March 22nd, 2010
Join us on March 25th for a complimentary webinar hosted by DeCarley Trading and SFO Magazine, "Coping with Margin Calls" : http://clicks.aweber.com/y/ct/?l=ON6zJ&m=1gpvdRNxtMFgzm&b=NDqwnVmNI7UezjMZwyf9kg
Health care bill passes, but market shrugs it off
Many traders and analysts were glued to their TV's on Sunday awaiting the latest news in regards to the health care bill. Most were expecting the equity markets to see the new piece of legislation as a negative...and it did. However, most didn't expect to see an early morning reversal that brought the S&P nearly 20 handles higher than the overnight lows.
The extremely choppy trade makes futures trading a difficult task. Unfortunately, my guess is that traders on both sides of the fence (bulls and bears) struggled to stay above water during the session. In the past, we have witnessed similar action just before a major trend change. Remember mid-January? After waffling between 1120ish and 1140ish several times (and with vigor), the S&P finally broke down and eventually traded under 1040.
Despite what many predicted, the market seemed to be relieved that the healthcare bill passed. Not necessarily because it offers pro-growth policy but at least there was a certain degree of uncertainty removed from the political landscape. That said, as things begin to sink in the market might be singing a different tune. Nonetheless, pharmaceuticals were up sharply and they helped to keep the major indices in the green.
Interestingly enough, prices at the pump have been slowly grinding higher without the typical moans and groans. Current gas pricing is at the highest level since the fall of 2008; should crude begin to move above $85 this might become an issue that is once again in the spotlight and this could be a difficult hurdle for stocks to overcome.
Coming into the session, the markets looked horrible but it didn't last. Nonetheless, we haven't given up on the idea of a larger correction. In the meantime, the technical areas of resistance are 1165 and 1173 in the S&P, 1950 and 1982 in the NASDAQ and 684 and 695 in the Russell.
* 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 -
February 19 - Our clients were advised to sell the April 1165 calls for about $7.50, fills were coming in near $7.25 and a handful at $7.50.
March 5 - Clients with ample margin and guts, were recommended to add to this position by selling the 1165 calls for $9.50.
March16 - Clients were advised to roll half of their short call position into the April 1185/1100 strangle.
March 17 - Clients were advised to roll the remaining 1165 calls into the May 1190 calls to give the market some breathing room.
Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
March 9 - Sell 1 June mini Russell @ 682 OB
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 -
March 3 - Sell 1 e-mini NASDAQ at 1878 or better
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.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.
