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The Dow Futures Report

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Dead Cat?

Fri, May 23 2008, 09:58 GMT
by Carley Garner

Alaron

**Be sure to see my monthly column “Futures for You” in Stocks and Commodities!!!

All of the major indices showed signs of life on Thursday following the two day blood-bath on Wall Street. Lower crude oil and a drop in unemployment claims aided the effort for higher equities, yet today’s gains were relatively meager.

Keep in mind (as if you had forgotten) that we are approaching a three day weekend. Many traders likely began their holiday mid-day on Thursday and won’t be making their way back into the markets until the latter part of next week. The resulting light volume may mean an increase in volatility or it may create the opposite scenario, however it is important that you realize that it will have an impact and you should trade accordingly.

Crude oil continues to attract most of the attention. “People are concerned about the economy and what’s happening with oil,” noted Scott Fullman, director of derivatives investment strategy for WJB Capital Group. He added, “While the market is higher today we’re not seeing overall broad buying and we’re not seeing a lot of volume.”

I have to give credit to the analyst team at dow-trading, the dot com signal provider that I often speak to in regards to the markets. They were extremely bearish the Dow above 13,000 and their speculations were accurate. They continue to look for lower prices for U.S. stocks. On the contrary, DT Trading in the S&P pit, note heavy support in the S&P and are looking for a buying opportunity.

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 –

May 19th – If you followed my recommendation you would have sold the Dow 135 call today for 50 or better (this can be done with the mini contract).

• · May 20th – Buy this option back for 10 ticks or better to take a quick profit.
• o May 21st – You should have been filled today at 10 points, this is a profit of $200 on the mini and $400 on the full sized contract before commissions and fees!!

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 –

May 15 – Had you followed my recommendation you would be short a mini future from 2035…no stops recommended for now. So far so good...call me for guidance.

• · May 20 – You may have opted to liquidate this position on the spike low today, but if you are still in put a limit order to take a profit at 1977 and a stop order at 2016 to lock in a profit.
• o May 21st – If you placed a stop at 2016 you would have been liquidated before the drop. Depressing, but still profitable by about $380 before commissions and fees!!

Published on  Fri, May 23 2008, 10:10 GMT