The Stock Index Report by Carley Garner

[luckyd1976]

Carley,

If you want you might want to stick to one thread and just update that one thread on the daily basis. It might make for easier finding and reading of your info.

Thanks
D

 

[carleygarner]

January 20th, 2009


Obama in, buyers out.


Today's trade lived up to historical standards. Sources cited a 72% occurrence of inauguration day losses. Equities suffered in what I consider to be "buy the rumor, sell the fact" trade. Now that the new administration is in, reality may have set in as to the severity of the problems at hand and the dismal odds of a V-recovery regardless of who resides in the White House.

Wall Streeter's are beginning to suspect heavy regulations from Washington. In Obama's inauguration speech today he mentioned, "Without a watchful eye, the market can spin out of control."

The British government has mimicked recent actions of our own Federal Reserve by injecting what seems to be a never-ending amount of money into the Royal Bank of Scotland. The Royal Bank announced that its losses for 2008 could be in excess of $41.3 billion.

At the close of trade on Friday, we were expecting a continuation of the short covering rally to 888 in the S&P, 8,550 in the Dow and 1223 (with the possibility of 1274) in the NASDAQ. However, we mentioned that it would be tough to make further gains. While we over estimated the short covering rally potential (most likely due to swift overseas selling), our fears of a subsequent market sell-off became a reality in today's session.

The November lows are now within breathing distance. Despite what look to be technically oversold conditions, I can't help but feel that there is some room for the market to move lower. You may recall us mentioning the potential for the S&P to see 670 at some point in the first quarter, it appears as though it could happen sooner rather than later. The Dow, on the other hand, may be in store for a slide to 6,000 and the NASDAQ to sub-1000 territory.

Despite my bearish outlook for stocks, I wouldn't recommend that the bears chase it lower. The deeper the dip, the more powerful the recoil will be. If you aren't already exposed to the downside, you will likely be better off patiently waiting for better levels to be a bear. Also, if you are looking to buy puts...you may have missed the party. Put premium has exploded with implied volatility making option buying a difficult venture.

If you can't stand being a bull without a position, you may want to look at out-of-the-money calls in the February options. I like anything less than $450...about 910 to 930 strike prices.

If you are a bull looking to sell put premium as a means of taking advantage of the explosion in volatility, or are interested in executing a bullish option spread, I also recommend waiting. There could be better opportunities in the coming weeks and in my opinion it is better to miss the trade all together than it is to be caught in a free-fall with unlimited risk.


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.

 

[Lightning McQueen]

Carley,

If you want you might want to stick to one thread and just update that one thread on the daily basis. It might make for easier finding and reading of your info.

Thanks
D

Good idea luckyd :clap:

Carley, your posts are now merged into two seperate threads, one for the stock Index report the other for the bond bulletin, all together now and tidy, hope you like.

Please continue to use these new threads for your posts

 

[carleygarner]

January 26th, 2009


Choppy, directionless equities.


After a wild trading day on Wall Street, the major indices managed to close well into positive territory. However, if history has anything to do with it the markets could struggle to hold gains into tomorrow's session.

Monday's buying interest was sparked by Pfizer's $68 billion proposal to acquire Wyeth. Investors were delighted to learn that there were at least a few firms with enough capital to conduct "business as usual". Additionally, the market was relieved to learn that the National Association of Realtors data showed improvements, rather than contraction, in existing home sales.

The excitement was offset by news of Home Depot layoffs, Caterpillar labor cutbacks and the fact that it took a massive plunge in home prices to entice moderate buying.

Since the middle of January, we have seen S&P trade battle between running buy stops and running sell stops but the overall tone has been negative. We respect the potential for a rally to reach levels as high as 867 in the March S&P and 8,410 as shorts seem to be slightly too abundant. Nonetheless, we are still relatively convinced that a retest of the November lows are in store for the major indices. Thus, approaching the markets with the mentality of selling rallies seems preferential. With that said, caution is warranted in that we have witnessed a handful of swift rallies from similar levels.

