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The Stock Index Report

This report has been deactivated

Dollar drives stocks and oil lower

Thu, Nov 12 2009, 23:36 GMT
by Carley Garner

DeCarley Trading

The U.S. dollar index futures market is getting its 15 minutes of fame. What was once a rarely spoken about futures contract is now garnering attention from CNBC and Fox Business news. The greenback has been relentlessly grinding lower in recent months but is beginning to show temporary signs of life.

If you follow currency trade, you have likely read about the carry trade that has allowed the U.S. currency valuation to drop beneath what the fundamental value might actually be. Carry traders are essentially borrowing dollars (selling them) to invest in currencies that provide higher yields. With the Fed keeping the overnight Fed Funds rate at nearly zero, that leaves the dollar at an interest rate disadvantage relative to most currencies and thus the seemingly never-ending demise of the greenback. However, if you recall the Japanese Yen was once the victim of a similar carry trade but when traders were forced to unwind the Yen was catapulted. We believe that eventually we will see the same price action in the dollar.

Unfortunately, traders have been sensitive to dollar movements simply because much of this rally has stemmed from the premise that a weaker dollar promotes earnings potential for firms doing business overseas. In addition, it keeps U.S. farming and factory workers moving as a result of a high demand for domestic products from overseas buyers. Remember, U.S. goods look cheap with the dollar in the dumps.

As the dollar recovers, stocks will initially struggle. For this reason, I feel as though the December S&P futures will be facing an uphill battle in the near-term. I cannot say that I am overly bearish in this market due to the seasonal strength that is typically seen going into year-end but it does seem that a patient strategy of selling on swift rallies could be the way to go. That said, since March the money trade has been being long so as a bear you should make it a rule to never chase the market lower. Let it come to you, or miss the trade....

The S&P has left some buy stops above 1103 and might eventually go for them but for now it seems like a move to 1070 is the in the works. Similarly, the NASDAQ might be headed for 1730 and the Russell 555.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.


S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

November 11 - We recommended that our clients sell the December S&P 1160 calls for $7 or better. Some were getting fills near $6.75 others opted to continue working the order at $7.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -
Flat

Published on  Thu, Nov 12 2009, 23:36 GMT

Just another boring Friday

Mon, Nov 9 2009, 01:59 GMT
by Carley Garner

DeCarley Trading

Despite all of the pent up anticipation over today's employment report, it turned out to be less than exciting. According to our sources, there were only 40 locals standing in the pit near the close...the others had already welcomed the weekend.

As you have probably already read, the non-farm payrolls were reported as a draw of 190,000 and the unemployment rate finally hit the dreaded 10% mark. However, the numbers weren't too far off of the mark and had, more or less, been priced in.

An upgrade of GE lifted investor spirits; Bernstein Research and Oppenhiemer both upgraded their ratings on GE to "outperform".

The major indices settled nearly flat after a few bouts of volatility that favored both the bull and bear camps at alternative points in the morning. In terms of price, it might be fair to say that the session was a tie between buyers and sellers. However, from a psychological and technical aspect I see today's trade as a victory for the stock market bulls. Not only did the cash market Dow close above 10,000 but the December S&P futures managed to settle just above my 1066 pivot area. Both of these events suggests that the odds are in favor of a mutual fund Monday.

Fundamentals aside, price action tells me that we could be headed much higher from here. My weekly analysis points toward a possible move to 1120 in the S&P. Of course this type of move wouldn't happen overnight, but at some point in November it looks to be a real possibility. Others that I am in contact with have targets closer to 1140.

Next week, look for 1066 to be the make or break number in the S&P but our first upside target will be 1103. If I am wrong, the first support will be near 1026. If you are trading the Russell, initial resistance will be at 592 but a break here could mean the 620's again. We are looking higher in the NASDAQ , 1785 soon?

If you are following our short put recommendation, our clients were recommended to exit their positions by buying back the December 900 put this morning. Fills were coming in anywhere from 3.40 to 3.85.


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.


S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

October 28 - We recommended that our clients sell the November S&P 960 puts for $8. There were a few filled in the overnight trading session, but unfortunately the market turned without us. Those that were able to get a fill, were recommended to buy the option back at $3 to take a quick profit. We suspect that this order will get filled by tomorrow. If so, the trade locks in a quick $250 per contract before commissions and fees.
• November 4 - Our clients were filled on the recommended GTC order to buy back the November 960 puts for $3.

October 30 - Our clients were recommended to sell the December S&P 900 puts for about $8. Fills were coming in from $7.75 to $9.

• November 6 - clients were recommended to exit their positions by buying back the December 900 put this morning. Fills were coming in anywhere from 3.40 to 3.85.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Mon, Nov 9 2009, 01:59 GMT

Stocks up pre− Fed but fail to hold gains post−Fed

Wed, Nov 4 2009, 23:25 GMT
by Carley Garner

DeCarley Trading

All eyes were on the Fed in early morning trade. Uncharacteristically, the financial markets experienced a notable amount of volatility in pre-announcement trade. In more typical circumstances, the markets remain range bound into the interest rate decision; this time around the S&P rallied sharply ahead of the news.

The Fed expectedly left rates unchanged but some argue that their policy and their language contradict each other. According to the accompanying commentary, the U.S. economy has picked up; yet, their pledge to hold rates at record-low levels for an "extended period" suggest that there are still some reservations in their perception of the economy. As a result, stocks traders are a little uncertain of where to go from here. After all, low rates are good for the economy but if they are kept low because of underlying weakness (which is clearly the case) then it is hard to get overly excited. Accordingly, the major indices made their way back to unchanged by the close of trade.

It is not uncommon for trade to fade the initial reaction to a Fed announcement. In fact, that seems to be "the trade". Our friends from the floor reminded us (and our clients) of this earlier today http://www.youtube.com/watch?v=gntHQvbyoOk.

We have one event out of the way, but another one on tap. Friday's jobs numbers could very well determine the overall direction of equities. ADP's prediction of the report came in at 203,000 jobs lost which is a little worse that expectations for Friday's numbers are. Most analysts seem to be looking for draw of about 175,000 and an unemployment rate of 9.9%. A number in the 220's + might trigger another wave of selling and stop running. In that case, 1010 is possible in the December S&P. However, a number in line or better could result in a close above 1066. If this happens, 1100 becomes the upside target.

From a technical standpoint, the S&P fell slightly short of our upside target of 1066 and this is a bit troubling. Also, the Russell closed in negative territory...and that has been the market leader. The early morning bounce was enough to relieve the market from being oversold and leaves the indices vulnerable for a retest of the recent lows. That said, if we get it (or better yet, slightly new lows) we can't help but look higher from there.

If you are following our short put recommendations, our clients were finally filled on the recommended GTC order to buy back the November 960 puts for $3. This locks in a profit of $250 minus commissions per contract. If you like this style of trading, or would like ideas on how to get more aggressive with our recommendations...give us a call. You might also be interested in my book, "Commodity Options", which is available in all major bookstores.

For those that took the alternative recommendation to sell the December 900 puts, we are still holding this position but will be looking to buy it back shortly.


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations might be applied to either the full-sized or the mini versions. Unless otherwise noted, the mini version is used.


S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

October 28 - We recommended that our clients sell the November S&P 960 puts for $8. There were a few filled in the overnight trading session, but unfortunately the market turned without us. Those that were able to get a fill, were recommended to buy the option back at $3 to take a quick profit. We suspect that this order will get filled by tomorrow. If so, the trade locks in a quick $250 per contract before commissions and fees.
• November 4 - Our clients were filled on the recommended GTC order to buy back the November 960 puts for $3.

October 30 - Our clients were recommended to sell the December S&P 900 puts for about $8. Fills were coming in from $7.75 to $9.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -
Flat

Published on  Wed, Nov 4 2009, 23:25 GMT

Bulls tried to revive the rally, but failed in the end

Tue, Oct 27 2009, 01:11 GMT
by Carley Garner

DeCarley Trading

A stronger dollar and plummeting crude oil forced stocks lower, as investors sell their energy shares and worry about the profit potential of multi-national corps. However, the day started with the opposite sentiment and saw the December S&P futures peak out at 1088.50...a far cry from the daily low of nearly 1061.

Dramatic and unpredictable price swings have dominated trade in recent sessions suggesting that investors are extremely fickle in their opinions. In the past, I have noticed that such violent trade has often signaled very large market moves. Unfortunately, without the help of my crystal ball I am unable to determine with certainty which direction it might be.

In Friday's newsletter, we were looking lower to about 1063 in the December S&P futures and today we got wanted. We also mentioned that this would be the pivot for the S&P, or quite simply the "make or break" area. Below 1060 we might see accelerated selling that pauses near 1040 on its way to the mid 1020 area. On the contrary, if this general support area holds we wouldn't be surprised to see a swift rally to 1108. For now, we are in "wait and see mode" but if I had to pick a direction, I would look south based on our assumptions of a higher dollar, lower Treasuries and lower commodities.

While our initial target in the S&P was reached, the NASDAQ and the Russell failed to see our support areas. This complicates our analysis a bit, but these two have been the market leaders and will be critical in guiding the broad market. Similar to the S&P, we are overall neutral in both the Russell and the NASDAQ but our inclination is for prices to retreat to 582 in the Russell and 1723 in the NASDAQ.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

October 14 - Our clients were recommended to sell calls against today's equity market strength. Fills on the November 1135's were coming in near 7.50 and some sold the 1040's at 7.25. We feel as though the market might move a little higher in the near-term but like the prospects over the next week or two.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -
Flat

Published on  Tue, Oct 27 2009, 01:11 GMT

Stocks pause, yawn....

Sat, Oct 17 2009, 00:31 GMT
by Carley Garner

DeCarley Trading

Stocks traded moderately lower on lackluster earnings and mixed economic data. Bank of America reported a loss of $2 billion, sending a reminder to investors that improvements don't necessarily mean cured.

The University of Michigan's consumer sentiment index fell to 69.4 after posting 73.5 in the month of September. The sharp downturn doesn't bode well for the ability of consumers to pick up the slack. In a similar theme, GE reported weak profits last quarter due to losses in its business loan division.

Stocks and crude have been able to travel higher together in recent months but if crude continues at this pace that might quickly change. The market's perception of higher crude has been that it is a positive indication that demand for energy, and thus the health of the economy, is on the rise. However, as crude gets more and more expensive we will eventually reach a point in which the consumption pinch due to higher energy costs will be back in the spotlight. That said, we happen to be bearish crude at these levels. There seems to be a massive short squeeze in effect but it might not last.

Stocks were under pressure on Friday but the selling was muted. The lack of directly might be the result of option expiration but it is unclear as to whether expiration artificially held stocks up or if it prevented further gains. Monday's trade should provide a clearer picture. For now, we can't help but lean lower but realize that our upside targets in the NASDAQ wasn't quite achieved and therefore there may be slightly more buying ahead of the correction. Nonetheless, we feel as though the risk is in being long this market for now. Here is a similar prediction made by some of our friends on the floor with DT Trading http://www.youtube.com/watch?v=lVTpvR0fCEY. DT is a specialist that we use the one CME floor to execute open outcry positions for our clients and they have always had a knack for the markets as well as the ability to provide efficient fills.

In yesterday's newsletter we mentioned resistance at 1095 but thought that the S&P would kiss 1100. The overnight high was 1095...and it was downhill from there. We still see resistance in the NASDAQ at 1075 and in the Russell at 626.
If we are right, our first downside objectives are 1060, 1714 and 605 respectively.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

October 14 - Our clients were recommended to sell calls against today's equity market strength. Fills on the November 1135's were coming in near 7.50 and some sold the 1040's at 7.25. We feel as though the market might move a little higher in the near-term but like the prospects over the next week or two.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Sat, Oct 17 2009, 00:31 GMT

Friday was a painfully quiet slow grind higher

Sat, Oct 10 2009, 00:04 GMT
by Carley Garner

DeCarley Trading

Our friends on the CME trading floor mentioned at one point in the day that there were only 30 locals standing in the S&P trading pit, this is about 100 less than what might be seen on a good day. They also mentioned that those that were there, must have been married (aka nothing better to do). I think that this best sums up the uneventful trading session.

The most significant news story of the day was President Obama's victory in the Nobel Peace Prize award but I doubt that the news had anything to do with equity market gains. Instead it seemed to be a continuation of the never-ending short squeeze. Since March, all sell-off have simply been a trap for determined bears and they have been feeling the pain.

The trend is up and it seems like this will be the case going into next week. We see resistance at 1075 then again at 1095 in the S&P. However, we doubt that the market will be able to post gains above the noted levels without some type of pullback. Therefore, the bears should be ready to act but at the same time it is important to get a good entry. We were hoping for a move up to 1075ish today in order to provide traders an opportunity to sell calls and/or buy puts at better prices but the steady but strong close seems to favor a move beyond the original 1075 resistance area. Accordingly, we prefer to be patient; we will see what next week brings.

We are still looking for 1075 in the NASDQ and 625 in the Russell as preliminary objectives. However, there seems to be a good chance that the Russell will reach 635 or so before the rally fizzles.

We certainly aren't perfect and we don't have a crystal ball either. Nonetheless, we have managed to call the markets pretty well this year. Here are just a few...Does your broker do this for you?

DeCarley called the March low: http://www.aweber.com/b/n_FR

DeCarley called the July low: http://www.aweber.com/b/1VCxQ

DeCarley were within points of calling the October low: http://www.aweber.com/b/1YWeA



* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.


**Seasonality is already be factored into current prices, any references to such does not indicate future market action.


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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -
Flat

Published on  Sat, Oct 10 2009, 00:04 GMT

Here we go again...this rally isn't over folks

Thu, Oct 8 2009, 23:31 GMT
by Carley Garner

DeCarley Trading

A good start to the earnings season looks to have greased the way for a retest of the major highs in the indices. Kicking off the good news was a reported profit from Alcoa Inc. The news hit the wires yesterday after the bell and it took a little longer for the futures market to react but sure enough the major indices made their way higher into Thursday morning.

Also helping the market to retain gains after such a strong up-move, U.S. retailers posted their first monthly sales increase in more than a year. The market saw this as a positive sign that consumers might be making their way out of hibernation.

Our initial upside targets haven't changed. We are looking for about 1075 in the S&P, 1745 in the NASDAQ and 625ish in the Russell. At these levels we will be short-term bearish...and then we will re-evaluate from there.

We certainly aren't perfect and we don't have a crystal ball either. Nonetheless, we have managed to call the markets pretty well this year. Here are just a few...Does your broker do this for you?

