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The Dow Futures Report

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Mixed Equities on Mixed Crude Oil

Wed, Jun 18 2008, 10:23 GMT
by Carley Garner

Alaron

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

A continued string of poor economic news, ridiculous oil trade and more inflation scares capped an early morning rally in equities. What originally looked like a great day on Wall Street, turned into a non-event. The broad market barometer, the S&P 500, hugged the unchanged mark for a large part of the trading session. Boredom in both stocks and bonds may eventually trigger a counter trend move. In other words, the over all trend in equities is lower but the longer that the market stalls the more likely it is that a short squeeze will occur.

According to the Labor Department, the index of producer prices jumped 1.4% last month. This was the largest one month increase since November and suggests that many firms are currently absorbing much of the pricing pressure. The figures were much higher than the consensus estimates, although the core reading was relatively stable.

If you are a technical trader, you are likely looking for further declines in the Dow. The trend is lower, trade was heavy following the attempted rally and sentiment is low. I see major support at 12,070 and resistance at 12,417 but recommend being on the sidelines going into expiration. On a dip to support I like the idea of selling puts but picking a direction from here with certainty is a challenge.

The Nasdaq futures contract is displaying much more optimism than the Dow. In fact, the trend seems to be higher, despite an attempt to break below support late last week. As mentioned in yesterday’s newsletter, 1996 is a critically juncture for the September Nasdaq futures. If the market successfully holds at current levels we should see a continuation of the rally to 2059.

You should be trading the September futures contracts by now, if you are holding June positions roll them over immediately as liquidity will soon become an issue.

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 –

Flat

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 –

June 12th – Buy 1 September Mini Nasdaq (this can be done with a big contract) at 1923 using a tight stop. Contact me for ideas.

• * We missed this one…would have been nice, cancel this order.

Published on  Wed, Jun 18 2008, 10:29 GMT