I wanted to point out a typo in the last newsletter, we stated that there were significant sell stops in the S&P through 845 or so, but the buying may begin drying up from there. This should have read, buy stops in the S&P...So far, this prediction has been true.

Our next downside target in the S&P is 792, but resistance can be found near 867. We are expecting the March Dow to make its way to 7,750 and see resistance near 8,420. 1,133 seems to be a likely target 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 -

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.

 

[carleygarner]

January 27th, 2009

See DeCarley Trading in the March Issue of SFO Magazine..."Trade Like a Girl"

Stocks rally ahead of FOMC

A handful of positive earnings kept the market afloat on Tuesday. Some of those positing quarterly profits were U.S. Steel, American Express, Netflix, Inc. and Texas Instruments Inc. In oversold market conditions, it can sometimes take little to excite the bulls and scare the bears.

Crude oil tumbled sharply too continue the downtrend as more job cuts are announced and lagging consumer confidence threatens energy demand. The day's losses have essentially erased last week's gains and look to be headed below $40 per barrel. Lower energy prices will arguably be the largest catalyst for an economic recovery, but without investor confidence it seems as though the drag on commodity stocks is outweighing the economic benefits. This will eventually reverse itself, but will likely be later in the year.

According to Bloomberg news, the commercial paper market is steadily improving and the part that the Fed must play in retaining liquidity is diminishing. However, the bad news continues to plague stock trade. The Conference Board's index of consumer confidence reached an all time low of 37.7 in January and the Standard & Poor's Case/Shiller Index showed that home prices are down about 18.2% in November from a year ago. Additionally, while the Richmond Fed's regional manufacturing index improved, it still suggests contraction.

It isn't impossible for the markets to rally on bad news, but it doesn't seem sustainable either. With that said, we are of the opinion that the major indices have a bit of room to move on the upside but have serious doubts in regards to their ability to hold gains. We believe that short covering alone, could bring the S&P to 867 and the Dow to 8,420 but are of the opinion that the bears will be rewarded for taking risk at such levels.

The NASDAQ is facing considerably weaker seasonal pressures than that of the Dow and the S&P. Accordingly, the index may struggle to post gains alongside the broader based indices. Look for resistance near 1203 and again near 1270.

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.

 

[carleygarner]

January 28th, 2009


See DeCarley Trading in the March Issue of SFO Magazine..."Trade Like a Girl"


It's been nice, but will it last?


Stocks have rallied sharply in recent sessions leaving many traders wondering whether or not the rally can sustain itself. For a little over a year, the answer to that question has always been no. Until the market can prove otherwise, it seems like the safest bet is to assume that this will continue to be the case for now. While I strongly believe that a long-term equity market bottom is looming, I am not convinced that it is already in place.

As much as I would love to open my 401k statements and see green, the major indices are at or near major resistance levels and could very well be in store for another retest of the recent lows and maybe even the November lows that we have all been touting. Based on conversations with market insiders, there are rumors of large institutions selling into this rally, and I wouldn't want to be the on other side. If you are long with either options or futures, we recommend taking profits. Aggressive traders may even want to position themselves on the short side of the market. Those with less risk capital or less fortitude in regards to being exposed to market risk may look to buy the March e-mini S&P 760 puts for about $350. The risk is limited to the premium paid and the profit potential is unlimited. Although it will take a large move for a substantial profit to materialize, it seems as though the risks are worth the potential rewards.

The bulk of the rally occurred as short traders appeared to be covering positions ahead of the Federal Open Market Committee announcement but the buying didn't end there. Post Fed, the market found new buyers as optimism over bank bailouts and the governments dedication to repairing the economy lured pockets of investors. Don't forget that the only thing scarier than being exposed to a crashing market is missing the rally. Sidelined investors don't want to watch the bus leave the station without them.

Despite being overall bearish, we acknowledge that we may see spillover buying early in tomorrow's session. With that said, it seems relatively likely that we will also see a wave of buyer's remorse that could lead to lower indices in the next few trading sessions. Keep in mind that many buy stops were taken out in the last few trading days, and there are likely just as many sell stops lining the downside.