DeCarley called the March low: http://www.aweber.com/b/n_FR

DeCarley called the July low: http://www.aweber.com/b/1VCxQ

DeCarley were within points of calling the October low: http://www.aweber.com/b/1YWeA




* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.


**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, Oct 8 2009, 23:31 GMT

Bounce?

Fri, Oct 2 2009, 21:21 GMT
by Carley Garner

DeCarley Trading

The highest unemployment rate since June of 1983 sparked another round of early morning selling pressure. However, as calmer heads prevailed the indices were able to recover from the lows.

The unemployment rate was reported in line with expectations at 9.8%, still below the benchmark 10% but dire nonetheless. For those of us in Nevada, and a few other hard hit states, the rate is between 13% and 14%. What was a surprise to the market was a larger than expected decline in non-farm jobs. The U.S. economy is believed to have lost about 263,000 jobs in September, much greater than the 180,000 consensus estimates.

There is no getting around the fact that the day's news was bleak but it wasn't a complete surprise either. Accordingly, the "payroll panic" in early morning futures trade seemed to be more emotion than anything. In reality, we have dropped from a high of 1065.75 in the e-mini on Tuesday to Friday's low of 1012 and the market went from being overbought to oversold in a matter of a week and a half.

We aren't necessarily bullish but we don't think that the decline will be straight down either. The market may be setting up for a bounce to the mid to high 1040's.

Our clients were advised to sell puts into the volatility this morning...so far, so good but we will see what Monday brings. Specifically, they were recommended to sell the November 890 puts. Fills were coming in from $9.50 (or about $475 per e-mini option minus commissions and fees) to $9.25. We feel good about the trade simply because there is a substantial amount of room for error. At the time of this email, the reverse break even on this trade was over 140 points out-of-the-money. In other words, we can be wrong by this amount and still not lose money on the trade at expiration. The downside of this strategy is the fact that beneath 890 the risk is similar to that of a futures contract and the maximum profit potential is equal to the amount collected. That said, the odds seem to be in favor of this trade....and should the market rally in the near term, we will be quick to take a profit and remove our risk from the table. If you are interested in these types of option selling techniques, you may be interested in my book "Commodity Options" available through all major book outlets.

Check out this video made by our friends at DT Trading. They are our go-to guys for open outcry execution in CME/CBOT products and have a great feel for the markets. They will soon be providing an intraday commentary service to subscribers. I'll keep you posted!

http://www.youtube.com/watch?v=nOG1_I0i94E

Perhaps the intermediate-term lows aren't in quite yet, but we think that they are close. Our downside target in the S&P was 1007 but the bounce occurred from about 1012...not too far off. It is possible that we will retest the lows and maybe even a bit lower but we doubt that a complete meltdown will occur. It seems as though a bulk of the selling has already come into play. Look for support in the Russell near 568 and resistance at 595. Similarly, the NASDAQ could see 1640 but we have to lean higher from such levels.

If you are following the NASDAQ trades below, you should be out...if not look for a place to get out Monday morning. If you sold the futures and bought the call, leave the long call and hope for a rebound. If you have the option spread, you should be able to get out with a respectable, but not life-changing, profit $500 to $700 depending on your fills.


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Our clients were recommended to sell calls into the rally, most sold the 1095 or 1090 strikes in the October S&P options for $6.50 to $6.00 respectively.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Sell 1 mini NASDAQ at 1683ish
• September 30 - This trade is vulnerable, it may be a good idea to place a stop above noted resistance areas but we prefer the idea of buying an October 1720 call as insurance. It will run you about $550.
• October 1 - You should be out of this trade with a decent profit (at any point today you could have offset the futures with a profit ranging from $1000 to $500 before transaction costs and considering the protective call). If you bought the call for protection...keep it. If the market rebounds you can sell it at a better price.

September 23 - If you are looking for something a little more aggressive, you might want to do a bear put spread with a naked leg using the November NASDAQ e-mini options. At the time of this writing, it was possible to buy the 1720 put, sell the 1620 put and sell the 1800 call for even money. In other words, this is a free trade in terms of cash outflow (not considering commissions). However, there is margin of about $3,000 and unlimited risk above 1800. The max profit is $2,000 before considering transaction costs but the best part about it is that your risk at expiration doesn't come in until 1800 so there is plenty of room for error.

• October 2nd - Our clients were recommended to exit this trade this morning. you should be able to get out with a respectable, but not life-changing, profit $500 to $700 depending on your fills.

Published on  Fri, Oct 2 2009, 21:21 GMT

Consolidation ahead of event risk

Wed, Sep 30 2009, 01:38 GMT
by Carley Garner

DeCarley Trading

Mixed economic news ultimately resulted in mixed trade in the equity market. The major indices made attempts at price moves in both directions, but seemed to be drawn to the unchanged mark.

After what felt like an endless string of relatively optimistic economic readings, the data is beginning to soften up. The question going into the rest of the week's overloaded data calendar is whether or not the market can continue to accept "not so bad" news as good news.

Yesterday's rally was impressive but it was also done on one of the lightest volume days in months. It is hard to put too much credence into a move that few participated in. On the other hand, the fact that the S&P bounced so sharply from our 1035 support area gave the bulls a slight edge coming into the session. Therefore, today's consolidation trade leaves me to believe that the path of least resistance is moderately lower. It appears as though the next logical move would be a retest of the recent lows.

The daily chart points higher but my gut tells me lower. The truth is that unless you have the ability to gauge the upcoming economic releases, picking a direction from here faces the same odds of success as flipping a coin. Our overall consensus hasn't changed from yesterday:

I have strong resistance in the S&P near 1060 then again at 1066. Assuming that these areas hold we should retest 1035 support. If we are wrong and a meaningful break of the noted resistance areas occurs we might be off to the races....again. If this is the case, 1086 is the next stopping point.

Sorry so brief today, we have been swamped and there wasn't much to talk about. We expect that tomorrow will give us more interesting content.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Our clients were recommended to sell calls into the rally, most sold the 1095 or 1090 strikes in the October S&P options for $6.50 to $6.00 respectively.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Sell 1 mini NASDAQ at 1683ish

September 23 - If you are looking for something a little more aggressive, you might want to do a bear put spread with a naked leg using the November NASDAQ e-mini options. At the time of this writing, it was possible to buy the 1720 put, sell the 1620 put and sell the 1800 call for even money. In other words, this is a free trade in terms of cash outflow (not considering commissions). However, there is margin of about $3,000 and unlimited risk above 1800. The max profit is $2,000 before considering transaction costs but the best part about it is that your risk at expiration doesn't come in until 1800 so there is plenty of room for error.

Published on  Wed, Sep 30 2009, 01:38 GMT

Quadruple witching, zero excitement

Fri, Sep 18 2009, 20:32 GMT
by Carley Garner

DeCarley Trading

I found it ironic that the Associated Press ran a story on today's stock trade with the headline, "Stocks Rise in Volatile Quadruple Witching Trade". The September futures expired this morning on a high note, the rest of the session saw consolidation trade. Looking at volume data and based on communications from the trading floor, most traders simply took the rest of the day off (or perhaps they never showed up in the first place). At one point during the day it was noted that the S&P open outcry pit only had 25 locals standing in it. On a good day, it may have 130 to 150.

Monday's trade is key in that it may be the deciding factor in whether or not this rally can continue from current levels or if some corrective trade is needed. It could be that option (and futures) expiration artificially held the indices up. This can sometimes be the case if there are a lot of option traders caught on the wrong side of a market. For instance, short call traders may look to buy futures against their short call options and in turn force the market higher against their original positions. There is always a chance that expiration actually kept a cap on the rally, but I don't feel that this is the case.

According to Marc Harris, co-head of global research for RBC Capital Markets in New York, the strength of the rally has been a surprise to investors due to the fact that much of the gains are coming from "lower-quality" with "weak balance sheets". He added, "Even turkeys are going to fly in a hurricane," and noted, "Those lower-quality companies are leading the charge here."
Some friends of ours from the CME floor came up with a list of "15 not so good things for the stock market", and I thought that you might be interested.

1. The S&P 500 closed more than 20% above its 200-day moving average yesterday for the first time since May 1983.

2. On a risk adjusted return basis between 1990-2009 for Global Equities vs. USD and 30-yr UST, the standard deviation is historically+/- 2. Currently, this measurement is at an extreme showing 4 standard deviations arguing equities are rich and you should allocate to long UST and USD.

3. For the first time since the recovery off the March lows, high yield credit spreads fell below their "pre-Lehman" levels.
4. The national municipal bond ETF (MUB US) is trading at an all-time high today. The trading in muni's runs counter to the concerns people have about local and state governments. Since most muni's offer tax-free income, the run-up could also be due to worries about the coming increase in taxes.

5. Airlines (XAL Index) are up 12 days in a row..."stop the fraud"
6. T-Bills are yielding 9 bps down from 20 bps recently.

7. Volker says banks should operate in a less risky fashion and no prop trading. Krugman says unemployment in the US will peak in 2011 because of slow recovery. World Bank said the recovery in Emerging Markets is likely to be weak.

8. US Continuing Jobless Claims (INJCSP Index) ticked back up on the weekly chart signaling a more mixed/choppy recovery.

9. DJ Industrials and Utilities Indices made new highs yesterday as did SPX but the Transport Index was negative. This is a Dow Theory bearish divergence.

10. Ikea, the world's biggest home-furnishings retailer, reported its slowest annual sales growth in more than a decade and called 2009 a "challenging" year as consumers cut back on purchases.

11. Zhou Wenzhong, China's ambassador to the U.S. said he "wants to believe" President Barack Obama's decision to impose tariffs on imports of Chinese tires won't start a trade war. "The worst thing would be if this becomes a precedent,"

12. Financials - After the standing room only Barclays conference (read crowded long sector), KBW Inc., the New York-based boutique that advises financial institutions, expects 500 to 1,000 U.S. banks to fail by 2011, Chief Executive Officer John Duffy said.

13. Small Caps - The only thing more volatile than Chinese Small Caps are Chinese NASDAQ Small Caps. The China Securities Regulatory Commission will allow initial public offerings by seven companies in the first batch of sales on the nation's Nasdaq-like board for start-ups.

14. RIMM - Bluefin says US carriers did not see the expected pick-up in sales for back to school season. Aug worst month of yr for carriers, didn't see big back to school pickup that expected. Jul/Aug sell-in below sell-thru.

15. Asia - Sinopharm's IPO drew about $114 billion of orders as Hong Kong investors sought almost 600 times the amount of stock available to them.


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Our clients were recommended to sell calls into the rally, most sold the 1095 or 1090 strikes in the October S&P options for $6.50 to $6.00 respectively.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Sell 1 mini NASDAQ at 1683ish

Published on  Fri, Sep 18 2009, 20:32 GMT

Pause or correction?

Thu, Sep 17 2009, 23:50 GMT
by Carley Garner

DeCarley Trading

The rally took a breather ahead of option expiration but the bulls didn't give up much ground despite technicians calling for an overbought correction. This morning's news was positive, but arguably priced into the action.

According to Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, "There was some positive economic news that didn't really do anything (for the market), so that's another sign of exhaustion."

According to the government, the net worth of U.S. citizens grew for the first time in the second quarter since 2007. While this seems like a positive, it offers little comfort as the increase in worth was directly related to domestic asset recoveries that have spent the previous two years plummeting. I doubt that many Americans feel as good about their finances as they did in 2007 but beggars can't be choosers.

Either we are in the midst of a blow off top in the stock indices or we are crazy...There are no guarantees that the highs are in, but this particular short squeeze seems to have gone on far too long. In fact, it is among the largest in history. We pled the bearish case in yesterday's newsletter, now all we can do is wait and see what happens. We also want to remind traders that being overly bearish isn't wise; the trend is up and fighting it is an uphill battle. The same warning can be provided to the bulls; financial markets normally don't move in one direction. The lack of back and filling in the recent run up seems to suggest that something is fundamentally amiss. Whether the market turns the corner immediately, or finds a way to rally another 5% before doing so...markets often go down faster than they go up and therefore being a complacent bull could be dangerous.

Crash? Maybe not, but it seems as though a pullback to 1025 in the December S&P is probable.

Many traders avoid entering positions on option expiration, especially on a quadruple witching month. You may want to take tomorrow off.


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Our clients were recommended to sell calls into the rally, most sold the 1095 or 1090 strikes in the October S&P options for $6.50 to $6.00 respectively.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Sell 1 mini NASDAQ at 1683ish

Published on  Thu, Sep 17 2009, 23:50 GMT

China trade concerns can't hinder rally

Tue, Sep 15 2009, 01:06 GMT
by Carley Garner

DeCarley Trading

Concern over a trade dispute between the U.S. and China triggered overnight selling in the futures markets but the pressure subdued and eventually the markets turned positive. All in all, it was a relatively positive day for the markets and contrary to the expectations of many, the bull is still going strong.

A speech delivered by President Obama seemed to have a positive impact on trade, or perhaps it was simply that it didn't have a negative impact that is important. Mr. Obama warned the financial industry that the days of recklessness is over. He also promised that regulatory reform, in some format, will pass this year.

The U.S government adopted trade penalties on tires coming from China and the Chinese subsequently filed a complaint with the World Trade Commission. Some worry that a tariff war or, worse, a reduction in Chinese Treasury purchases could slow down the already sluggish recovery. After all, China is one of the largest backers of the U.S. financially, if they stop buying our debt or begin selling what they own, rates will skyrocket and so will our national debt. This would make it even more difficult to finance the government "stimulus" projects.

Is option expiration holding this market up, or is it holding it down...? Despite today's recovery, we are still leaning lower. We like the short side of the S&P from about 1055 and the downside of the Russell from just over 600. The NASDAQ seems a bit toppy near 1688 but I can't rule out a last ditch move to 1720ish.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Our clients were recommended to sell calls into the rally, most sold the 1095 or 1090 strikes in the October S&P options for $6.50 to $6.00 respectively.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

September 10 - Sell 1 mini NASDAQ at 1683ish

Published on  Tue, Sep 15 2009, 01:06 GMT

Geithner gives market a boost

Fri, Sep 11 2009, 00:45 GMT
by Carley Garner

DeCarley Trading

A relentless uptrend was given another boost by Treasury Secretary Timothy Geithner's comments on the financial system recovery. Today's gains marked the fifth consecutive day of green prints and could signal follow through buying in early morning trade. Nonetheless, it seems as though some back and filling or maybe even something much larger could be on the horizon.

