October 10th, 2008
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Lack of trust, capitulation, horror...What else is there to say?
CNBC and other media outlets have been yearning for capitulation in order for this market to find a bottom. If today's open wasn't capitulation, I don't know what is. The Dow plunged about 400 points from already desperate levels on the open of the NYSE. The VIX topped at 76.94, the highest reading ever (there was a slightly different measure during the '87 crash so we can't really compare), I can't imagine much more fear and panic than this.
At this point, the market has surpassed fundamentals or rationality so it doesn't seem helpful to write about the day's events. From what I can see, things are scary but the world isn't coming to an end. The market may not recover Monday, or even next month but it is just a matter of time. Don't forget that there is now an estimated $50 trillion on the sidelines looking for a home and in the long run equities may be the place.
From a short-term point of view, as many of you likely are if you are reading this, the direction of the market is all but certain. Most of my contacts in the industry and on the trading floor are noting that the "big players" are on the sidelines. If professional floor traders are sitting this market out, I think it makes sense that retail traders do the same. Don't trade unless you have to.
Now is the time to buy lottery tickets! Buy the October S&P 500 1050 calls for $6 in premium or less (you could have gotten filled today for closer to $5). You may also like the November 1180 calls for about the same amount.
Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.
S&P Futures and Options Trade Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
October 10 - Buy the October e-mini 1050 calls for $6 or better and or the November 1180 calls for about the same premium, you likely would have been filled much better.
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 Futures and Options Trade Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
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 Trade Recommendations
**There is unlimited risk in naked option selling and futures trading
Swing Trade -
Flat
Position Trade -
October 10 - Buy the October 1430 calls for 15 points.
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.decarleytrading.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. 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.