Resistance in the S&P lies at 876 and again at 890, but we are leaning toward a move toward support near 793 in the coming weeks. Dow traders should be aware of resistance near 8,420 but we feel as though failure at or near this level will lead to selling pressure all the way to 7,750.

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.

 

[carleygarner]

January 29th, 2009


See DeCarley Trading in the March Issue of SFO Magazine..."Trade Like a Girl"


Buy the rumor sell the fact


The high flying optimism witnessed in yesterday's session, was nowhere to be found on Thursday. Swiftly lower European markets influenced trade in domestic markets and carried throughout the session. Today's selling suggests that the recent rally may have been primarily short covering and buy stop running as we had suspected. Accordingly, it is likely that there are will be sell stops to be triggered on the way down. Without a catalyst to halt the snowball effect, we should see the indices slide back to the January lows.

With the FOMC out of the way as well as the Obama stimulus package, the market has little to look forward to. As a result, traders were forced to turn back to earnings and unfortunately it isn't a pretty site. Earnings results have been broadly weak; companies from Eastman Kodak to Qualcomm reported fourth quarter losses. Putting salt in the wounds of the bulls is news of Starbucks plan to lay off 7,000 additional employees.

Despite plummeting pricing, new home sales dropped nearly 15% in December. This translates into the slowest pace on record and resulted in the worst annual results in more than two decades. The median price of a home sold in December was $206,500, about 9.3% lower than last year. For those of us in Las Vegas, things are much worse. According to insiders, the inventory of unsold new homes is still too high and prices will need to depreciate even further before finding an equilibrium.

The indices have essentially erased yesterday's euphoria, and to us it seems like the theme will continue into tomorrow. Although we are likely due for a minor bounce, we expect lower prices going into the weekend. Ultimately, we are looking for the S&P to make its way down to 793. However, we realize that markets don't go straight down. In fact, we can't rule out a bounce to 860 or even 866 before resuming its move lower. Our downside target in the Dow is 7,725 but we see resistance near 8,240 and 8,330. Assuming a close below 1206 on Friday, the NASDAQ should see 1136 by sometime next week as seasonal pressures and earnings should take their toll on the index.


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.

 

[carleygarner]

January 30th, 2009

See DeCarley's article on option selling in the bonus issue of Stocks & Commodities Magazine!


Bad bank rescue falters, so do stocks


U.S. indices fell for the second day in a row as the negative sentiment continues to mount. Despite better than expected fourth quarter GDP data, the numbers were grim and the mood on Wall Street was similar. The "icing on the cake" being eaten by the bears was news that the governments "bad bank" plan was on the skids.

According to Dean Barber, president of investment firm Barber Financial Group, commented on the banking crisis and the lack of organization regarding the bailout; "The banking system is still in crisis mode...The surge we saw in financials earlier in the week was more symbolism than it was substance. There wasn't anything that had been decided upon. There's no clarity who is going to get the money, how much they are going to spend."

The advanced fourth quarter GDP report came in at a draw of 3.8%, the fastest pace decline in nearly 27 years. Coming into the day, analysts estimates were expecting a negative 5.5%. Accordingly, the data was initially looked at as a positive but the optimism quickly dissipated.

Overall, we are still looking for weakness in the markets. However, it wouldn't surprise me to see a moderate amount of buying come in on Monday. With that said, selling rallies will likely be the money making trade for now. Our downside target in the March S&P futures is near 790, we are looking for 7,730 in the Dow and 1133 in the NASDAQ.

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

Position Trade -

January 28 - Buy the Feb S&P 760 puts for about $350. **This recommendations was made in the text of the 28th newsletter but was accidentally referred to as March.

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]

February 2nd, 2009

See DeCarley's article on option selling in the bonus issue of Stocks & Commodities Magazine!

Stocks struggle to make progress, bears in control

Domestic equities suffered from overflow selling in foreign markets but it was downbeat economic news and corporate announcements that prevented gains. News that Macy's will be cutting 7,000 jobs and Morgan Stanley may be laying off up to 4% of its workforce proved will likely keep pressure on stocks in the coming sessions.