Gains have been made on light volume and suspect fundamental news. Realizing that the market and the economy are two separate things and it is certainly possible for stocks to rally well beyond the pace of the recovery, it seems as though investors may be running out of reasons to buy...at least for now. Crash? Maybe not, but I wouldn't expect gains to be overly swift from these levels without some type of digestion.

Our clients were recommended to sell calls into the rally, most sold the 1095 or 1090 strikes in the October S&P options for $6.50 to $6.00 respectively. However, those looking for a little more action might be able to buy the following spread for less than $400 and a profit potential of $3000. Go long the November S&P 1030 put, sell the 970 put and then sell the 1100 call. Above 1100 at expiration the risk is unlimited but with the market between 1030 and 1100 the risk is limited to $400. The trade starts making money intrinsically below 1030, breaks even at expiration at 1022 and maxes out at 970 (a profit of $2600 before commissions and fees). It gives traders nearly 70 points in room for error but still allows a respectable profit should the market move lower as anticipated.

If you prefer to trade futures, it seems like the December S&P begins to be an attractive short in the mid-to-high 1040's. We like the downside in the Russell from the mid 590's but just over 600 is possible. The NASDAQ seems a bit toppy near 1688 but I can't rule out a last ditch move to 1720ish.

Thursday was the official roll-over day. You should begin trading December futures!



* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Sell 1 December mini-NASDAQ near 1685

Published on  Fri, Sep 11 2009, 00:45 GMT

Bulls are back

Wed, Sep 9 2009, 01:09 GMT
by Carley Garner

DeCarley Trading

Merger and acquisition news awoke the sleeping bull. From an investor point of view, if firms are willing to initiate large business transactions then they must be optimistic about the prospects of business going forward. Accordingly, if the "big bucks" are investing the recovery so should the retail trader....right? Well, at least for now that is the current market theme and it seems as though the rally has some room to run. Also helping move the markets higher, the world's largest 20 economies agreed to continue stimulus efforts to aid the global recovery.

Just because it is post-Labor Day, doesn't mean that the volume is back. Looking at the numbers (and my IM list) it appears as though many traders opted for an extra-long weekend. It may take a few weeks to fill the trading desks back up and get back to a more realistic account of price movement. In the meantime, light volume leaves the door open for nearly anything.

While we were trying to enjoy the Labor Day holiday, the overseas markets were soaring. Consequently, the U.S. indices have forged an impressive comeback and appear to be looking even higher. Coming into the weekend, I inaccurately assumed that the selling pressure would continue moderately lower but it is now apparent that despite the fact that our downside targets weren't completely fulfilled it was enough of a correction in the eyes of the market. It now seems as though a retest of the highs is in the works. In-fact, it "feels" as though the light volume could propel the S&P to 1055 and maybe even 1070 if there is supportive news. Keep in mind that the markets tend to start September on good footing but fail later in the month as mutual funds lock in profits ahead of the quarter end. Therefore, we will grow increasingly bearish into the decline.

We are looking for a bit above 1700 in the NASDAQ and 589 in the Russell but we see the possibility for 599.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, Sep 9 2009, 01:09 GMT

Calm after the equity storm

Thu, Sep 3 2009, 01:11 GMT
by Carley Garner

DeCarley Trading

Today's session was in stark contrast to yesterday's trade. Tuesday's plunge occurred on the highest volume in months but today's consolidation had little in the way of order flow. Also, the erratic and highly volatile price action in yesterday's session was nowhere to be found. It is possible that the market will be on hold until Friday's job report.

The FOMC minutes of the most recent Fed meeting was released but turned to be a relative non-event as far as the market was concerned. Fed discussions suggest that they believe that inflation is moderate, the job market is still a "concern" and demand for new housing has strengthened. Altogether it was a relatively neutral account of current conditions.

Most analysts are expecting that the U.S. economy lost about 250,000 jobs last month and therefore the market seems to have priced this in. Unfortunately, we have all become accustomed to this type of number and have even began looking at it as a positive sign of recovery. The market seems a bit heavy and this leads me to believe that the odds favor a weak market reaction to the news should the number come out in line with expectations or worse. It might take a surprisingly "positive" figure below 200,000 to avoid another wave of selling.

Given the directionless trade, our overall outlook remains the same as yesterday:


...we think that a minor bounce could be seen before another wave of selling comes in. Don't be surprised to see the S&P move up to the 1010/1012 area before finding resistance. From an intermediate -term perspective we are still looking for lower prices. I see the next downside support in the mid-to-low 970's and depending on the news, 940 may be possible at some point in September.

Our first support in the NASDAQ will come in near 1578 then again near 1561, it seems as though we could see such levels in the next day or two. We noted our first support level in the Russell near 551 and that seems like a real possibility sooner rather than later; the next support level will be 545.

If you are following the short option trade below in the S&P, we recommended that our clients with multiple positions lighten up last week near break-even due to the risks posed. Unfortunately, that turned out to be a mistake but looking back it may have still been a wise decision as a quiet market is capable of just about anything. We recommended that the remaining short September 1045 calls be bought back on today's dip near $5 to lock in a profit on this leg of the trade. It feels good to be out!

If you want to participate in trades like this, alternatives to this or even more aggressive strategies, give us a call. We would love to have you on board. You may also be interested in my option trading book "Commodity Options", currently on sale at www.TradersLibrary.com and other retail outlets.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
• August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.
• August 24 - We recommended to buy back the 940 puts for $4 in premium to lock in a profit on that leg.
• September 1 - We recommended to buy back the 1045 calls at $5ish to lock in a profit on this leg. It is nice to be flat this market!


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, Sep 3 2009, 01:11 GMT

Eight gains in eight days

Fri, Aug 28 2009, 00:48 GMT
by Carley Garner

DeCarley Trading

The Dow Jones Industrial average stretched its winning streak to 8 on Thursday after overcoming a swift early morning dip. The financial and industrial stocks lead the market higher despite pessimistic news on the health of the banking sector.

The FDIC reported that its fund fell 20% to $10.4 billion in the second quarter to reach its lowest level since 1992. There is some concern that the fund could fall to, or even below, zero as 2009 progresses. The Federal Deposit Insurance Corporation claims that there are no plans to use the Treasury as backing but they say that they can "never say never". The FDIC estimates that bank failures will cost them $70 billion through 2013 which would deplete the fund. So far this year, 81 banks have gone under and it is expected that we will see many more throughout the next few years.

Sideways action will eventually lead to a large break-out but traders in both camps are getting chopped out trying to catch the move. Just as the major indices make new highs, prices fall back into the range and similarly this morning's selling pressure likely lured a lot of shorts into the market only to be "slapped" in the face by reality.

We still think that September and October could see a sizable correction in equities, but it is difficult to determine whether the near-term highs are in or not. Although our resistance areas have proven to be valid we are concerned that there could be another round of buying. If this turns out to be the case, we could see 1045ish in the S&P and 1689 in the NASDAQ. If these levels are reached, however, we would be bears.

For those of you that are flat the market, a 20 point rally could turn out to be a great time to sell calls (if it happens). I like the 1075's for $8 or so in premium. If you are a swing or day trader, this move may also be a good place to initiate a (cautious) short position.


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
• August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.
• August 24 - We recommended to buy back the 940 puts for $4 in premium to lock in a profit on that leg.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

August 27 - Let's take a shot....Sell a September e-mini NASDAQ at 1687 OB

Published on  Fri, Aug 28 2009, 00:48 GMT

The trend is your friend until it ends

Wed, Aug 26 2009, 01:09 GMT
by Carley Garner

DeCarley Trading

The trend is up in equities and fighting it has been a losing battle for the bears; however, the upside seems to be limited. September and October are the last of the "worst sixth months" of the year for equities and they have troubled track records with seemingly high instances of volatility. In fact, the Stock Trader's Almanac refers to October as the Jinx month because it has been the host of several crashes.

It was brought to my attention that today is the 22nd anniversary of the beginning of what turned out to be the crash of '87. As the story goes, the daily (and annual) high in the Dow and S&P were made near noon on August 25th and began retreating from there. It wasn't until 8 weeks later that the magnitude of the slide was made apparent by Black Monday.

The Conference Board's Consumer Confidence index rose to 54.1 to beat analyst expectations. Similarly, the S&P/Case-Shiller index on National Home Prices ticked a bit higher last month but are still rather depressing. To put things into perspective, home prices are near levels seen in early 2003. If it weren't for these two somewhat optimistic announcements I wonder if today would have gone much differently. After all stock index futures slid in overnight trade and seemed to be technically weak in early morning trade. Nonetheless, these are the cards that were dealt and we have to play them.

Keep an eye on Treasuries which continue to grind higher. Although there are some positive aspects of this, namely lower interest rates, it suggests that the bond and note markets are still trading on fear. Why else would investors be willing to purchase low yielding securities?

In a nutshell, Treasury buyers haven't completely come to peace with the idea that the recovery will be as swift and painless as the equity market seems to be suggesting. Eventually, either stock traders or bond traders will have to be proven wrong.

We are sticking with yesterday's comments:

So far our upside resistance areas are holding, we noted 1035 in the S&P, 589 in the Russell and 1655 in the NASDAQ. Based on today's action, it seems as though the path of least resistance could be lower. We are looking for a retest of the 1000 area in the S&P, 565 in the Russell and 1577 in the NASDAQ.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
• August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.
• August 24 - We bought back the 940 puts for $4 in premium to lock in a profit on that leg.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, Aug 26 2009, 01:09 GMT

OE and good housing numbers sparks rally

Fri, Aug 21 2009, 21:24 GMT
by Carley Garner

DeCarley Trading

A swift dip in overnight trade was quickly reversed, and resulted in a move that brought the S&P approximately 30 handles from its low. Better than expected housing numbers and comments from Fed chair Ben Bernanke were likely to blame.

However, it felt like there were a lot of bears jumping on the correction bandwagon so I am sure that there were a lot of large bets placed. Now that the squeeze is on they are scrambling. It seems like much of the buying might have been done by short call traders looking to hedge their risk, AKA save themselves from ruin.

Bernanke's verbal declaration that the economy is near recovery gave the light volume rally reason to push even higher. According to the Fad Chair, "The prospects for a return to growth in the near term appear good." On the other hand, he did mention that consumers will continue to struggle to find credit and businesses will find it difficult to obtain financing.

Coming into Friday's session we were looking for higher prices, but were a little surprised at the day's momentum. Although we did state that "If things really get out of hand" the mid 1020's were possible in the S&P. Our relative targets in the Russell and NASDAQ were met in Friday's session and this leaves us leaning cautiously lower into early next week. The next resistance in the S&P lies at 1035 but it seems like a pullback could see a retest of 1000. We see the next resistance in the Russell is near 589ish but feel as though the market is getting near-term toppy. The NASDAQ could see 1655 or so, but we would be bearish from such levels. In the meantime, support could be found at 1608.


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
• August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Fri, Aug 21 2009, 21:24 GMT

Going nowhere fast

Thu, Aug 20 2009, 01:11 GMT
by Carley Garner

DeCarley Trading

Equities have failed to make progress in either direction despite some impressive selling pressure and equally swift short covering. Choppy price action combined with the upcoming option expiration and notoriously thin seasonal trading volume makes for a tough market to trade.

If it weren't for the weekly crude oil inventory report, it may have been a rather devastating day for equities. Futures traded considerably lower in overnight trade and looked to be headed toward the mid 960's before news of a decline in the nation's oil inventory. The market saw this as a sign that increased demand for crude oil and indirectly a pickup in economic activity.

Aside from oil inventories, there weren't any significant economic releases today. However, Warren Buffet's change of heart in regards to the deficit did get some attention. The Oracle of Omaha believe that the government was justified in using any means necessary to stave off another Great Depression. However, he now sees the recovering economy as a warning signal that the Fed will need to change its ways. He warns that the out of control spending could destroy the greenback and many American's life savings. He noted that Congress is spending nearly twice as much as it is taking in and the U.S. debt is growing by 1% a year.

The lack of news left traders looking to technical analysis for help but indecisive trade likely lead to frustration. We see 991 as the pivot area for the September S&P and today's close above it leaves us leaning slightly higher. However, recent gains on super light volume leaves us lacking confidence. Therefore, we will refrain from trying to pick a direction in a market that seems as though I could get better odds shooting craps down the street (I live in Vegas). Instead, we like the idea of waiting for a rally to the 1020 area as a place to be a bull or a dip to the mid to low 960's to be a bear.

The NASDAQ and the Russell seem to be positioned a little better for the upside. We may reconsider being bearish the NASDAQ on a move back to the mid 1630's and the Russell near the mid-580's, but wouldn't be willing to jump in front of the bus should momentum build up.

If you are following our trade recommendations below, we are still holding the short S&P strangles which are beginning to work out nicely. You should have been out of the NASDAQ trade last week, but if you managed to hold on a bit longer you might have made out much better than we had recommended. The long S&P puts for August turned out to be a losing proposition, but that is why we normally prefer selling options over buying them.

I apologize for not sending out a newsletter yesterday, I have been swamped with the production of my second book "A Trader's First Book on Commodities", which is now listed on Amazon. If you haven't picked up a copy of the first, "Commodity Options", it is also available on Amazon at a great price!

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
• August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 28 - Sell the e-mini NASDAQ at 1630 or better.
• August 3 - We recommended to buy an August at the money (1630 call) for about $600, this limits the risk of the trade to the premium paid for the option plus commissions and fees.
• August 10 - We like the idea of trying to take a profit on the futures contract near 1580.
• August 11 - If you weren't able to exit on the dip this morning, look to exit the futures shortly and hold on to the call option (if you bought it).
• August 12 - We recommended to try to sell liquidate the long call tomorrow near break-even if possible. If not, take what you can get.
• August 13 - You should be completely out of this trade...and may have done well depending on your exit prices.

Published on  Thu, Aug 20 2009, 01:11 GMT

Chop, chop, TGIF!

Fri, Aug 14 2009, 23:46 GMT
by Carley Garner

DeCarley Trading

Equities have been trading relatively violently between major support and resistance areas for some time. The choppy, yet directionless, trade has complicated speculation tremendously. As a result, many traders took much of the day off. According to our sources at the CME, there were approximately 10 locals standing in the S&P open outcry pit in late afternoon trade. To put this into perspective, on a busy day there may be as many as 160 and on a slow day somewhere in the 50's. A number below 20 is nearly unbelievable and would seem more realistic in a commodity that "nobody" trades such as oats...not the Big Board!

Stocks were able to shrug off bad news yesterday, but today was a different story. Although the latest inflation data was neutral, the Michigan Consumer Sentiment index was decisively pessimistic and equities quickly reacted. With the consumer being a large part of the economy, their lack of confidence in the recovery will act as a plow in the improvement.

