September 29th, 2009
Visit our websites to register for our next free webinar..."Back to the Basics: Getting Started in Futures"
Consolidation ahead of event risk
Mixed economic news ultimately resulted in mixed trade in the equity market. The major indices made attempts at price moves in both directions, but seemed to be drawn to the unchanged mark.
After what felt like an endless string of relatively optimistic economic readings, the data is beginning to soften up. The question going into the rest of the week's overloaded data calendar is whether or not the market can continue to accept "not so bad" news as good news.
Yesterday's rally was impressive but it was also done on one of the lightest volume days in months. It is hard to put too much credence into a move that few participated in. On the other hand, the fact that the S&P bounced so sharply from our 1035 support area gave the bulls a slight edge coming into the session. Therefore, today's consolidation trade leaves me to believe that the path of least resistance is moderately lower. It appears as though the next logical move would be a retest of the recent lows.
The daily chart points higher but my gut tells me lower. The truth is that unless you have the ability to gauge the upcoming economic releases, picking a direction from here faces the same odds of success as flipping a coin. Our overall consensus hasn't changed from yesterday:
I have strong resistance in the S&P near 1060 then again at 1066. Assuming that these areas hold we should retest 1035 support. If we are wrong and a meaningful break of the noted resistance areas occurs we might be off to the races....again. If this is the case, 1086 is the next stopping point.
Sorry so brief today, we have been swamped and there wasn't much to talk about. We expect that tomorrow will give us more interesting content.
* 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
September 23 - If you are looking for something a little more aggressive, you might want to do a bear put spread with a naked leg using the November NASDAQ e-mini options. At the time of this writing, it was possible to buy the 1720 put, sell the 1620 put and sell the 1800 call for even money. In other words, this is a free trade in terms of cash outflow (not considering commissions). However, there is margin of about $3,000 and unlimited risk above 1800. The max profit is $2,000 before considering transaction costs but the best part about it is that your risk at expiration doesn't come in until 1800 so there is plenty of room for error.
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.
