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The Dow Futures Report

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Stocks Battered...Again

Thu, Jun 12 2008, 07:37 GMT
by Carley Garner

Alaron

**I was recently interviewed by Stock Shotz!! Visit YouTube.com and search Carley Garner Stock Shotz to listen.

Wednesday turned out to be another rough day for stock bulls (if there are any left). We have experienced a significant slide from the May highs leaving the Dow a few bad days away from the dreaded January lows near 11,600.

The trading and analyst team and dow-trading, a dot com signal provider, successfully predicted the move lower from the 13,000 area and is looking for prices to reach 11,700 in the near future. They believe that high commodity prices, namely crude oil, will be too much for the U.S. economy to withstand.

In Monday’s report I called for the Dow to trade lower to 12,150. Now that this is a reality, it looks like the index now has its eye on 12,070. The VIX (CBOE’s volatility index) is now trading near a respectable 24. This tells me that it is time to begin taking a serious look at option selling once again. However, I also believe that patience will be rewarded. DT Trading, my contacts on the floor, remind us that there has been a pattern for stock indices to find a low on either the Thursday or Friday before expiration only to rally into middle or end of the subsequent week.

Taking all of this into consideration, selling puts on a spike low looks to be attractive. However, the question is “how low will it go?” I recommend giving the market plenty of room to breath; in the long run it doesn’t pay to get greedy. Stay tuned for details.

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 –

• * June 3rd - Sell the Dow (big or mini) 118 put for 50 points or more
• * June 6th - Despite the recommendation in the previous report, my clients were not advised to place an order to sell the June 118 puts for 50 or better. Instead we will wait until Monday in hopes of a clearer picture. If you were filled on this order don’t panic, I still feel that it will work out. Contact me for guidance.

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

Published on  Thu, Jun 12 2008, 07:50 GMT