Crude oil fell to its lowest level in two weeks and this most certainly flared the equity selling. Aside from energy stocks dragging the major indices lower, investors have been looking to crude price, specifically demand fundamentals, for hints in regards to the economic recovery.

Our bearings are a bit off on this market. We are looking for an early morning rally to bring the S&P to the 1026 area before the selling resumed. However, a rally wasn't in the cards. If our upside targets in the indices (1025 in the S&P, 1524 in the NASDAQ and 549 in the Russell)are going to be met, it will need to be early next week. Otherwise, it seems like a larger correction may be underway. In the meantime, we see critical support in the S&P near 985 with the next level being around 950. Our next support area in the Russell is still 549 with the next area being 524. NASDAQ traders should look for the next major support near 1525.

Futures traders, keep in mind that just because we don't put daily recommendations out on this newsletter doesn't mean that we can't help you with different and/or more aggressive strategies!

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
• August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 28 - Sell the e-mini NASDAQ at 1630 or better.
• August 3 - We recommended to buy an August at the money (1630 call) for about $600, this limits the risk of the trade to the premium paid for the option plus commissions and fees.
• August 10 - We like the idea of trying to take a profit on the futures contract near 1580.
• August 11 - If you weren't able to exit on the dip this morning, look to exit the futures shortly and hold on to the call option (if you bought it).
• August 12 - We recommended to try to sell liquidate the long call tomorrow near break-even if possible. If not, take what you can get.
• August 13 - You should be completely out of this trade...and may have done well depending on your exit prices.

Published on  Fri, Aug 14 2009, 23:46 GMT

Traders lock in profits ahead of event risk

Wed, Aug 12 2009, 00:16 GMT
by Carley Garner

DeCarley Trading

The longs have finally been convinced to take some of their profits off of the table. Despite what might have occurred given the dramatic gains, the selling pressure was moderate at best.

Investors are looking forward to the Fed's comments regarding the state of the economy. Oh yeah, and they also might be interested in the interest rate decision. We have been suggesting that the rally has gotten away from what may be the reality, and the Fed's wording could have a large impact on whether the two come back into line.

Going into Treasury auctions, retail sales and the conclusion of the FOMC meeting there doesn't seem to be a clear cut direction. We would rather not speculate on what seems to be nothing more than the same odds faced by a coin toss. The S&P could see prices as high as 1026 and as low as 975 in the coming sessions. If we see 1026, I would be a bear...but as far as becoming a bull I prefer to be patient. Let's see how things play out in the coming days.

If you took the short e-mini NASDAQ as recommended in this newsletter, I hope that you were able to offset with a nice profit this morning (although it didn't quite reach our noted exit point). If not, look to lift the futures position and hold the call option (if you bought it for protection).

Futures traders, keep in mind that just because we don't put daily recommendations out on this newsletter doesn't mean that we can't help you with different and/or more aggressive strategies!

I apologize for the brevity, but I am a bit short on time. My second book is in the production stage and it has me working around the clock. I figure that if the markets don't have to sleep, neither should I!


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
• August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 28 - Sell the e-mini NASDAQ at 1630 or better.
• August 3 - We recommended to buy an August at the money (1630 call) for about $600, this limits the risk of the trade to the premium paid for the option plus commissions and fees.
• August 10 - We like the idea of trying to take a profit on the futures contract near 1580.
• August 11 - If you weren't able to exit on the dip this morning, look to exit the futures shortly and hold on to the call option (if you bought it).

Published on  Wed, Aug 12 2009, 00:16 GMT

All dips have been buying opportunities

Sat, Aug 8 2009, 00:53 GMT
by Carley Garner

DeCarley Trading

Equities rallied to 10-month highs following a better than expected, but still arguably terrible, employment report. The day's excitement was sparked by news of an unemployment rate of 9.4% and a loss of approximately a quarter of a million jobs. However, stocks don't necessarily need proof of economic growth to move higher all they need is the expectation of such. This is what we are seeing now.

On a side note, Home builder stocks benefited from better than expected earnings from Beazer Home and Goldman Sachs added D.R. Horton to its "conviction buy list".

According to Fred Dickson, market strategist at D.A Davidson in Lake Oswego, Oregon. "Investors are looking for confirmation that the bottom is close and employment is a big piece of it. ISM is another piece, and put that together with durable goods and housing and the mosaic is slowly filling in that the economy is beginning to stabilize. That's exactly what investors are looking for."

Keep in mind that the equity markets look to be pricing in a "V" shaped recovery, but the economic data has not been suggesting that this is the case. Eventually something will have to adjust course in order for the two components to be in sync. Whether the numbers will improve, or stocks take a breather, is yet to be seen but my gut tells me that it will eventually be the later. That said, this has been my assumption for weeks now and I have yet to be right.

In yesterday's newsletter we mentioned that we felt as though the market wanted to go higher before it would move lower, and that proved to be the case. However, we were anticipating a little more weakness on the afternoon reversal. As a result, we can't help be look regretfully higher to our next resistance areas of 1021 and 1030 in the September S&P futures, 9,545 in the Dow and 586 in the Russell.

Have a great weekend!

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -



July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta
• August 5 - We recommended to get into a more comfortable position ahead of the employment report by buying back the 925/995 August spread and selling the September 940/1045 spread for a credit of about $3.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 28 - Sell the e-mini NASDAQ at 1630 or better.
• August 3 - We recommended to buy an August at the money (1630 call) for about $600, this limits the risk of the trade to the premium paid for the option plus commissions and fees.

Published on  Sat, Aug 8 2009, 00:53 GMT

Meager pullback, may frustrate the bears again

Thu, Aug 6 2009, 01:08 GMT
by Carley Garner

DeCarley Trading

Despite multiple attempts by the bears, equities refuse to stage a correction. The three-week rally has been resilient, but whether or not it is healthy is another question.

The day's news was questionable at best, but traders likely won't make any dramatic moves until the release of Friday's non-farm payrolls data. In the meantime, they are digesting news that the ISM services index showed more contraction that previously calculated and ADP is predicting more job loss than analysts were looking for.

In recent weeks, buying on dips has been the only profitable trade. I wonder if this trend will continue beyond Friday's data and more importantly beyond earnings season. However, let's face it...myself and many others didn't see the market coming this far this quickly and betting against the bulls has been a tough trade.

According to our weekly chart work, 1010 should mark the short-term high in the September S&P but a daily chart reveals that the rally could extend itself to the 1030 area. Only time will tell how it plays out but the bottom line is that both bulls and bears should play this one close to the chest. A large breakout in either direction is possible and for those on the wrong side it could be very painful.

In the past, the market has been prone to sideways trade ahead of large news events. I feel like that was one of the major contributing factors into today's late session comeback. If my assumptions are true, tomorrow should be a consolidation day in anticipation of an uncertain employment report.

We see resistance in the September S&P futures near the round numbers...1010, 1021 and then again at 1030. It seems like the market wants to go higher before it goes lower, bears should look cautiously toward the mentioned resistance levels. When, or if, prices turn around the first significant area of support is 950 based on current valuations. Resistance in the September Dow lies at 9,310 but if the rally gets "out of control" 9,560 is possible.

If you are following our short option strangle, we recommended that our clients take advantage of the morning dip by rolling the August 995/925 strangles into the September 1045/940 strangle for a credit of about $3 in premium. This slows down the trade and moves the risk comfortably away from the market....for now.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -



July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 28 - Sell the e-mini NASDAQ at 1630 or better.
• August 3 - We recommended to buy an August at the money (1630 call) for about $600, this limits the risk of the trade to the premium paid for the option plus commissions and fees.

Published on  Thu, Aug 6 2009, 01:08 GMT

Market on pause; are the highs in?

Fri, Jul 31 2009, 21:26 GMT
by Carley Garner

DeCarley Trading

Today marked the end of a significant month in equities, but one may not have realized it by looking at intraday trade. The month of July saw a rally that, in terms of percentages, was the strongest seen since 2002.

Traders were relatively undecided on the fate of the equity rally following a better than expected advanced GDP estimate for the second quarter but a simultaneous revision downward to first quarter growth. Second quarter Gross Domestic Product is estimated to be a negative 1% as opposed to a negative 1.5% as expected by most analysts. The first quarter GDP was revised to a dismal - 6.4% from what seemed to be an already challenging figure of -5.5%.

While the GDP has been the most promising sign of recovery to date, the latest reports suggests that consumers cut spending by 1.2% in the second quarter. Steven Stahler, president of Stahler Group in Baton Rouge, La. claimes, "We're still not in very good shape in the employment part." Until this turns around, the consumer will have a difficult time leading the economy out of the longest recession since World War II.

We can't rule out another run at the highs and buy stops may even lead to a move a little above 1,010 in the September S&P futures, 1660 in the NASDAQ and 570 in the Russell. However, we have doubts as to whether the market can sustain such levels. That said, don't get overly bearish...the trend is up regardless of what anybody may think the fundamentals suggest.


* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -



July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 28 - Sell the e-mini NASDAQ at 1630 or better.

Published on  Fri, Jul 31 2009, 21:26 GMT

More digestion, little momentum

Thu, Jul 30 2009, 01:06 GMT
by Carley Garner

DeCarley Trading

Tumbling Asian markets and freefalling crude oil kept tabs on the U.S. equity rally, but there is a certain lack of enthusiasm behind the selling. Accordingly, there are likely to be a lot of nervous bears in this market....and another extension of the short covering rally isn't out of the question.

The market started the day on bad footing with news from the Commerce Department suggesting that orders for big-ticket items have slide by 2.5% in the month of June. The decline in durable goods orders is being attributed to a lack of demand for commercial aircraft and a struggling auto industry.

It is important to point out that the stock market normally finds a bottom well ahead of the economy. Accordingly, negative economic readings may not necessarily translate into immediately lower stock prices. In fact, mixed economic news may be enough to keep a floor under pricing. According to Russell Croft, portfolio manager at Croft Leominster Investment Management in Baltimore, "There's a good economic number and then there's a bad number and that's probably what you'd expect at this juncture of the recession," he added "Hopefully it's two steps back and three steps forward."

With that said, if you have been following this newsletter you are likely aware that we have not jumped on the bull market bandwagon quite yet. While I think that the rally will eventually resume, I also think that the most recent run has been a little too much too fast to be sustainable without some consolidation. However, I also respect the market's ability to fire one more rally bullet as shorts continue to be squeezed.


It is difficult to pick a direction as the selling pressure has remained moderate at best, but our overall technical levels are identical to yesterday's figures:
We see resistance in the S&P near 988, but it looks as though 995 may relatively likely in the coming sessions. In the meantime, major support lies at 925. The NASDAQ may be headed for 1633 but we would be bearish at such levels. Similarly, the Russell could see prices as high as 558, but the bears should be ready to get involved should we see it.

If you are following the short S&P call recommendation, we recommended to our clients to roll into the 995 calls for August. This lowers the delta on the trade and gives it a bit more breathing room intrinsically. It will also position the trade for a possible roll into September calls if this rally continues to cause grief. If you are interested in this type of trading, you may want to check out the free articles posted on our websites as well as my book "Commodity Options".

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -



July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.
• July 28 - We recommended to sell the 925 puts for a little over $8 to take a bit of the heat off of the 975 calls
• July 29 - We recommended to buy back the 975 and sell the 995 to give the trade a bit more breathing room and lower the delta


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 28 - Sell the e-mini NASDAQ at 1630 or better.

Published on  Thu, Jul 30 2009, 01:06 GMT

Stocks consolidate

Mon, Jul 27 2009, 23:22 GMT
by Carley Garner

DeCarley Trading

After an astonishing two-week rally that lifted the major indices approximately 11%, stock market bulls finally took a breather. Perhaps it has come to realization that the positive earnings have been posted on expense cuts rather than strong revenue figures. Nonetheless, the most recent round of earnings reports weren't as optimistic as those released last week. RadioShack Corp. beat analyst estimates (admittedly on cost-cutting) but Aetna Inc. and Honeywell International failed to meet expectations.

What may have been the glue to hold the markets together today, the Commerce Department reported that new home sales rose 11% in June to 384,000 figured on an annual basis. This is the strongest pace since November of 2008, but is still a historically low number. Don't forget that not too long ago this number was near 2 million. Also, sales seem to be the result of price discounts as opposed to a rebounding market. However, sales are trending higher...and this is better than the alternative.

A painful reminder that we are still in a recession, Verizon reported a 21 percent drop in earnings and announced that it plans to cut 8,000 jobs. Adding insult to injury, the firm's COO Denny Strigl stated, "We probably will not have large-scale hiring until we're out of the recession."

For those with extremely long-term views, there are glaring positives. In fact, Fed Chairman Ben Bernanke stated on Sunday that "The silver lining in this whole thing is that people are starting to save more, since they saw what happened with 401(k) investments." He added, "People are adopting good habits, so not only will we be back on track, but the economy will be stronger than it had been before this started. However, if you are viewing the market with a much shorter horizon (as many futures traders do) it seems obvious that this rally has gotten a bit overheated. An "obviously" overbought market doesn't always translate into a correction as one would expect; the bottom line is that the market will do what it needs to do regardless of what you or I think that it should.

With that said, I think that the risk is in being long this market. In recent sessions the rally has been reduced to an annoying grind higher but will be facing significant resistance near the 988 area in the September S&P. In the meantime, even if the rally resumes the market seems vulnerable to a large one to two day pullback and I would hate to be on the wrong side of that. Of course, it is also uncomfortable to be on the wrong side of the rally and that (short covering) has been much of the catalyst for price gains. Even so, there are likely a lot of sell stops lining the downside, if the market cracks and stops are elected it could be a quick move.

Resistance in the S&P lies at 988 and then again near 1,000. Support, on the other hand, should be found near 961 then 940. We see strong resistance in the Dow near 9,163 with support at 8,950 and again at 8,755. NASDAQ traders may look for resistance at 1615 and first support near 1568.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 22 - Buy cheap August S&P puts. We like the 880's and the 885's, you shouldn't pay more than $6.50

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better

• July 15 - We advised buying this option back for $2 or less, you should be out of this trade with a respectable profit. Don't let this option sit!


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Mon, Jul 27 2009, 23:22 GMT

Stocks pull back, but losses minimal

Wed, Jul 22 2009, 00:26 GMT
by Carley Garner

DeCarley Trading

The major indices finally broke their winning streak but the selling pressure was moderate. This may suggest another retest of the highs, or slightly new highs, are in the cards. Despite today's minor digestion, we feel as though a larger correction is looming at some point. However, we also can't rule out a continuation of the squeeze to elect buy stops in the 958 area of the September S&P. If this happens, we could see 960/962 before running out of buyers.

