September 22nd, 2010
Stock index futures biggest decline in weeks, wasn't so big
Stock index futures suffered the biggest daily loss since September 7th; that is hard to swallow given the close of the December S&P which was a decline of just five handles. We have to admit, after the major indices were rejected by (or near in some cases) our technical resistance areas, we were expecting the slide to be a bit more dramatic. This leaves us wondering if the corrective move will be much shallower than we originally thought.
Given the lack of selling, it seems as though the market has hit the facebook "like" button on the Fed's pledge to do whatever it takes to aid the sluggish recovery...and even promote inflation. However, taxpayers have deep pockets but not unlimited resources and the central bank can't buy debt forever. At some point, investors will be reminded of this and the rally will take a breather.
In yesterday's newsletter we mentioned we were due for a trend-change in economic data and tomorrow we will know if the tides have turned. We start the day with weekly jobless claims, but the focus will likely be on existing home sales and leading indicators later in the day. With prices so frothy, bad numbers could be a good reason for the bulls to lock in profits.
For now, we are sticking with a sell rallies mentality. If the current move, is the breather we are talking about...the December S&P should see 1105 (filling a previous gap) and likely even 1092ish before finding credible support. If not, resistance lies at 1148 and then again near 1156.
The Russell has been the market leader in past reversals, whether it be bullish or bearish. Today's trade saw a considerably more selling pressure in the small cap index relative to the NASDAQ or the S&P. In the past, this has worked against equities and could pull the other indices down in the next day or two. Support in the December Russell lies at 636ish with resistance in the 668/673 range.
* 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 factored into current prices, any references to such does not indicate future market action.
Please note: An e-mini S&P and e-mini NASDAQ chart are used because they 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.
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.
