re-establish bearish positions.


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


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

Position Trade -

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 Jones 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





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


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

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

 

[carleygarner]

January 9th, 2009


Close below 891 in S&P suggests 850 is next.


Equities found temporary solace in the fact that the jobs numbers were in-line with analyst expectations and substantially better than ADP's miss. The futures market managed a slight up-tick on the news but the cash market open on the NYSE quickly changed the mood. As we had predicted in yesterday's newsletter, a Friday morning bounce proved to be a good time to be a bear.

The unemployment rate was reported to be at its highest level in 16 years, 7.2%. The domestic economy is said to have lost 524,000 but negative revisions in prior months seemed to eventually be the straw that broke the camel's back.

Profit warnings from Chevron, resignation of Citigroup director Robert Rubin and woes in the technology sector added salt to the wounds of bulls. As a result, the broad-market experienced the worst trading week since November. Unfortunately, it doesn't look like the bloodletting is over.

Next week is slated to be an exciting one in terms of economic data. We will hear from the U.S. Department of Labor regarding consumer and producer prices, which are expected to show slightly negative inflation figures (deflation). We will also get wind of the current retail sales figures, manufacturing data and consumer sentiment.

Although, most of the announcements are expected to be dismal, there shouldn't be anything to surprise the markets. With that said, there likely won't be anything that is capable of improving investor sentiment until we get closer to technical support levels. While we may see a "dead cat bounce" on Monday, I expect the major indices to continue their grind lower.
Our target in the S&P remains 850 but don't be surprised to see an recovery early in the week that could see the March S&P near 900 or maybe even 913 before continuing the down move. Our new target in the Dow is 8,317, with resistance near 8,658. Interestingly, the NASDAQ has held our support levels and may see the strongest recoil on Monday. Nonetheless, if the broad market trades heavy it will break tech stocks down and we should see 1162 sometime next week.


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


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

Position Trade -

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 Jones 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




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



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

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

 

[carleygarner]

January 12th, 2009


"Down" Jones struggles to stay afloat.


Weak energy stocks worked against the indices on Monday as crude oil fell over $3 per barrel on the session. Accordingly, Exxon and Chevron weighed on the Dow. Investors are likely relating to the plummeting demand for commodities with a lack of demand for other goods and services and even further deterioration of corporate profits. With earnings season around the corner and profit warnings flooding the media, trepidation is high.

A press conference conducted by President Bush may have lifted some of the unrealistic optimism regarding Obama's takeover of the White House. Without getting into political affiliations, in my opinion media banter has set the bar impossibly high for the incoming President. Whether you agree with his policies or not, I think you will agree with the premise that nothing magical will happen immediately following the inauguration.

Economic and monetary policy is a process not an instance but the market and many hopeful citizens seemed to have temporarily forgotten. Any impact, positive or negative, that the Obama plan has on the economy won't be known until well into the future. Let's hope that the lack of an immediate economic marvel as the President elect steps into office won't result in another wave of liquidation in equities.

From a technical point of view, the recent pullback in stocks wasn't necessarily a surprise, but I don't think that it is quite over yet either. We have been calling for 850 in the S&P and it is quickly approaching. While we could see some buying interest step at such levels, a weekly chart appears to be pointing toward the possibility of 670 in the S&P. Similarly, DT Trading from the S&P floor believe that we could eventually see prices as low as 650.

Similarly, our outlook for the Dow to reach levels near 8,320 has become a reality. From there, we may see buyers step in but the gains may be capped at 8,650. According to a weekly chart, we could see 6,930 before all is said and done.

NASDAQ futures are looking to 1160, as we have been touting. However, long-term analysis projects a retest of the 2008 lows and maybe even a quick stint at 900!

At this point, our weekly targets are merely possibilities. Don't bet the farm...we will first have to break several areas of support. Stay tuned to this newsletter for specifics.

If you like our support, resistance and target numbers you should consider trading with us (if you aren't already), we have similar intraday analysis that is communicated to our clients upon request by email, instant message and phone.

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


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

Position Trade -

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 Jones 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





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



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

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

 

[carleygarner]

January 14th, 2009


Retail sales shocks equity bulls, long squeeze...


For the sixth day in a row, equities tumbled on concerns over the economy and the banking crisis. Salt was applied to the wounds this morning on the announcement of the most recent retail sales data. Although dismal numbers were expected, the Commerce Department surprised the market with a draw of 2.7%.

Under more normal circumstances, the Treasury bond rally and corresponding incredibly low yields would be a bullish factor for stocks as it indicates that credit is cheap. However, as we all know credit isn't flowing and low yields are nearly meaningless in this environment. Also, yields in corporate bonds are at a polar opposite of those in government backed securities leaving it difficult for firms to raise much needed cash. None of this is new information, but it is often helpful to take a step back and look at the big picture.

It seems as though, as dire as things appear to be, government intervention into the markets via monetary policy and bailouts will eventually lead to a recovery of the most important aspect of the markets; confidence. Accordingly, traders must make a conscience effort to avoid being overly bearish. It could be months down the road, but once investors begin to see the light at the end of the tunnel and sidelined cash makes its way to equities there could be a large rally. The late comer bears, or those that failed to hedge their risk could find themselves in the wrong trade at the wrong time.