In the meantime, investors are focused on Fed Chairman Bernanke's congressional testimony. The "grilling" started today and will extend through tomorrow. However, the topic of discussion doesn't seem to be anything new and exciting. Although, Bernanke did mention that inflation doesn't seem to be a threat in the coming few years and claims to have the "tools" needed to fight that battle once it begins to emerge.

The market continues to see the CIT story as a positive sign that the economy has turned the corner from government subsidies to private equity financing. However, it has been corporate earnings that have made this rally possible. Caterpillar beat analyst expectations and announced and improved profit forecast for 2009. Due to Caterpillars role in the expansion of industry, it is considered to be somewhat of a bellwether of the global economy.

Either we are early, or we are just plain wrong but we still think that a near-term top is in the cards for the major indices. We are sticking with yesterday's call of an extension of the rally to the mid 950's or possibly the low 960's but at such levels we are highly bearish. That said, there is still a lot of cash on the sidelines and if there are shorts looking for a way out of the squeeze, we are hearing that there are buy stops running all the way to 1,000. Be careful!

If you want to play the downside with limited risk, we like lottery ticket plays such as buying the August 880 or 885 puts. Fills were coming in for the 885's this morning near $6.50.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -


July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.


Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, Jul 22 2009, 00:26 GMT

Slow trade, squeezing bears

Mon, Jul 20 2009, 21:33 GMT
by Carley Garner

DeCarley Trading

Even the bulls are likely a little surprised by the resiliency of the most recent broad market rally. A positive earnings season and a possible resolution to the CIT insolvency has managed to propel equities nicely higher from last Monday's early session lows.

CIT Group has apparently struck a deal with its bond holders to avoid bankruptcy. This comes after bailout funds requested from the fed failed to come through. The market was pleased with the news given the potential consequences of a failure to many small businesses. Some analysts point out that the fact that the government wasn't forced to intervene and CIT was able to secure private financing suggests that the financial markets are healing.

Earnings have been a pleasant surprise but the bulk of the numbers have yet to be released. Investors will likely be focusing on retail stocks, which haven't been represented as of yet. Poor retailer numbers could trigger a case of buyer's remorse and lead to a swift correction. On the other hand, should retailers have a good showing this rally may have more legs that we originally anticipated. The high 950's don't seem to be out of the question and some of our contacts on the floor note that even 1,000 is possible on the running of buy stops.

I am not convinced that we will see much higher this time around. I tend to favor the idea of, at minimum, a temporary correction that could bring the S&P back to the 908 area. However, the light volume makes for very one directional trade and I worry that the lack of liquidity will work in favor of the short squeeze.


We continue to fight against the grain looking for a correction in equities, but I am not going to lie...we are nervous bears. Last week we noted that a run to the mid 940's may be possible in the S&P and now that we are here it seems like the buying could extend to the mid 950's and maybe even 961. Nonetheless, I am having a hard time jumping on the bull bandwagon...at least for now.

We also pointed out resistance in the Dow near 8,850 and 1540 in the NASDAQ. These levels have quickly come into play, and moderately higher without a pullback is possible but we have to wonder how long this can last. Nonetheless, if this rally resumes the next stopping point will be 8,880 and 1580 respectively.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better

• July 15 - We advised buying this option back for $2 or less, you should be out of this trade with a respectable profit. Don't let this option sit!


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Mon, Jul 20 2009, 21:33 GMT

Nervous bears

Thu, Jul 16 2009, 01:39 GMT
by Carley Garner

DeCarley Trading

Data suggests an uptick in inflation, the Fed declares double digit unemployment is looming but...according to the central bank the U.S. economic is predicted to shrink between 1 and 1.5% this year, and improvement over the previous 1.3 and 2%. The markets may have celebrated today, and we may even get a little more follow through tomorrow as the last of the bulls are suckered in and the bears squeezed out but I have a feeling that there will be some buyer's remorse in the coming days.

According to the Fed's minutes of the last FOMC meeting, it could take "five or six years" for the economy and the labor market to fully recover. However, for 2010 they expect that the economy would grow between 2.1 and 3.3%, instead of the previous expectations of 2 to 3% but I don't think that anyone is going to change their overall investment strategy for a few tenths of a percent.

Inflation is beginning to poke its head up, but the signs are still relatively minor. Nonetheless, the Fed worries that the public will begin to fear inflation in light of the Fed's recent policy of purchasing its own Treasury securities.

Today's rally began on the open of electronic trade on Tuesday evening following an upside surprise in Intel earnings. However, traders were already in a good mood following solid numbers posted by Goldman Sachs.

We really didn't expect the markets to rally this far, this fast but I don't think that anyone really could have predicted such a move. However, we seem to be near significant resistance areas. We think that 930 is critical for the S&P and feel as though aside from the possibility of a moderate overflow of buying into tomorrow's session, the near-term highs are looming. We are looking for a pullback with 916 and then 902 as our support levels. Dow traders may look for a correction that could result in prices near 8,300 should support at 8,420 fail to hold. The Russell on the other hand, looks like it may have a little more room to move on the upside than some of the other indices. We don't see significant resistance until the 520 area.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 15 - We like selling the August 975 calls, fills ranged from $7 to $9 today.

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better

• July 15 - We advised buying this option back for $2 or less, you should be out of this trade with a respectable profit. Don't let this option sit!


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat

Published on  Thu, Jul 16 2009, 01:39 GMT

Stable crude, stocks rally

Tue, Jul 14 2009, 02:03 GMT
by Carley Garner

DeCarley Trading

We have been pointing out the correlation between equities and crude oil and have mentioned that stocks will need a turnaround in the crude pit in order to get a rally going. However, as it turns out...all that the market needed was for crude prices to stop going down. With the August crude contract trading near unchanged for much of the day, a green light was given to buy equities ahead of the bulk of the earnings season.

It seems as though much of the day's buying was short covering and/or buy stop running. Accordingly, it doesn't necessarily mean that investors are expecting positive earnings, but what it does indicate is that the bears are a bit concerned over the possibility of less than horrific earnings.

Most stock market journalists and commentators are attributing the day's gains to comments made by market analyst Meredith Whitney who claimed that Bank of America shares are inexpensive based on the firm's assets. Whitney is highly respected by the bears in that she has offered one of the more pessimistic, and later we discovered accurate, assessments of the banking business. Accordingly, those short bank shares scrambled to exit their positions by buying the shares back. The buying frenzy bled into other sectors and light volume allowed the rally to extend beyond what many thought possible based on last week's trade.

Nonetheless, our predictions were surprisingly accurate...sometimes it is better to be lucky than good! We have reached our target in the S&P of just under 900 and nearly reached our target in the Russell of 500 and 1450 in the NASDAQ. From here we feel like moderately higher prices may be in store for tomorrow as the short squeeze continues but we can't help but feel as though the buying will dry up, at least for now.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Tue, Jul 14 2009, 02:03 GMT

Weakness in Crude weights on stocks

Fri, Jul 10 2009, 21:33 GMT
by Carley Garner

DeCarley Trading

Earnings jitters, a weaker than expected Michigan Sentiment index, and a lack of reasoning to be bullish allowed equities to creep lower for much of the day. This marks the fourth consecutive week of losses for the major indices. However, there is a bright side; the selling has been orderly. That doesn't mean that stocks won't continue to decline. In fact, we still think that the mid to low 800's are likely in the September S&P at some point in the next few weeks. However, it does suggest that investors are no longer in the same panicked state experienced in the fall of 2008.

While we have heard earnings reports from a few firms, the season will pick up pace next week. We will hear from Johnson & Johnson, JPMorgan, Google and others. Some fear that even numbers that beat expectations will fail to give stocks a lift. Nonetheless, I believe that the fact that equities spent the four weeks prior to earnings grinding lower the "buy the rumor sell the fact" disappointment may already be accounted for.

On a side note, General Motors Corporation rose from the dead today. Well...they have emerged from bankruptcy protection but many would likely argue that they still aren't showing many signs of life. CEO Fritz Henderson claims that the new GM will focus more on customers. He also mentioned a partnership with eBay in which visitors to the site will be able to purchase vehicles online via their auctioning platform. As a consumer, this doesn't strike me as being a good idea...

While we can't rule out a retest of the lows, or slightly new lows next week, our comments from yesterday are still valid:


We made a rather bold call yesterday, and today's lack of follow through was a bit disappointing. However, we are going to stick with our idea of a higher market...even if it means a retest of the recent lows before a longer lasting rally can ensue. We could be wrong, but we are looking for just under 900 in the September S&P, 500 in the Russell and 1450 in the NASDAQ.


**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Fri, Jul 10 2009, 21:33 GMT

Waiting for earnings season...

Wed, Jul 8 2009, 01:25 GMT
by Carley Garner

DeCarley Trading

Waiting for earnings season...

It is a slow news week, but traders are gearing up for tomorrow's G-8 meeting and the upcoming earnings season. We will hear from Alcoa and Pepsi Bottling tomorrow but it is next week that traders are looking forward to.

Don't forget that the historical tendency for earnings season suggests that stocks outperform before and suffer from disappointment after the fact. This is similar to a buy the rumor, sell the fact type of scenario that often plays out in markets. However, it seems as though some of the selling has come early this time around and the price pressure may not over yet.

Crude oil dropped for the fifth consecutive day and seems to be dragging equities down with it. Nonetheless, it is difficult to see if the dog is wagging the tail or the tail wagging the dog. In both cases, we are approaching oversold conditions but this is more true of crude than equities. While our models are pointing toward the potential for a bounce from here, we still think moderately lower before this can happen. We have been calling for the mid-to low 70's in the S&P and despite today's valiant attempt at reaching our target, we feel like there is a bit more downside and will continue to look for such levels. Our clients were recommended to sell the August 760 puts for about $6.50 in late day trade.


If you are trading the Russell or the NASDAQ, we are still looking for 468 and 1390 in the September contracts. Because the NASDAQ was the strongest on the way up, it could be the hardest hit on the way down. We would refrain from overly bullish holdings in this market. However, aggressive Russell traders may look to put on bullish positions at or near our noted target.




**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat



Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, Jul 8 2009, 01:25 GMT

Stocks slump on jobs data

Thu, Jul 2 2009, 21:00 GMT
by Carley Garner

DeCarley Trading

Equities suffered from low volume and poor economic news on the last trading session before the 4th of July celebration. Rumors of a possible North Korean attack on Hawaii, although not necessarily credible, also worked against the markets.

Our prediction that traders would disappear shortly after the release of non-farm payroll numbers seemed to be relatively accurate. Volume was at a bare minimum in post-announcement trade. The headline numbers weren't a big surprise; an estimated 467,000 jobs were lost last month to bring the unemployment rate to about 9.5%. It is important to note that the so called U-6 number, which includes those that have stopped looking for work or who can't find full-time jobs, has climbed to nearly 16%. Suddenly, the green shoots look a little brown. Nonetheless, most of this was expected well before today and therefore the initial reaction looks to be a bit exaggerated by the lack of market liquidity.

The major indices posted losses of nearly 2% by mid-session, while the Russell was down over 3%. The Russell is comprised of small cap stocks, which are often the market leaders. I wouldn't put too much credence into today's trade in light of the volume situation, but it seems that even if we see an oversold bounce on Monday the overall trend is lower. We think that the next target in the September S&P is the mid-to low 880's. In the case of the Russell, 2000 the mid-480's should be the next target and we expect that the NASDAQ could see the 1420 area again in the near future.

For the most part, the markets will be closed tomorrow in observance of the holiday. With that said, the CME Group Globex stock indices (e-mini S&P, e-mini NASDAQ and e-mini Dow) will trade overnight as usual but the session will be halted at 10:30 am Central.

Enjoy your holiday weekend!



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat



NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, Jul 2 2009, 21:00 GMT

Stocks tepidly higher in pre−employment report trade

Thu, Jul 2 2009, 01:05 GMT
by Carley Garner

DeCarley Trading

The day was chock full of mixed economic data, but equities found a way to trade higher. Coming into the day, statistics pointed toward a positive trading session as the first trading day in July has historically had good outings. Not surprisingly, it seems as though mutual funds were on the buy side of the markets in early to mid-session trade; however, the buying quickly dried up.

Richard E. Cripps, chief market strategist for Stifel Nicolaus commented on the day's action, "Some of the buying that wasn't' done yesterday is being done today," he added, "I'm a little surprised. There isn't a lot of convincing volume here to read too much into this."

News on the day included ADP's prediction of tomorrow's employment report. According to the payroll firm, the U.S. economy has lost over 470,000 jobs in the most recent month. Most analysts are expecting the government to report a number closer to 400,000. The ISM manufacturing index was reported slightly better than expected and so were pending home sales. The mixed news puts even more emphasis on tomorrows data.

It was apparent from the "get-go" that many traders have already begun their long holiday weekend. Those that did stick around for today's session, will likely make their departure after tomorrows employment report. Accordingly, tomorrow will likely see very little trading volume; scaling back on your trading is recommended.

Going into tomorrow, we aren't taking any bold stances. It seems as though there are equally likely odds that the market will go down tomorrow as there are that it will go up. On a larger scale, we see resistance near 950 and support at 890 in the S&P with the 920 area as the pivot...If we had to pick a direction, we would say lower from here, but we wouldn't be willing to put much more on the line than a friendly bet between friends.

Likewise, we see strong resistance in the Russell near 535 and support at 487 but have little opinion as to what the next day or two will bring. Resistance in the NASDAQ should be found near 515 and support at 1417.

If you have missed this newsletter in recent days, we apologize for the inconvenience. Unfortunately, we have limited time and sometimes have to prioritize. Keep in mind that clients of DeCarley Trading were, and are always, welcome to contact us for guidance above and beyond this newsletter. If you aren't already trading with us, perhaps you should be.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, Jul 2 2009, 01:05 GMT

The Stock Index Report

Fri, Jun 26 2009, 20:38 GMT
by Carley Garner

DeCarley Trading

Consumers are confident, but not spending

Volume and excitement were on the light side ahead of the weekend, leaving me with very little to write about.

The University of Michigan reported a slightly higher reading in its consumer confidence reading but consumer income and spending data suggests that Americans are still tight fisted. As a result, investors found little incentive to continue yesterday's rally.