The market is anxiously awaiting the economic stimulus plan that is now before the Senate but the chaos and uncertainty surrounding the details may keep any bullish reaction muted. This stimulus package was passed by the House last week, despite a lack of Republican support; the GOP argues that the plan is too expensive and should include tax cuts to spur economic growth.

Given the tendency of the equity markets to set the tone for the year in January, we aren't off to a good start. January of 2009 turned out to be the worst ever recorded. Unfortunately, February doesn't have a good track record. Although it is within what are considered to be the "best six months of the year" the market tends to post losses more often than not in February. Keep an eye on the trading session before President's Day which has been down 14 of the last 17 for the S&P with consecutive losses occurring in 1992 through 2002.

Contrary to seasonal tendencies, tech stocks outperformed the broad market in Monday's session. According to Keith Springer, president of Capital Financial Advisory Services, "Technology is one of the sectors that people, businesses are always going to need." He added, "There's a feeling that corporation are going to continue to invest in technology."

However, we are still expecting continued weakness in the near-term in all of the indices. We are looking for the March NASDAQ futures to trade lower to 1130 before finding meaningful support. Likewise, we are now projecting that the S&P will trade below 790 and the Dow below 7,700 before a reversal can occur.


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 28 - Buy the Feb S&P 760 puts for about $350. **This recommendations was made in the text of the 28th newsletter but was accidentally referred to as March.
• January 30 - Clients were recommended to exit this trade in late trade on Friday for about double their money (some may have gotten a little more, some a little less).

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]

February 3rd, 2009

See DeCarley Trading quoted in the "Hot Commodities" section of this month's Futures magazine!

Positive trade, but bears still have the upper hand

Stocks drifted higher on Tuesday but we are having doubts as to the sustainability of any gains...at least before a retest of the January lows and maybe even the November lows.

U.S. auto sales plunged in the month of January. Economists were expecting weakness, but estimates turned out to be overly optimistic. Ford reported sales down 40% while GM sales were down over 50%. Toyota outperformed, but still experienced a 32% drop in sales. Weighing on sales was a lack of fleet buyers such as rental car companies. To put the percentages into perspective, Ford sold 93,060 vehicles in January 2009 compared to 155,832 in January of 2008. Clearly, the abysmal sales will cut deeper than Ford and GM as the car makers are operating at overcapacity and will be forced to continue layoffs and plant closures with or without government money.

On a positive note, the National Association of Realtors reported much better than expected pending home sales. Its seasonally adjusted index rose 6.3% in December despite analyst expectations for a flat line. Additionally, a few better than expected earnings reports by firms such as D.R. Horton Inc, UPS Inc., and Merck & Co. gave investors a shred of hope. However, the event that seemed to turn sentiment was rumors of a merger between Bank of America and UBS.

Until mid-day, Tuesday was a painfully sideways session on Wall Street. Since Monday, the indices have been trading in a gradually tightening range. This can only mean one thing, breakout.

In such instances, the direction is typically dependent on fundamental events in Washington, on Wall Street and released economic data. It seems as though there was ample time for stop orders to accumulate on both sides of the market; it was just a matter of time before something triggered the stop running and the market would make a move. I think that is what we saw on Tuesday and acknowledge that there may be some moderate follow through buying tomorrow.
Nonetheless, the trend is down and we wouldn't want to fight it. My sources and assumptions, tell me that there are a pocket of sell stops under 808 in the S&P and 7,800 in the Dow and it seems likely that they will be executed sooner rather than later.

We are still looking for the indices to head lower to our noted targets of below 790 in the March S&P, 8,246 in the Dow and 1135 in the NASDAQ. However, it seems as though the markets have potential to creep a little higher before the selling resumes. We see resistance in the S&P near 852, 8,246 in the Dow and 1259 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 -

January 28 - Buy the Feb S&P 760 puts for about $350. **This recommendations was made in the text of the 28th newsletter but was accidentally referred to as March.
• January 30 - Clients were recommended to exit this trade in late trade on Friday for about double their money (some may have gotten a little more, some a little less).

