May 13th, 2010
See Carley at the Trader's Expo in LA, join us on June 11th to talk about "Trading Commodities Like a Girl" (http://www.moneyshow.com/caot/WorkshopDetails.asp?wkspid=C0F78BEC175A43A68A939CAB488E0235)
Stock rally pauses just under resistance
Equities traded lower on Thursday but that shouldn't be a surprise after the massive rally that has taken place since the May lows. It is hard to imagine that the low in the S&P near 1050 took place a short week ago.
There wasn't much economic news to work off of so trade relied on technical trade to guide pricing...and lets' face it the markets should be tired after what they have experienced. However, next week should be different. We will hear about inflation at both the producer and consumer level as well as details on the SEC's circuit breaker rules.
As good as the markets look, there is still some risk of one more dip before a much bigger rally can take place. We would prefer not to see it, but we can't rule out a last ditch effort by the bears that triggers a retest of the 1120 area. In the meantime, we continue to look for the mid 1180's in the S&P and 1994 in the NASDAQ. The Russell has been the leader, and this time is no different. This small cap index has already surpassed our initial target. We continue to favor the upside but feel like chasing this market higher could mean trouble, if you want to be a bull wait for a pullback.
A reminder from yesterday's newsletter:
We agree that there are still substantial questions regarding market fundamentals but let's face it, markets are based on emotion and prediction...not necessarily reality. There were truckloads of investor cash waiting for a dip to "go to work" in equities...and they finally got it.
If you have been following this newsletter for long, you know that we had been awaiting a correction. Our technical levels on a weekly chart were 1130 and the next being 1050. In our wildest dreams, we wouldn't have expected it to reach both in the same trading day but that is exactly what happened. In essence, the market ran all of the sell stops to get the bulls out...and now it could be reloading time. If we are right, (aside from some near term two-way trade and volatility) the S&P could see prices as high as 1240 in the coming weeks/months.
* 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 -
May 10 - After several adjustments, and challenging market conditions, our clients have been recommended to hold the short June 1100 puts. We are underwater considerably on the position but hope to be able to recoup as the market stabilizes.
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.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.