Personal income and spending numbers point toward the highest savings rates in years. I doubt that anybody was surprised to hear that the savings rate had increased. Consumers were overleveraged and it will take years for things to unwind. However, it is clear that the lack of velocity of money will act as a plow to the recovery. "The consumer is not going to completely hibernate although the consumer is not going to be the same force" as was the case when "coming out of the previous recession" noted Henry Smith, chief investment officer of Haverford Trust Co. in Philly. He added, "Ultimately, this expansion will be characterized as a below average, slower expansion."

The markets made very little progress in either direction, therefore yesterday's projections are still valid:

In our last newsletter we mentioned that the S&P can bounce as high as 920 without compromising the bears. Today's high of 917ish was significant, and while a retest of the highs and maybe even 921 are possible in Friday's session we feel as though failure to close above these levels will lead to another wave of selling going into next week.

We see strong resistance in the Russell near 507 and 8,544 in the Dow. The NASDAQ remains the strongest of the major indices, but we see resistance near 1482.

Sorry so short, enjoy your weekend!!



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.



S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Fri, Jun 26 2009, 20:38 GMT

The Stock Index Report

Thu, Jun 25 2009, 20:52 GMT
by Carley Garner

DeCarley Trading

Stocks soar, but tomorrow may be different

After what seemed to be a quiet open, trade quickly turned into a mass of buy programs. According to our sources, short covering triggered buy stops then the sharp reversal triggered technical buy programs...and the rest is history.

The buying was said to be attributable to homebuilder and retail stocks. Homebuilding shares benefited from an announcement by Lennar Corporation reporting that orders for new homes had jumped 63% during the second quarter. Bed Bath & Beyond gave a boost to customer discretionary stocks after reporting that its first quarter profit climbed 14% thanks to overflow business from rival Linens N Things.

On the economic front, claims for unemployment benefits rose by 15,000 to 627,000 last week. More significantly, 1st quarter GDP was reported at a negative 5.5%. The print was better than expected but didn't paint a positive picture for the economy.

Some of the market volatility was likely due to the day's events in Washington. Ben Bernanke spent the day being questioned by Congress in regards to the Bank of America Merrill Lynch deal that cost taxpayers $20 billion. The Fed chair claims, "I did not tell Bank of America's management that the Federal Reserve would take action against the board or management", in regards to questions regarding the "forced" merger of the firms.

In our last newsletter we mentioned that the S&P can bounce as high as 920 without compromising the bears. Today's high of 917ish was significant, and while a retest of the highs and maybe even 921 are possible in Friday's session we feel as though failure to close above these levels will lead to another wave of selling going into next week.
We see strong resistance in the Russell near 507 and 8,544 in the Dow. The NASDAQ remains the strongest of the major indices, but we see resistance near 1482.

This report was written a little earlier than usual, but the analysis should still be relatively current. I am speaking at a CFA (Certified Financial Analyst) event tonight, so time is a little scarce.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.



S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat



NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, Jun 25 2009, 20:52 GMT

Quiet trade ahead of FOMC

Wed, Jun 24 2009, 08:57 GMT
by Carley Garner

DeCarley Trading

Stock trade was stagnant on Tuesday; investors are preparing for tomorrow's concluding remarks of the FOMC meeting that began today. It is widely expected that the Fed will leave the target overnight rate at its current range of 0 to .25%. However, a lack of action in terms of monetary action doesn't necessarily mean that the markets can't get excited about any hints that the Fed has to offer in terms of its future moves. The announcement is expected to be released at about 2:15 pm Eastern on Wednesday.

There wasn't much to talk about today, so we will look to tomorrow. In addition to the interest rate decision, we will hear about durable goods orders and new home sales. Look for a market reaction to home sales, but I doubt that there will be any large bets made ahead of the Fed. You may want to sleep in tomorrow!

The stock market didn't participate in a rebound from yesterday's selling pressure as many of the commodities and currencies did. We mentioned that commodity prices were hit hard yesterday on the realization of a weak global recovery. Today, soybeans gained a quarter while crude oil recovered nearly $2 per barrel. The disconnect in the relationship between stocks and commodities is a bit unsettling.

As we have been suggesting in recent newsletters, we think that a retest of the 870 area in the S&P is in the cards. However, we were looking for a much more significant oversold bounce in today's session. Don't forget that this market can bounce as high as 920 without compromising the bears. We still like the idea of being short-term bullish near 875, depending on the Fed this opportunity may arise as early as tomorrow. We will likely be looking to sell premium on a sharp move in price and volatility.

Similarly, the bulls may find good opportunities near 1400 in the NASDAQ and 470 in the Russell (but first support is at 483).

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

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 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
Flat

Russell Futures and Options Trading 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 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
Flat

Published on  Wed, Jun 24 2009, 08:57 GMT

The Stock Index Report

Fri, Jun 19 2009, 21:36 GMT
by Carley Garner

DeCarley Trading

Quadruple witch disappoints

Many of the traders/brokers/analysts that we know took the day off as a precautionary measure; quadruple witching days can sometimes create unmanageable amounts of volatility. This time around, that was certainly not the case. In fact, I would argue that this was one of the most uneventful sessions we have seen in months. Nonetheless, those that avoided the markets today didn't miss much, so the "better safe than sorry" approach was appropriate.

In addition to a lack of participation, there were no economic reports to speak of. However, rumors and speculation over a U.S. Navy attempt to intercept a North Korean ship suspected of carrying illegal weapons attempted to get trader's attention. The news may have crippled the markets agenda to run near-term buy stops to extend the day's rally but wasn't enough to trigger a complete reversal. Also failing to get much of a reaction from traders was talk of a possible downgrade by Moody's of the state of California.

According to a Morgan Stanley analyst, the economy has put in a bottom. It was noted that the positive recovery is "subdued" but they believe that exceptionally low interest rates promoted by most of the major central banks will promote growth. Keep in mind that even if this is the case, the equity markets may have priced much of this in. It is possible that we could see a "buy the rumor" sell the fact scenario in which stocks struggle a bit despite confirmation of the recovery hitting the headlines.

We remain relatively neutral going into next week but feel as though the odds favor the downside. That said, we feel that any accelerated selling will run into heavy support near 879 in the September S&P with a potential for 850 if the bears really get carried away. Accordingly, we are patiently awaiting the chance to be bullish at better levels. If it turns out that we are wrong about near-term weakness we will look for an opportunity to turn bearish again near the recent highs.

In terms of the other indices, we will stick with our previous outlook until this market picks a clearer course of action:

The September Russell is toying with its uptrend line but as long as the market stays below 507, the bears are in control. If we see a swift move lower, we will become bullish near the May lows (470's). The NASDAQ remains the broad market's shred of hope. Today's positive close, and above our major pivot near 1445ish, could be the saving grace for equities.


**Seasonality is already be factored into current prices, any references to such does not indicate future market action.



S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Fri, Jun 19 2009, 21:36 GMT

The Stock Index Report

Thu, Jun 18 2009, 01:14 GMT
by Carley Garner

DeCarley Trading

Stocks bounce, but minimal

Stock index futures didn't let a near 50 point drop in four sessions influence trade. The market opened up weak and the bears quickly thwarted several attempts at a short covering rally. The direction from here is anyone's guess. Our charts and models suggest that the S&P should continue lower to the mid-870's but the fact that the turnover happened with a triple witch looming makes the move highly suspect. Therefore, I can't feel good about having (or more importantly, publishing) any strong opinions.

The major indices consolidated following several sessions of consistent selling pressure. The lack of ability to "bounce" suggests that this market may be heavier than many had previously thought. One has to wonder if option expiration is holding this market down, or if in post expiration trade we could see another bout of swift selling.

If this weren't expiration week, I would be looking for an up-move to the mid-to-high teens in the September S&P at which point I would become bearish. A daily chart is pointing toward 876 and a weekly toward 850. However, given the uncertainties surrounding this weeks events combined with light volume a safer place to be is on the sidelines. That said, I would become a near-term bull if the S&P trades near 875.

The September Russell is toying with its uptrend line but as long as the market stays below 507, the bears are in control. If we see a swift move lower, we will become bullish near the May lows (470's). The NASDAQ remains the broad market's shred of hope. Today's positive close, and above our major pivot near 1445ish, could be the saving grace for equities. Let's see what tomorrow brings.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.



S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat



NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, Jun 18 2009, 01:14 GMT

The Stock Index Report

Wed, Jun 17 2009, 01:42 GMT
by Carley Garner

DeCarley Trading

VIX in the spotlight again

A positive reading on housing starts and building permits triggered a small wave of early morning buying but overseas weakness and mixed economic news prevented the move from becoming more than an oversold bounce.

We mentioned last week that the stagnant volatility wasn't going to last. This week it seems as though traders are embracing it. According to our sources, speculators and even large investment houses were getting on the long side of volatility through the purchase of VIX call options and call spreads. Buyers are using the August and September options, meaning that they think that it could be a rough summer for equities. This is something that we have suspected as well, but the relentless early summer trade has proven many wrong thus far.

Coming into today, we were expected a decent sized bounce from what we had deemed to be considerably support on the daily chart. However, the upside momentum was a disappointment and the S&P has settled beneath our critical pivot level of 917. This leaves us on the fence in terms of near-term direction.

If you are trading the S&P, look for weakness to continue as long as the market closes beneath 917. Above such areas, however, the bulls may have an edge. Major resistance lies at 957 and support at 877. We will refrain from making any bold calls until things clear up a bit.

The NASDAQ on the other hand, managed to remain above its major pivot area near 1445. If tech stocks are still the leader, this may be significant for the bulls. In the meantime, intermediate term resistance can be found near 1538 and support near 1350. The "make or break" area for the Russell appears to be 504.



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat



Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, Jun 17 2009, 01:42 GMT

The Stock Index Report

Fri, Jun 12 2009, 21:10 GMT
by Carley Garner

DeCarley Trading

Quadruple witch around the corner

The VIX has been comfortably below 30 in recent days and things seem to have gotten back to "normal". However, we wonder if the directionless trade can last. The market seems to be setting up for a volatile move but picking an immediate direction is difficult. Our best guess is that we will see some type of temporary rally that manages to run the lingering buy stop orders, then reverse dramatically. We still feel as that the odds favor a relatively large correction of the rally from the March lows but we aren't convinced that it will occur before some sort of key reversal on the charts.

The U.S. consumer confidence index as reported by the University of Michigan suggests that confidence is currently at a 9 month high. However, the actual headline number was a slight disappointment relative to analyst expectations. Conversely, the report's indications of inflation expectations rose to the highest level seen in months. Undoubtedly, this has to do with the increased size of the Fed's balance sheet and its long-term implications.

It has been a painfully boring week. Not including Friday's session, the June S&P futures have closed near 940 in 8 of the last 9 sessions but nothing lasts forever. If you happen to be short premium in this market, I would recommend taking profits as it seems like there is a good chance for excessive volatility going into next week's triple witch. On the other hand, if you are an option seller on the sidelines (as we are), there should be some great opportunities in the coming sessions. We are hoping for a sharp rally in which we can sell call premium, current option volatility and option pricing doesn't favor sellers. In fact, I am not much of an option buying advocate, but some may consider buying a June915/955 strangle for about $450 or so on Monday

We are still waiting for what we believe will be a "bull trap" in order to begin getting bearish in this market. We think the S&P could see the mid 960's and the NASDAQ as high as the mid-1500's. Stay tuned for ideas....

**You should now be trading the September contract!!



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

June 10 - Sell 1 June NASDAQ at 1540 (we may have to roll this into September)

Published on  Fri, Jun 12 2009, 21:10 GMT

The Stock Index Report

Wed, Jun 10 2009, 23:26 GMT
by Carley Garner

DeCarley Trading

Volatile yet unchanged

An impressive overnight rally was quickly reversed into what seemed to be the beginning of the end; sticking to the current theme the major indices gravitated toward the day's starting point.

Summer trading volume, historically significant economic news and high running emotions are all working to keep intraday volatility high in equities. At the same time, progress has been nonexistent in several sessions. Despite highs near 957 and lows in the mid-920's, today marked the 4th day in a row that the S&P has settled relatively unchanged on the session. One thing is for sure, this can't last.

The selling began with technical traders, but fundamental traders seemed to pressure the market on news of a weaker than anticipated 10-year note auction. The Treasury was able to sell $19 billion in notes but they did it at a rate of about 4%. Investors worry whether the government will be able to fund all of the proposed programs at such a high borrowing rate.

The Beige Book lured some buying back into the markets. The Fed announced that all twelve districts continue to display weak conditions but five of the twelve are moderating.

In yesterday's newsletter we stated, "Perhaps a retest of Friday's highs and maybe even a bit higher are in the cards for the major indices." Today's high of was pretty close...but we can't help but feel like there may be another round of buying before things turn around again. Some of the insiders we talk to are looking for prices as high as 980 in the S&P. We aren't quite this optimistic but it wouldn't shock us. That said, we like the idea of patiently looking for prices in the mid to high 960's to begin constructing bearish positions.


**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat



NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

June 10 - Sell 1 June NASDAQ at 1540 (we may have to roll this into September)

Published on  Wed, Jun 10 2009, 23:26 GMT

The Stock Index Report

Tue, Jun 9 2009, 21:03 GMT
by Carley Garner

DeCarley Trading

Light trade favoring upside

It was a slow news day and an even slower trading day. The volume was light and so was the excitement; however, things should be heating up as the week progresses. What may end up being the most newsworthy event going into the weekend is the reopened auction of 10 and 30 year Treasuries. Without strong demand for U.S. debt, the market will begin to lose confidence in the government's ability to financed their recovery plan.

Despite giving the "ok" for 10 big banks to repay nearly $70 billion in TARP funds, the government and private analysts warn that the crisis isn't over...but most admit that there are some signs of improvement. In order to be granted permission to give the money back, they must have passed stress test devised by the Treasury. Whether or not the tests have any real bearing as to solvency and the ability to operate as a going concern is beside the point. Nonetheless, there are definite signs of improvement.

At mid-day yesterday we were bearish; however, the wild buying into the close and today's stable climb makes me feel like we may be looking higher in the near term. Perhaps a retest of Friday's highs and maybe even a bit higher are in the cards for the major indices. With that said, these are thoughts and not necessarily an encouragement to trade bullishly. We are cautiously approaching the next day or two leaning higher but with the plan of selling calls against a strong up-move. Similarly, day traders may look to buy on dips but because the market is near the upper end of the overall range, taking overly bullish stances is not recommended. Remember, in most cases...less is more!

Yesterday we were looking for 910 in the S&P, we now think that it is more likely that the market will test the 955/960 area again before trading lower. Likewise, the Dow could see 8,900 again before running into resistance. Believe it or not, the NASDAQ could see 1527 before finally trading toward our 1414 target. 