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]

February 4th, 2009

See DeCarley Trading quoted in the "Hot Commodities" section of this month's Futures magazine!

Bank realities return to Wall Street

As the financial sector rescue plan remains in limbo, investors are growing increasingly uneasy with equities. Bank of America shares weighed heavily on the Dow pushing the index well below the coveted 8,000 mark and causing it to underperform relative to the other indices.

There wasn't a lot of economic data for the market to mull over, but the intraday headlines offered significant guidance. The market's attention was focused on Obama's new cap on executive pay to firms tied to bailout money and the Madoff probe in Washington.

President Obama stated, "We're taking the air out of golden parachutes" in regards to the announced government intervention into corporate America. The compensation cap is said to be the beginning of a dramatic restructuring of the $700 billion bailout that Congress created last year. The new leaves some proponents wondering whether bank employees will be provided with enough incentive to bring the industry back to life, and talk of many institutions paying the money back in order to avoid the caps is concerning in that they may be incentivized to gamble on the solvency of their firm. It is clear that high compensations for running financial institutions into the ground is unethical but unfortunately the solutions to solving this issue could have substantial unintended consequences.

We were right to suspect some moderate buying to come in before the selling resumed. However, the reversal from this morning's highs (near our major resistance targets) suggests that the slide will continue to our targets of 790, 7700 and 1135 in the S&P, Dow and NASDAQ respectively.

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 28 - Buy the Feb S&P 760 puts for about $350. **This recommendations was made in the text of the 28th newsletter but was accidentally referred to as March.
• January 30 - Clients were recommended to exit this trade in late trade on Friday for about double their money (some may have gotten a little more, some a little less).

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]

February 5th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!

Non-farm and stimulus package cause stock shorts to cover

The equity indices enjoyed consistently positive trade for most of Thursday on what looked to be position squaring ahead of tomorrow's employment numbers, optimism over the stimulus package and better than expected retail sales. However, the day didn't get off to a good start and it didn't end particularly well either. The Dow traded below 7,800 before the buying ensued to push the index to 8,069 then retreated into the close.

Many retailers, including discount giant Wal-Mart and Macy's Inc., beat the street's sales estimates. The news took investors minds off an announcement by Macy's earlier this week in which the firm plans to cut 7,000 jobs. Keep in mind, however, that even though the numbers were a pleasant surprise relative to expectations they were still incredibly weak.

All eyes are on tomorrow's data with most analysts looking for 500,000 jobs lost last month. Many claim that the financial markets have assumed a number close to 600,000. If this is the case, it may be difficult to expect heavy selling on the announcement as speculators have already sold the market short in anticipation of a downside miss.

I am not going to attempt to predict the outcome. The indices at or near major resistance levels and under the right circumstances could break out to the upside as shorts are forced to cover positions. On the other hand, in the absence of the non-farm payrolls data I would be a bear looking for areas noted in previous reports...790 in the S&P, 7700 in the Dow and 1135 in the NASDAQ. We prefer the sidelines until things clear up (hopefully after tomorrow's data).




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]

February 6th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!


Bad news is good news


Wall Street found solace in the incredibly poor employment reading. It seems as though bad news, as long as it is not completely unexpected, is seen as a positive in that it is incentive for Washington to pull together. Investors spend the session awaiting a Senate vote for a $937 billion plan. In the meantime, Treasury Secretary Timothy Geithner are said to be putting the finishing touches on a plan to overhaul the original Troubled Assets Rescue Plan. The revised program is expected to be announced on Monday.

Dan Cook, senior market analyst at IG Markets in Chicago commented on the state of the market. "All focus right now is really on Washington." He believes that investors are hoping that the unemployment report was bad enough to push lawmakers into swift action. "It basically equates to a group of firefighters showing up at a burning house and then arguing over what type of fire hose they're going to use," he said.

