October 16th, 2009
"Your book (Commodity Options) just paid for itself 358 times today...I'd call that a good investment any day!!! I'm buying 2 next time"~Jonas Miller. (*Past performance isn't indicative of future results). Pick up a copy of "Commodity Options" at any major bookstore or online outlet!
Stocks pause, yawn....
Stocks traded moderately lower on lackluster earnings and mixed economic data. Bank of America reported a loss of $2 billion, sending a reminder to investors that improvements don't necessarily mean cured.
The University of Michigan's consumer sentiment index fell to 69.4 after posting 73.5 in the month of September. The sharp downturn doesn't bode well for the ability of consumers to pick up the slack. In a similar theme, GE reported weak profits last quarter due to losses in its business loan division.
Stocks and crude have been able to travel higher together in recent months but if crude continues at this pace that might quickly change. The market's perception of higher crude has been that it is a positive indication that demand for energy, and thus the health of the economy, is on the rise. However, as crude gets more and more expensive we will eventually reach a point in which the consumption pinch due to higher energy costs will be back in the spotlight. That said, we happen to be bearish crude at these levels. There seems to be a massive short squeeze in effect but it might not last.
Stocks were under pressure on Friday but the selling was muted. The lack of directly might be the result of option expiration but it is unclear as to whether expiration artificially held stocks up or if it prevented further gains. Monday's trade should provide a clearer picture. For now, we can't help but lean lower but realize that our upside targets in the NASDAQ wasn't quite achieved and therefore there may be slightly more buying ahead of the correction. Nonetheless, we feel as though the risk is in being long this market for now. Here is a similar prediction made by some of our friends on the floor with DT Trading http://clicks.aweber.com/y/ct/?l=ON6zJ&m=1g3ibFyCzcFgzm&b=jzNTkhYTHRqqY46kRRfXig. DT is a specialist that we use the one CME floor to execute open outcry positions for our clients and they have always had a knack for the markets as well as the ability to provide efficient fills.
In yesterday's newsletter we mentioned resistance at 1095 but thought that the S&P would kiss 1100. The overnight high was 1095...and it was downhill from there. We still see resistance in the NASDAQ at 1075 and in the Russell at 626.
If we are right, our first downside objectives are 1060, 1714 and 605 respectively.
* 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 -
October 14 - Our clients were recommended to sell calls against today's equity market strength. Fills on the November 1135's were coming in near 7.50 and some sold the 1040's at 7.25. We feel as though the market might move a little higher in the near-term but like the prospects over the next week or two.
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 -
Flat
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.