**Seasonality is already be factored into current prices, any references to such does not indicate future market action.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

June 5th - Our clients were recommended to sell the June S&P 985 calls for $7, we were filled this morning on the spike.
• June 8th - Our clients were recommended to buy this back at $2 this morning to lock in a profit of $250 per contract (before commissions and fees) on the mini and $1,250 for those trading the big contract.


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Tue, Jun 9 2009, 21:03 GMT

The Stock Index Report

Thu, Jun 4 2009, 01:02 GMT

DeCarley Trading

Stocks turn over, for good?



Stocks made their way lower in a mid-week session as traders were likely looking to book profits ahead of what could be a volatile close to the week. While I can't imagine that we will see a show quite like last Friday's finale, the employment report should be interesting.



In yesterday's newsletter, we mentioned that the seasonal highs were approaching and we felt as though a reversal in the currency markets seemed likely. Today's commodity and equity weakness, combined with dollar and Treasury strength leads us to form the opinion that the tides have turned and there could be a new trend across all asset classes. Of course, one day does not make a trend and we have been wrong before...therefore, we believe that traders should move cautiously forward with such sentiment.



The day's trigger was most likely a weaker than expected ISM services index but

I think that most people agree that the market was due for a pullback. True to character it has a way of luring most to the bull camp before dumping. After weeks of mentions in this report of a possible run to the 940/950 area in the June S&P, we were almost convinced that the rally had a bit more steam left in it. Nonetheless, it seems as though barring any unforeseen positive news event the 949 high in the S&P could hold for now...but may be retested.



We are leaning lower, but the market may not go straight down. Look for resistance near 942 and 949 in the S&P; we think 907 is possible on the downside. We see resistance in the Russell near 527 but think that 494 is possible if the selling accelerates. Look for a possible ceiling in the Dow near 8,726 with a downside target of 8,441.





**Seasonality is already be factored into current prices, any references to such does not indicate future market action.



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 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading



Position Trade -



Flat





Russell Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading





Position Trade -



Flat







NASDAQ Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading



Position Trade -



Flat

Published on  Thu, Jun 4 2009, 01:02 GMT

The Stock Index Report

Fri, May 29 2009, 22:45 GMT
by Carley Garner

DeCarley Trading

Directionless, but it didn't last

Shrinking volatility and tight ranges in the equity index futures have left us with butterflies in our stomachs. The bulls and bears have been battling throughout May without a resolution. We have essentially watched the S&P trade in a 55 point range that was carved out early in the month. As boring as things have become, we can't help but feel as though June will be a different story. If the last 20 minutes of trade in May is any indication of things to come, we should all brace ourselves.

What seemed to be destined to be a sideways trading session ahead of a much needed weekend turned into one of the most volatile closes that we have ever witnessed. The S&P rallied nearly 20 points in the last 30 minutes of the day to trigger buy stops beginning above 910 and reaching the high 920's in the e-mini version of the contract. Other than light volume and stop running, there seems to be no logical explanation for the move.

In yesterday's commentary, we mentioned :

...this type of trade is typically a precursor to a large move. Direction? Great question; my best guess is that we are eventually headed lower. However, bears should be careful in getting too comfortable because my charts are still pointing toward a potential run at the highs before turning over. In other words, we could see one last "sucker's" rally to lure in the last Johnny come lately before the bears are finally rewarded once again.

Today's late session rally appears to be the move, or at least the beginning of the move, that we had been waiting for to become bearish. Unfortunately, it happened so quickly and unexpectedly, that selling calls (as was our original intention) was impossible. It is possible that today's seemingly illogical move may have paved the way for a move toward our key resistance near 940/950 in the S&P, so we will begin cautiously looking for bearish opportunities should the market continue moderately higher.

As it turns out, our resistance areas in each of the indices were achieved near the close of trade. However, they should still lure sellers back to the markets. Look for first resistance in the S&P near 926 with 940 within reach, 900 still offers considerable support. Dow traders should look for resistance near 8,560 and again at 8,850. Support can be found at 8,375. We think that 513 is the next stopping point for the Russell and the NASDAQ may see 1470 before turning back around.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Fri, May 29 2009, 22:45 GMT

The Stock Index Report

Fri, May 29 2009, 03:07 GMT
by Carley Garner

DeCarley Trading

Indecision could mean large break-out

It was a relatively action packed trading session, with plenty of trade on both sides of the market. However, in the end the bulls came out on top. The major indices seemed to find comfort in a successful 7-year note auction and Bill Gross' endorsement of U.S. Treasuries. Normally it is the equity markets that drive interest rates, but as of late it has been the other way around.

Tomorrow morning should also be action packed, the release of first quarter GDP, the Chicago PMI and Michigan Sentiment will all offer guidance to a directionless market.

The U.S. greenback and commodities such as crude oil posted gains on the day suggesting that there are still some traders speculating on an economic recovery. In theory this optimism could leak into equities tomorrow and even early next week but we are having serious doubts as to the prospects of a sustainable rally.

Equities are going nowhere fast and it is easy to see the market's frustration; price moves in recent sessions have been quick and seemingly illogical at times. In my experience, this type of trade is typically a precursor to a large move. Direction? Great question; my best guess is that we are eventually headed lower. However, bears should be careful in getting too comfortable because my charts are still pointing toward a potential run at the highs before turning over. In other words, we could see one last "sucker's" rally to lure in the last Johnny come lately before the bears are finally rewarded once again.

Again, we can't make any predictions that we are comfortable publishing. Nonetheless, we are looking at 900 in the S&P as a critical pivot and see significant resistance near 924 and support near 876. In the Dow, we think that 8,370 is the make or break point and resistance lies at 8,540 with support at 8,200. The NASDAQ is stuck in a range between 1440 and 1392, but a break of support could mean 1342 in short order.

What the Russell does from here is a coin toss, we see resistance at 511 and support near 470.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Fri, May 29 2009, 03:07 GMT

The Stock Index Report

Thu, May 28 2009, 01:36 GMT
by Carley Garner

DeCarley Trading

Investors contemplate higher interest rates

A seemingly out of control spike in interest rates triggered selling pressure in equities as traders associate higher borrowing costs with a slower recovery. Accordingly, the major stock indices nearly erased all of Tuesday's progress.

Despite a successful 5-year note auction, yields in the benchmark 10-year note rallied to nearly 3.75%. Keep in mind that our floor brokers are noting that 3.75% is the "magic number" when it comes to portfolio adjustments. If this theory holds true, we could see investors selling their equity holdings in search for the safety of Treasuries which are now trading at almost respectable rates. In other words, at 3.75% investors may believe that the long-term prospects for equities vs. buying 10-year notes is undesirable. All eyes will be on tomorrow's 7-year note auction

A GM bankruptcy and its corresponding exclusion from the Dow also offered a psychological blow to the market. While the bankruptcy filing by the auto giant isn't a surprise, it is quickly becoming a harsh reality. As a result, many of the bulls may be rethinking their stance.

In the meantime, the National Association of Realtors reported that existing home sales rose 2.9% last month. However, they also announced that inventories of unsold homes rose almost 9%. This is a 10-month supply. It has been suggested that a recovery may be signaled by a decline in the inventory to a 5 or 6-month supply. Clearly, there is a long way to go.

We are still refraining from making any definitive calls. The market seems highly unpredictable and we prefer to wait for our models to be a little more helpful in our analysis. That said, it seems as though as long as the market continues to trade (more importantly close) below 897 in the June S&P, the bears have an edge. Assuming that this continues to be the case, we could see a slide back to 870 in the coming sessions. This translates into 8,148 in the Dow, 1343 in the NASDAQ and 470 in the Russell.



S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat



NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, May 28 2009, 01:36 GMT

Surprise rally catches shorts

Wed, May 27 2009, 03:59 GMT
by Carley Garner

DeCarley Trading

After days of lingering, equities forged a surprisingly quick and massive rally in early morning trade. The buying picked up on the open of the cash market equities but soared after the release of the Conference Board's consumer sentiment data.

The consumer confidence index surged to 54.9 from 40.8 to put analyst expectations of 42.3 to shame. The surprisingly optimistic news resulted in a wave of short covering and buy stop running. Those bears unfortunate enough to be in the way, spent the rest of a painful session looking for a pullback to exit their trades. Accordingly, intraday weakness was nearly non-existent.

During recessionary times, investors often put a lot of credence into consumer sentiment data. This is because a consumer that is confident will behave that way, which translates into opening their wallet for larger items such as cars.

On the other end of the spectrum, the S&P/Case Shiller reported a 18.7% decline in its home price index for March. While analysts were looking for a negative number, they underestimated the weakness. Many equity analysts found it somewhat mysterious that stock investors shrugged off the poor housing market news in light of the fact that it was a major contributor to the economic decline.

In Friday's newsletter we mentioned that 889 was a major pivot point in the S&P, and that continues to be true. However, the highly erratic trade experienced late last week and in Tuesday's session suggests that things aren't as simple as being bullish above our pivot and bearish below it. Rather than trying to pick a near-term direction, we prefer to wait for a clearer picture. That said, based on the current environment we anticipate being bearish near 940 and bullish near 855. Similar levels in the Dow are 8,600 and 8,050; 511 and 470 in the Russell.

S&P 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Russell Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

NASDAQ Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, May 27 2009, 03:59 GMT

The Stock Index Report

Sat, May 23 2009, 18:36 GMT
by Carley Garner

DeCarley Trading

Equities lingered in light trade

Based on my conversations with industry insiders and a quick glance at volume data suggests that few traders showed up for work this morning. As we have predicted in previous newsletters, traders took the FOMC minutes release on Wednesday afternoon as their queue to begin the holiday celebrations.

Today's trade wasn't a total disaster as is sometimes the case in pre-holiday trade; news events can pave the way for dramatic light volume price moves. On the contrary, the session as a snoozer and left very few clues as to what next week may bring.

We have been calling 889 in the June S&P our "magic number" and that continues to be the case (we are ignoring today's close as trade wasn't "credible"). As long as the market can continue to hold in this area and close above it or in its vicinity, we continue to lean slightly higher in the near-term. That is not to say that we are extremely bullish, we simply feel as though the odds favor a temporary continuation of the rally should our key support levels continue to prevail. Conversely, a close considerably below 889 suggests that the next resting point will be 850. Tuesday's trade will likely be more telling as to the immediate direction of the market from here. A similar pivot number in the Dow is 8,293.

While we don't have a strong feel for the direction of the markets come Tuesday, we will be awaiting opportunities to sell premium should implied volatilities increase dramatically. This may mean a drop to 850 in the S&P or a rally to 940. Either way, we think that the move will be sharp and provide the ability to collect top dollar for out of the money premium.

Sorry so short, have a great holiday weekend!




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Sat, May 23 2009, 18:36 GMT

The Stock Index Report

Thu, May 21 2009, 22:02 GMT
by Carley Garner

DeCarley Trading

Red on Wall St.

Investors quickly reverted to pessimism following yesterday's late session reversal. Overnight weakness was propelled lower by signs of continued weakness on the jobs front and a reduced credit rating outlook for Britain. According to Rick Meckler, president of investment firm Liberty View Capital Management in NY, "The outlook downgrade of the U.K. debt is being taken pretty negatively." He added, "it sets a precedent for what could start to happen to a lot of the world, given the amount of spending that's going on."

Additionally, the Philly Fed's survey of mid-Atlantic manufacturing conditions shrunk for the eighth consecutive month. And provided traders with a reminder of yesterday's noticeably less optimistic view of the economy from the standpoint of the FOMC.

Stocks and bond traded side-by-side today, which is a stray from the norm. However, it can somewhat be justified by comments made by Pimco's Bill Gross suggesting that the markets fear that the U.S. is at risk of losing its AAA credit rating.

From a technical standpoint, the equity markets are teetering on their make or break levels. This combined with holiday volume, trading is tricky and should likely be scaled back or even stopped until Tuesday.

Coming into Thursday, we were looking for a possible pullback to 889 in the S&P and possibly even 886 but didn't expect weakness into the 870's. This leaves us "on the fence" in terms of market direction from here. If I had to pick a side, I would be cautiously and slightly bullish. Today's close in the June futures at or near our critical 889 leaves tomorrow highly uncertain but we do think that an overnight or early session rally extending to 902 is probable. The pivot point in the Dow is 8,293 above it the bulls have an edge and below the bears do....sidelines seems like the only comfortable position from here.





S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, May 21 2009, 22:02 GMT

Rally falters, but is it over?

Thu, May 21 2009, 05:25 GMT
by Carley Garner

DeCarley Trading

The FOMC minutes were a glaring reminder that the economy, green shoots and all, is still facing real challenges. In fact, many Fed members think that a full recovery could be five or six years away. Investors (Americans) are a lot of things, but patient isn't one of them. This is even truer given the turmoil that they have experienced in the last few years with their buy and hold strategies. This leaves me skeptical about the prospects for a prosperous summer in equities. It seems as though we could be in store for a relatively challenging summer as bearish trade may be exaggerated by highly illiquid market conditions.

Keep in mind that not all interpretations of the FOMC minutes were pessimistic, I read many analyst reports that managed to look at things with a glass half-full mentality. We may get similar action to the last time that the S&P saw the 920's. The market dropped like a rock from the high of 929.50 on March 7th but made a valiant attempt to resume the rally on March 8th. This is typical of markets, as it is the nature of the beast to shake out all of the bears before dropping and all of the bulls before rallying.

Our chart analysis is providing highly mixed signals, and I assume that we are not alone. It may be wise for traders to scale back trading on Thursday and Friday as we suspect that unusual market conditions will extend beyond the holiday weekend.

We are stepping back from our predictions of 940 in the S&P for now. Today's trade suggests that we may be in store for a test of 889 support before either resuming the rally or experiencing swift selling. We think that the VIX is due for another swing higher, and stocks another swing lower but are uncertain as to whether the market will be able to reach our upside targets before this occurs or if today's highs will be considered "close enough" for technical traders. If our inclination for a test of 889 in the S&P hold true, the Dow could see 8,280. Similarly, 1384 will act as a pivot for the NASDAQ and 487 will be the magic number in the Russell.

We continue to prefer a buy on dips mentality and are looking for a rally to the 940 area in the S&P, with 950 being a possibility. Likewise, assuming that 1380 holds, we could see 1440 in the NASDAQ in the coming sessions.





S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, May 21 2009, 05:25 GMT

The Stock Index Report

Wed, May 20 2009, 03:38 GMT
by Carley Garner

DeCarley Trading

Grinding higher, S&P 940?