Looking at the "board" it may be difficult to imagine that the day begun with one of the worst employment reports in history. The Labor Department claimed that U.S. Employers slashed 598,000 jobs in January. This was the largest number of cuts since 1974. Likewise, the unemployment rate rose to 7.6%, the highest since 1992.

We were right to be concerned over an upside breakout on short covering. Now that the squeeze is underway, it seems as though there may be a little more steam left in the move. It is my guess that the S&P will find resistance near 875 and again at 881 before the selling resumes. Similarly, resistance in the Dow should be found at 8,490. The NASDAQ seems to be at a significant area of resistance but may see 1320 before a reversal can occur.

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]

February 9th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!

Delayed stimulus announcement keeps market afloat.

Economic news was scarce, but investors found solace in Obama's pledge to curb an economic meltdown. Today the newly elected President spoke to the citizens of Elkhart Indiana in an attempt to garner support for his stimulus package.

It is expected that the Senate's version of the bill will be passed on Tuesday. From there it must be reconciled with the House's version of the plan which totals about $820 billion vs. the Senate's $827. According to Obama, there are no assurances that every item in the stimulus plan will work but he has no doubt that "delay or paralysis" in Washington could deepen the country's crisis. He claimed that "Doing nothing is not an option," he added, "We've had a good debate. Now it's time to act."

As stock traders look to Washington for help, the event risk continues to mount. All the while, volatility levels are shrinking to make me believe that we could be seeing the calm before the storm.

It was brought to my attention that some fund managers are expecting a sharp rally to occur that could bring the S&P to levels as high as 950 in the coming weeks. However, I am also being told that the same managers would like to be short from such levels.

I am having doubts that the S&P will be able to overcome resistance near 876 and 881. Accordingly, short futures and long puts seem to be a good play at such levels. However, option sellers may want to shy away from selling call options as the volatility is light and the risk/reward prospects may not be attractive. Should we see a short squeeze to 950, traders short call options will likely feel the pain. I would prefer to wait for either higher prices and volatility to feel comfortable utilizing a short call strategy.

For now, we are sticking with the upside projections pointed out in previous newsletter.

It is my guess that the S&P will find resistance near 875 and again at 881 before the selling resumes. Similarly, resistance in the Dow should be found at 8,490. The NASDAQ seems to be at a significant area of resistance but may see 1320 before a reversal can occur.


Nonetheless, we are slightly less confident in the analysis as it seems as though the market could easily break higher or lower from current levels based on news out of Washington.

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]

February 10th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!

Stocks turn over on a lack of TARP detail

Equity traders weren't happy with Treasury Secretary Timothy Geithner's revision of the TARP plan and they expressed their opinions by selling shares. The plunge was focused on bank stocks due to fears that the government's plans wouldn't be enough to revive the industry but spread throughout all sectors. This was evidenced by shares of Wal-Mart, one of the darlings of the Dow, plummeting over 2% on the session.

Treasury Secretary Timothy Geithner claimed that the Obama administration will be aggressive in their handlings of what they are calling the "worst financial crisis since the Great Depression". However, the market saw it as a lot of promises with no detailed plans of action.

Wal-Mart plans to build fewer stores in 2009 as well as cut at least 700 jobs from its headquarters in Arkansas. However, they also announced that they will be adding jobs in its New York office and throughout other areas of the nation. The news wasn't taken lightly by a market that has held Wal-Mart out to be nearly "recession-proof".

Now that the major indices have rolled over, the stop running and speculative selling may continue in the near term. It appears as though selling rallies in tomorrow's session will be the correct speculation. However, the daily trading range has become increasingly narrow and major support isn't too far away so caution is warranted.

Major support in the S&P should be found near 800, as has been the case in recent months. However, our earlier projection of 790 could be in the cards. We see significant support in the Dow near 7800 but a close below may suggest a slide under 7500. Support in the NASDAQ should be found near 1200, with 1133 as our S2.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.


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]

February 11th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!


