February 1st, 2010
Carley's new book, "A Trader's First Book on Commodities" is now available at all major book outlets!
Stocks finally sizzle without the fizzle
The equity markets had several things going for it on Monday; it was the first trading day of the month, it was "mutual fund Monday" and it was technically oversold. The real test will come tomorrow.
After several early morning rallies that eventually failed and made way for further declines, equities finally managed to put together a green session in which gains were held into the close. According to our research, a majority of the small speculators are holding short positions and we believe them to be the most fickle of the classifications. Failure for sellers to come to market tomorrow, could lead to a surprisingly sharp short-squeeze. Consistent trade above 1083.50 in the March S&P futures might be what it takes to shake out the shorts.
The Institute of Supply Management's manufacturing index was reported at its best performance in five years. The news put a positive tilt on trade but the rest of the day's data wasn't quite as promising. According to the Commerce Department, construction spending fell in December much more than expected and personal spending increased at a slower than anticipated rate.
Thus far, the earnings season has been a relative success. Of all of the numbers that have been released, the overall performance has been 17% higher than analyst expectations. Ironically, the S&P is coming off its worst month in over a year. As we noted prior to the earnings season, it can be difficult to please a lofty market and that is exactly what we are seeing unfold.
The overnight low in the S&P was 1068 (a bit higher than our 1061 support) but perhaps close enough to justify being temporarily bullish. We aren't necessarily bullish...but we do think that this "bounce" could see prices in the 1120 range.
The NASDAQ on the other hand, has been the weakest of the indices and will need to break, and hold above, 1770 tomorrow if the markets are going to move higher in the next few sessions. If this happens, the March NASDAQ futures could see 1835ish. Look for a possible bounce in the Russell to 627.
* 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 can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.
S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
January 21 - Our clients were advised to sell the March S&P 1000 puts today following the drop in an attempt to capture the market volatility in the put premium. Fills were coming in from $8 to $9.
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 -
January 27 - Buy 1 e-mini NASDAQ near 1781
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.decarleytrading.com/
http://www.commodityoptionsthebook.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.