Equities rallied sharply in yesterday's session and managed to add to the gains on Tuesday...much to the dismay of the shorts. It was clear to see that there were several bears caught on the wrong side of yesterday's move as each dip was met with buying (likely short covering). As you can imagine, those will losing trades on the books would rather "lose less" and consider pullbacks as an opportunity to cut their losses and get repositioned for the next trade.

Tech stocks led the rally ahead of HP's earnings and on news of IBM's expectations for better profit margins in 2009. Today's up move in techs, and the broad-market, moved the CBOE's VIX index (AKA the fear barometer) below 30 for the first time in 8 months. To put this into perspective, the index has been valued as high as 89.53 and as low as 15.82 in the previous 52 weeks. I can remember when the VIX began its climb, most were of the belief that 30 was high and a reading above 40 was out of the question. We now live in a very different world.

It was another slow data day, and with the Memorial Day weekend approaching it is highly likely that many traders will take Thursday and Friday off. This could make for highly erratic trade, so caution is warranted.

We will hear about the Fed's last interest rate decision via the FOMC minutes tomorrow afternoon. Regretfully, this is the only event to speak of and with the Fed chatter as of late, will probably be taken in stride. Thursday's events perk up a bit, with leading indicators and the Philly Fed due to be released but there may not be many market participants paying attention.

We continue to prefer a buy on dips mentality and are looking for a rally to the 940 area in the S&P, with 950 being a possibility. Likewise, assuming that 1380 holds, we could see 1440 in the NASDAQ in the coming sessions.

We are prepping to sell calls against what we believe to be an upcoming rally, for those of you that are more comfortable with limited risk...there may be an opportunity to buy puts. Stay tuned...





S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, May 20 2009, 03:38 GMT

The Stock Index Report

Tue, May 19 2009, 01:01 GMT
by Carley Garner

DeCarley Trading

Stocks up post-expiration

Investor optimism was renewed by better than expected housing data, impressive earnings from Lowe's and positive analyst comments in regards to the banking sector. According to Richard Bove of Rockdale Securities, the potential for "explosive earnings growth and unusually strong stock price performance" exists in the banking sector. Additionally, Goldman Sachs has raised its rating on Bank of America to a "buy".

According to data released throughout the day, homebuilder confidence has ticked higher and so has building permits and housing starts. While it is too early to call any type of bottom in real estate, it does appear as though there are signs of stabilization.

Last week's trade closed on a sour note, but it is now clear that option expiration may have played a role in equity weakness. We have been calling for a sharp rebound from last week's correction but I will admit that I didn't quite think that it would happen so fast...and with such a lack of back and filling. Today's session was highly one sided; most likely due to the fact that shorts were covering on all small dips which prevented "normal" digestive declines. The light volume leaves the rally somewhat suspect, and leaves me thinking that an overnight pullback in stock index futures is likely.

We are sticking to our previous call in the S&P:


Our major support area in the S&P near 877ish has managed to hold, as we have mentioned in previous newsletters; if this continues to be the case we could see a rally in the S&P to retest the recent highs and may be even reach the 940 area, 950 being our distant possibility. If we are wrong about the market's direction from here, a clear break and hold below 873 or so could lead to a much larger move to 820.

Last week we mentioned that the June NASDAQ will need to trade above resistance near 1374 in order for the rally to resume. It now looks like that is the case. Our next upside target is 1440. We noted that traders should be looking to buy the Dow on dips, with major support at 8,190 and this would have turned out to be a great place to be long. A pullback to 8,300 isn't out of the question but we are looking for a move to 8,640. We have mentioned that the Russell needed to break through resistance near 483 to make progress on the upside and now appears to be headed toward the 515/520 area.




S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat


Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Tue, May 19 2009, 01:01 GMT

The Stock Index Report

Thu, May 14 2009, 22:16 GMT
by Carley Garner

DeCarley Trading

Stocks bounce, will it last?

As we suspected, stocks rallied off of our 880-875 support area in the S&P but it sure wasn't because of good fundamental news. Chrysler took steps toward eliminating 789 of their 3,200 dealers and the weekly jobless claims bumped up above the dreaded 600k threshold.

Another relatively slow news day makes my job difficult and with the exception of the CPI data, tomorrow won't be much better. Although options expiration may make things a bit more interesting

Today's rally was slow and steady, which leads me to believe that it may have something to do with option expiration. There have been a lot of bears caught on the wrong side of this rally, and it isn't hard to imagine many short call traders that are taking the recent dip as an opportunity to buy futures against bearish option positions. If this is the case, we could see a bit of follow through in tomorrow's session with the first area of resistance coming in near 914 in the June S&P. My gut tells me that another run at the highs 930/340's could be in store for next week. Therefore, it seems as though aggressive traders may be better off leaning toward buying on dips. Keep in mind that if we are wrong about the immediate direction, a close below 875 will likely be followed by weakness the brings the index to the mid 820's.

The Dow must hold above 8,177 to avoid a sweeping move below 7,800 but at this point we are cautiously looking for the index to rally to the 8,600 in the coming sessions. The NASDAQ and the Russell are both trading somewhat independent of the broad market, their strength in today's session may bode well for the bulls going into option expiration. I see resistance in the NASDAQ near 1374, failure at this level may lead to an eventual slide to 1300. The Russell must break above 483 to resume the uptrend.





S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

May 4th - Our clients were recommended to sell the June 990 calls for $7.25 or better.
• May 13th - Our clients were recommended to take a profit by buying back this option near $3.



Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat




NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, May 14 2009, 22:16 GMT

The Stock Index Report

Thu, May 14 2009, 01:54 GMT
by Carley Garner

DeCarley Trading

Critical crossroads

The retail sales headline cracked the market in early trade and things only got worse. A market that seemed unstoppable a week ago has finally retreated to what we deem to be critical support levels. In other words...what the market does from here could make or break the rally.

According to the U.S. Census Bureau, retail sales declined in April by .4%. This marks 8 out of 10 of the last readings in negative territory and rightfully pulled some of the euphoria out of retail stocks. It is no surprise that the consumer has tightened wallets in light of plummeting stock and housing prices.

In yesterday's newsletter, we were calling for "a continuation of the dip to the sub 880 area; perhaps 875ish". We also mentioned that, "following this digestive correction, another large rally could be brewing." For now we will stick to this assumption and look for the market to potentially make a run at the recent highs...but as usual, things change quickly so we will attempt to be nimble.

While our technical analysis in the S&P suggests that at minimum we could see a temporary bounce from support levels, the two leading indices have broken support and point toward continued weakness. For this reason, if you do have bullish S&P positions on you should be willing to take a quick profit to reduce risk of the NASDAQ and the Russell pulling the market lower. The next significant support in the Russell isn't until we get close to 450, similarly the next notable floor in the NASDAQ could be near 1300. Like the S&P, the Dow hasn't broken significant support, which is now looming near 8,160.

If you were following our recommendation regarding the short June S&P 990 calls from the May 4th newsletter, our clients were recommended to liquidate near $3 this afternoon to lock in a profit. Assuming fills at $7.25 and $3 it is a profit of $212.50 per contract on an e-mini and a little over $1,000 on a large. These figures are before commissions and fees of course. Don't forget that option selling involves the same unlimited risk faced by futures traders. If you are interested in an option selling approach to the markets, pick up a copy of my book "Commodity Options". It is currently available at all major book outlets.

Sorry so short!!

S&P 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

May 4th - Our clients were recommended to sell the June 990 calls for $7.25 or better.

· May 13th - Our clients were recommended to take a profit by buying back this option near $3.

Russell Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

NASDAQ Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Thu, May 14 2009, 01:54 GMT

The Stock Index Report

Wed, May 13 2009, 01:18 GMT
by Carley Garner

DeCarley Trading

Choppy but bears have the edge

Equities are finally taking a breather from one of the most impressive rallies of all time. With the exception of the Dow, which posted moderate gains, the major indices settled moderately lower on Tuesday despite an early morning freefall. At this point, it seems as though the late day rally was just a case of the market being "too short" in the near-term. Accordingly, we are expecting some continued weakness in the near-term. However, it is impossible to ignore the resiliency of the bulls. We are cautiously looking for a continuation of the dip to the sub 880 area; perhaps 875ish but the sideways action is enough to deter us from making any bold calls. Keep in mind that following this digestive correction, another large rally could be brewing.

Much of the late day buying seems to be attributable to comments made by the former Federal Reserve Chairman Alan Greenspan. Mr. Greenspan suggests that "seeds of a bottoming" home market are becoming visible. He noted that draws on housing inventories should begin to bring stability back to home prices and that some of the biggest slumping markets, such as California and Nevada, are seeing a rebound in sales even though prices haven't followed.

It is becoming more and more difficult to find traders that have any conviction as to where the markets go from here and we find ourselves with the same level of confusion. Our charting models are suggesting moderately lower, so that is how we will approach the markets. At the same time, we cannot emphasize enough that bears should be patient as rallies have been sharp. Having a great entry is key to maintaining mental composure when the going gets tough.

Tomorrow is a statistically bullish day and this expiration seems to be somewhat positive. This doesn't necessarily mean that you should bet the farm on the market going up, after all the day after Mother's Day has historically been a winner; but it does point out that traders shouldn't be married to any single opinion or trade.

Resistance in the S&P lies at 934/940 while support should be found near 880/875. Dow traders face resistance at 8,620 and support near 8,200. Resistance in the Russell remains at 520 with support at 480.

S&P 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Russell Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

NASDAQ Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, May 13 2009, 01:18 GMT

The Stock Index Report

Tue, May 12 2009, 02:28 GMT
by Carley Garner

DeCarley Trading

Stock index futures take a breather

It was an overall red day on Wall Street, but the selling pressure wasn't as swift as many had anticipated.  The markets had several opportunities to take out critical support levels but it just wasn't meant to be.  Perhaps there is too much pessimism in regards to the recent rally and, quite frankly too many bears.  If this is the case, we could continue to see short covering on dips.  That said, while another run to our major resistance levels (940 in the S&P and 8,950 in the Dow) is entirely possible we believe that the major indices have become a bit "toppy" and should see a sizable correction at some point.  Unfortunately, without the help of a crystal ball it is difficult to determine the timing of it all. 

Accordingly, we feel as though bears should play it conservatively.  Being too early and overleveraged in this market has the potential to end a trading career.  This is what they call a trader's market; those looking to sell futures should patiently wait for favorable intraday levels and be willing to offset trades to lock in profits should the opportunity arise.  Option traders should do the same as long option traders may struggle to overcome premium erosion and short option traders are subject to explosions in volatility at all times in which there are open positions.  It is better to be safe than sorry. 

In Friday's newsletter, we noted our expectations for a pullback in the near-term but also pointed out that the eventual target may be 9,000 in the Dow and 940 in the S&P.  Monday's action proved to be in line with our analysis but we are left wondering whether the correction has run its course or will we get another day or two of back and filling.  We see major support near 875 in the "Spoos" and 8,150 in the Dow. 

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data.  However, market analysis and commentary does.

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 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Russell Futures and Options Trading 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 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

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.

Published on  Tue, May 12 2009, 02:28 GMT

Bernanke optimism deters bears

Wed, May 6 2009, 10:04 GMT
by Carley Garner

DeCarley Trading

Stock market bears seemed to be reluctant to sell into overbought market conditions and Federal Reserve Chairman, Ben Bernanke, may have been the glue holding the rally together. Bernanke told congress that the economy should begin growing again later this year. This is the brightest forecast provided by the Fed Chair since last year.

On the other hand, Bernanke also reminded listeners that the growth will be subpar and we could see a continuation of sizable job losses. Also preventing what could have been a more significant pullback of the broad market, the Institute for Supply Management reported that the economy is contracting at a slower pace. Their index of non-manufacturing activity was reported at 43.7, nearly 2 points better than the previous month's.

Later in the day, Goldman Sachs announced that they have changed the rating of Bank of America to "outperform". They also noted that U.S. banks are "attractive". In theory this is good news for the market; after all, it was the financial sector that lead equities higher. However, we can't help but believe that much of the near-term buying was expended before the announcement and that the flurry of short covering yesterday essentially built in this type of news.

In yesterday's newsletter we mentioned that Tuesday was a statistically neutral day and that is exactly what we saw. Conversely, based on historical data the odds are favoring the downside in the next two sessions. We are leaning very cautiously lower, but can't rule out one last push higher. Resistance in the S&P lies at 911 and again near 920.

As far as the other markets go, we are sticking to our original numbers:

On Friday we pointed out Dow resistance near 8,400 and today's high wasn't too far away. However, the next ceiling should be found near 8,440. We think a temporary pullback is looming which could extend to just above 7,800. We still see the next major resistance area on the NASDAQ near 1495 but if you are bullish this market you should tighten stops, as a sizeable pullback (1350) seems necessary. Additionally, we feel as though the June Russell futures could see 520 but overbought conditions leave the risk to the downside.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.

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 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

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 Jones Futures and Options Trading 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 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, May 6 2009, 10:04 GMT

Awaiting the Fed

Wed, Apr 29 2009, 08:27 GMT
by Carley Garner

DeCarley Trading

Again, stocks managed to pick themselves from up what seemed to be a desperate overnight session. Slightly positive data and news that IBM will be raising its dividend by 10% offered the market some hope that the economy has turned the corner.

All eyes are on the Federal Open Market Committee and the looming interest rate decision. It is widely expected for the Fed to do nothing in terms of adjusting the Federal Funds rate as there is nowhere else for it to go but higher...and they don't see ready to pull that trigger. However, as is always the case, traders will be focused on clues into future moves by the central bank. Last month, the Fed dropped the quantitative easing bombshell on the bond market. Who knows what could be in store for the financial markets tomorrow.

In light of the event risk, it seems wise to be sidelined ahead of the day's activities. There are often trading opportunities in post FOMC market conditions but being in the wrong place at the wrong time prior to the announcement can be devastating.

We would like to be able to sell calls against a swift rally in the S&P to the 830 area and puts beneath the 800. Obviously it would take a large move for either of these objectives to be met, but it isn't out of the question.

Given that the market hasn't made any notable moves, we still believe in the support and resistance figures reported yesterday:

Resistance in the S&P can be found near 868/872 area with the next potential ceiling looming at 881. Should the index see 881, we would turn highly bearish and look to construct an appropriate strategy. In the meantime, significant support lies at 837, 830 and then again at 793.

Dow traders should look for resistance near 8,200 and support at 7,885 and 7,600. We have a hard time believing that the NASDAQ will be able to penetrate 1400 and see support near 1314 and again at 1232.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.

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 500 Futures and Options Trading 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 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Published on  Wed, Apr 29 2009, 08:27 GMT