S&P erases last week's gains with all eyes on Washington


An early morning "dead cat bounce" was quickly met with moderate selling pressure leaving the bears in control. Barring any surprises by the Fed we will likely see the indices trade weaker in the coming session or two. However, shorts shouldn't get too comfortable as event risk remains high.

With two versions of the stimulus bill passing in the house and senate, lawmakers spent the day working to find an a final agreement that both legislative bodies can live with. Putting pressure on the deal, Caterpillar Corporation executives told President Obama that they would rescind some of the 22,000 layoffs that the recently announced upon him signing the bill into law. Late in the session, news of a finalized Bill sparked a low volume rally from the daily lows.

Also providing guidance, or lack of, from Washington was the bailout bank CEO's Congressional testimony. The executives agreed to demands of increased transparency and accountability but they seem to have trouble accounting for taxpayer anger. Barney Frank began the hearing with the following statement:

"I urge you going forward to be ungrudgingly cooperative...There has to be a sense of the American people that you understand their anger...and that you're willing to make some sacrifices to get this working."

Increased crude oil supplies forced the March contract to the mid-$30 range. However, despite the added benefit in consumer discretional spending equity investors continue to focus on the fact that weak economic conditions are the cause of "cheap" oil. Accordingly, confidence continues to erode along with spending.

We are sticking with yesterday's targets and support:

Major support in the S&P should be found near 800, as has been the case in recent months. However, our earlier projection of 790 could be in the cards. We see significant support in the Dow near 7800 but a close below may suggest a slide under 7500. Support in the NASDAQ should be found near 1200, with 1133 as our S2.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.


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]

February 12th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!

Stocks rebound as S&P futures refuse to break 800

It was a relatively hectic day, so I will keep today's commentary short and sweet.

After what seemed like a desperate day for equities, the major indices forged a strong comeback in late session trade. The buying was triggered by oversold market conditions but was fueled by news that the Obama administration was working on a plan to subsidize mortgage payments for troubled homeowners.

Analysts, and apparently the market, find comfort in the new plan in that it will be structured to help homeowner's before they fall into arrears on their loans. This is in contrast to existing programs that aren't relevant until borrowers are delinquent.

We may or may not have found a long-term low in the stock indices, but I do feel confident that we will see another day or two of follow through buying. Today's key reversal should be enough to shake up the bears. The first area of resistance in the S&P is 837, but beyond that it looks like we may be headed back to 875. The Dow managed to hold 7,800 (despite an intraday dip much lower) telling me that we should see prices above 8,042 and possibly 8,311 shortly. Our upside target in the NASDAQ is 1278.

Some of those trading with us purchased the February 845 calls on the dip for $6.25 in premium. Later in the day we were able to sell them for as much as double, a $312.50 profit before commissions and fees, less than 2 hours later (naturally they don't all turn out this well). We may be looking to put them back on if the market dips a bit tomorrow.
If you like what you see on this newsletter and would be interested type of trading or intraday and swing trading futures, give us a call. Not all of our recommendations make it onto the newsletter in a timely fashion due to fast paced markets. We would love to work with you and accept accounts of all types and sizes.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.


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]

February 13th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!

Equities range trade despite stimulus bill passing.

After weeks of anticipation, hoopla, and near chaos, the Obama's stimulus package passed. The $787 billion aimed at rescuing the economy was sold by Obama's claims that it will create over 3.5 million jobs. However, opponents criticize the lack of tax cuts and question its viability.

Equity traders didn't seem to be impressed, instead they are looking forward to next week's outline of the foreclosure plan as well as the new rescue plan for the financial industry. The previous TARP revision announcement left a bad taste in the mouths of stock traders in that details were absent and so was confidence.

I will admit that I thought that yesterday's buying frenzy would bleed into today's session. This is especially true given strength in many overseas markets posting gains at the time of the U.S. open. We now know that this wasn't the case.

Monday will be more telling, but it seems like the indices will be subject to a retest of the recent lows. Depending on the "feel" of things, pending Washington event risk, and of course our chart work we may be looking to be a bull via options. We will begin with shopping for long call opportunities trading at a discount but as the volatility increases short puts may even be in the cards.