Likewise, bulls trying to pick the bottom in hopes of a recovery to the 2007 highs will likely be disappointed. This is a traders market, taking a piece out of the middle of any move should be the goal, leave homerun hitting to those with deep pockets and nerves of steel.

The major indices have traded through our projected downside targets and may be setting up for a corrective reversal. I see potential for short covering to trigger a rally in the S&P to 888 in the coming days. Likewise, look for a potential rally to 8,600 in the Dow.

If you have the capital and the risk tolerance, you may want to consider selling put premium. I am looking at the February e-mini 630 puts for $8 or better, this is equivalent to $400 per contract and will take additional weakness to get filled. You may also want to look at a lottery ticket play using the January call options, for example the 860 e-mini S&P calls are about $250. However, I can't make a concrete decision until I see what things look like tomorrow. Call me for details.

If you like our support, resistance and target numbers you should consider trading with us (if you aren't already), we have similar intraday analysis that is communicated to our clients upon request by email, instant message and phone.

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


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

Position Trade -

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 Jones 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




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



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

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

 

[carleygarner]

January 15th, 2009


Equities mixed, and so are traders.


After a swiftly lower open, the S&P rallied nearly 20 points in 20 minutes in mid-session position squaring ahead of Friday's option expiration. It seems possible that tomorrow may bring similar short covering, if so the market may grow legs and advance into the middle of next week. We see potential f or the March S&P futures to reach 884 with the Dow looking higher toward 8,500 on the short covering bounce.

Bailout hopes may have been the catalyst that temporarily moved the bears to the sidelines mid-day. Word of Bank of America needing another government infusion was somewhat mitigated by the Senate vote scheduled to take place after the bell. Traders with short positions in the market, understandably so, didn't want to be the victim of a wildly out of control short covering rally as is always possible in these types of events. Conversely, it may have been terrorism fears surrounding a plane going down in the Hudson River that put an end to the short covering spree. Unfortunately for the bulls, once it was clear that terrorism wasn't involved the indices had a difficult time recovering.

Today's trade from low to high, looks like nothing more than an oversold bounce. Whether it eventually becomes more than that will depend on the upcoming senate vote and earnings season. However, given the magnitude of the slide there seems to be a lot of risk in the short side of the market. We may have entered a scenario in which the market is simply "too short". If all the bears are in, there may be nobody left to sell.

If you took our advice in selling the February e-mini 630 puts for $8, we recommend being quick to take a profit. It may be possible to buy it back for $2 or $3 tomorrow.

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


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

Position Trade -

January 15 - If you took our advice in yesterday's report to sell the February e-mini 630 puts for $8, we recommend being quick to take a profit. It may be possible to buy it back for $2 or $3 tomorrow.

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 Jones 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




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



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

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

 

[carleygarner]

January 16th, 2009


Option expiration and holiday trade left indices mixed.


The equity markets began the day swiftly higher, but at one point traded equally as swiftly lower. Fundamentals continue to weigh on trade and Bank of America's first posted loss in 17 years added fuel to the bear camp. In our opinion, yesterday's sharp reversal was triggered by short covering and buy stop running. While there may be some additional room for the indices to move on the upside, the market will need some fundamental backing to break major resistance levels near 888 in the S&P and 8,550.

After reporting a quarterly loss and receiving a lifeline from the government to the tune of billions, Bank of America rightfully slashed dividends. The largest U.S. bank is struggling to absorb Merrill Lynch and the divisions losses of $15.31 billion. Citigroup on the other hand is scrambling to shed troubled assets and split into two divisions in order to survive. Clearly, banking news didn't bode well for financials or capitalism in the face of a nationalized banking system.

The trading floor will be closed on Monday in observance of Martin Luther King Day but the indices will be trading an abbreviated electronic Globex session. We don't recommend having open futures positions, if you do don't take the shortened day for granted. I am still having nightmares regarding last year's MLK weekend in which the futures opened limit down (70 points) on the Sunday night before the holiday. Keep in mind, that at that point a 70 point day in the S&P was unheard of and while many Americans were enjoying their day off without knowledge of what was going in on in the futures markets (cash equities were closed) I was in full panic mode as we had clients short put options. Adding to the dramatics, the Tuesday following the holiday the Fed announced an emergency rate cut and the market rallied sharply to blow out the shorts (and likely many accounts). By the way, the pre-market selling has been blamed on a rogue trader from Societe Generale that triggered a global sell-off.

We see a continuation of the short covering rally going into the Obama inauguration, but have doubts as to whether the move will lure enough buying interest to bring the markets back to levels seen earlier this month.

Have a great three-day 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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

January 15 - If you took our advice in yesterday' report to sell the February e-mini 630 puts for $8, we recommend being quick to take a profit. It may be possible to buy it back for $2 or $3 tomorrow.

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 Jones 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





*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.