September 17th, 2009
See DeCarley Trading in this September issue of Equities Magazine!
I will keep this short and sweet as we are preparing for today's webinar with the New York Institute of Finance (I hope to see you there).
Pause or correction?
The rally took a breather ahead of option expiration but the bulls didn't give up much ground despite technicians calling for an overbought correction. This morning's news was positive, but arguably priced into the action.
According to Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, "There was some positive economic news that didn't really do anything (for the market), so that's another sign of exhaustion."
According to the government, the net worth of U.S. citizens grew for the first time in the second quarter since 2007. While this seems like a positive, it offers little comfort as the increase in worth was directly related to domestic asset recoveries that have spent the previous two years plummeting. I doubt that many Americans feel as good about their finances as they did in 2007 but beggars can't be choosers.
Either we are in the midst of a blow off top in the stock indices or we are crazy...There are no guarantees that the highs are in, but this particular short squeeze seems to have gone on far too long. In fact, it is among the largest in history. We pled the bearish case in yesterday's newsletter, now all we can do is wait and see what happens. We also want to remind traders that being overly bearish isn't wise; the trend is up and fighting it is an uphill battle. The same warning can be provided to the bulls; financial markets normally don't move in one direction. The lack of back and filling in the recent run up seems to suggest that something is fundamentally amiss. Whether the market turns the corner immediately, or finds a way to rally another 5% before doing so...markets often go down faster than they go up and therefore being a complacent bull could be dangerous.
Crash? Maybe not, but it seems as though a pullback to 1025 in the December S&P is probable.
Many traders avoid entering positions on option expiration, especially on a quadruple witching month. You may want to take tomorrow off.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations 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 -
September 10 - Our clients were recommended to sell calls into the rally, most sold the 1095 or 1090 strikes in the October S&P options for $6.50 to $6.00 respectively.
Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
Flat
Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.
NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
September 10 - Sell 1 mini NASDAQ at 1683ish
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.carleygarnertrading.com/
http://www.decarleytrading.com/
*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.