We apologize for a lack of "meat and potatoes" and less than certain analysis. However, we would prefer to see what Monday brings before making any bold statements. In the meantime, support in the S&P should be found at 803 and resistance at 836. Dow traders can look for support near 7,740 and resistance near 8,035. Support in the NASDAQ will come in near 1208, resistance can be found near 1277.

Sorry so short, have a great holiday weekend.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.


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]

February 17th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!

Stock market low may be blooming, but near term danger.

Investors weren't given a reason to buy into equities, so they didn't. The selling pressure took the S&P below the 800 level for the first time since the notorious November lows set on the 21st of that month. Among the sectors hardest hit were energies, financials and big manufacturers.

The Obama administration's $787 billion stimulus bill isn't being given confidence from the street despite White House hopes the package will create 3.5 million jobs. New data suggests that the price tag on each of those jobs is in such excess that it is a negative net proposal to the economy. In an overly simplistic example, if the government expends $200,000 in resources to create a job that will pay $50,000 annually which may or may not last long enough to actually "pay back" the economy...everybody falls short.

Also detracting from any optimism that the markets may have in regards to the stimulus package, is the ongoing saga in the automotive industry. General Motors and Chrysler spent all night negotiating with the UAW (United Auto Workers Union) in hopes of reaching a restructuring deal that could be presented to the federal government. Many feel as though the final deal may not materialize until after the government set deadline. Union officials were said to be blaming the delays on Obama's failure to appoint a "car czar" to oversee operations. However; the administration announced on Sunday night that a task force would be working with the restructuring plans of the automakers.

Markets in general, but specifically equities, are built on trust in the system and faith that each of the components of the system are working toward a greater good. Investors have lost conviction in Wall Street and until it returns the markets will have a difficult time sustaining gains. In the meantime, the major indices are oversold and should see a corrective bounce. Our clients were recommended two alternatives ideas; purchase February calls (we were getting filled on the 820 calls for $7.25 or $325 plus commission and fees), or sell March puts (we were getting filled at 660 puts for $8.00 or $400 minus commissions and fees).


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.


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]

February 18th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!

Stocks waffle on Obama's $75 billion mortgage relief plan.

The long awaited mortgage relief plan was essentially a non-event. The $75 billion attempt to alleviate foreclosures and the pressure they are causing in the financial markets was unveiled in a speech delivered by President Obama in Arizona.

New home construction fell to a record annual rate of 466,000 in January making news of the mortgage bailout plan bitter-sweet. Although more expensive than previously expected, the Obama administration claims that their proposal will keep 9 million people from losing their homes. The plan includes the easing of refinancing for people that are upside down on their loan to rates that are subsidized by the government. It also provides incentives to mortgage lenders in order to promote action to help those on the verge of foreclosure. According to the President, it is worthwhile for the responsible citizens to support the plan to help their struggling neighbors as failure to do so will impact everyone. Clearly, the markets aren't necessarily convinced and if the they are...they are bitter.

While analysts are arguing that the big three auto companies would be better off filing for bankruptcy protection, motor city CEO's would "rather not go down that road". At the same time, GM is claiming that they will be out of cash by March in the absence of another government injection of capital.

It is hard to justify being a bull given the dreary market sentiment and dismal economic news. However, it is times like this that offer the best opportunities. The major indices are oversold and although it may be in their destiny to see lower prices we are due for a corrective rally. Now is a great time to buy lottery tickets, I like February calls with strike prices near 800. If you are an option seller, I like selling puts into weakness but caution that you would want to stick with the March options and strike prices at or below 660.

It seems as though most of the sell stops have been triggered and support near 785 through 778 (despite a today's temporary break-down) will hold for now. In the meantime, we should see a rebound to 820 or as high as 830 as short traders cover positions. The Dow came very close to reaching our major support level near 7,400 which supports a recoil rally that could extend to 7,900 should the buy stops lining the upside begin to trigger.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.


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.