May 7th, 2008
**Be sure to see my monthly column "Futures for You" in Stocks and Commodities!!!
The major stock indices have experienced several large ranging days in recent trade, but the progress hasn't been too impressive. In fact, today's losses wiped away much of the Friday/Monday rally. Lower equities overseas and a relentless rally in crude oil both worked against the Dow and Nasdaq in today's trade.
The June futures peaked out at nearly $124 per barrel following an announcement yesterday that Goldman Sachs is predicting oil prices as high as $200. The consumer is considered to be the life-line of the economy, if discretionary spending is reallocated to transportation and food we could see a large weight handing around the neck of theU.S. economy.
All is not lost for the Dow and the Nasdaq despite today's dismal performance. The market has arguably moved too hastily from the March lows and needs to digest gains. With that said, I see support near 12,768 and at 12,349. Assuming that 12,768 holds we could see a rally to 13,187. Although it isn't appearent by looking at today's session, the market has been in an uptrend since the middle of March. While today was a large down day, it wasn't enough to break technical barriers.
Believe it or not, I think that the market is leaning higher. Until the up-trend channel is broken it seem logical to ride the wave rather than fight it.
I am recommending that my clients remain flat. If you were holding the short 133 position recommended below, you should have bought this option back for a nice profit. Yesterday this option could have been bought back for 15 ticks as recommended ($75 in the mini and $150 in the full sized). If you would like to trade options using this strategy, please contact me.
Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.
Dow Recommendations...
**There is unlimited risk in naked option selling and futures trading
Position Trade -
April 18th - My clients were advised to sell May Dow 133 calls for 50 or better (this can be done with the mini options or the full sized).
- April 29th - Place an order to buy this back for 15 or better
- You should have been filled at 15 for a profit of 35 points before considering transaction costs!!
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 Recommendation
**There is unlimited risk in naked option selling and futures trading
Position Trade - Flat
Carley Garner
Alaron Research Team
800.935.6492
cgarner@alaron.com
http://www.commoditytradingschool.com/
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. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. 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.
