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The Stock Index Report

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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, 01:12 GMT