January 21st, 2009
New look, new educational content, same honest commentary www.CarleyGarnerTrading.com!
Short covering bounce may retest Tuesday’s highs
Thanks to a positive forecast from IBM, equities were able to forge what looks to be a short covering rally. However, with a little government intervention or miraculous recovery in earnings it may turn into something more.
IBM reported late Tuesday that it expects its earnings for the New Year to beat expectation. The tech giant also announced that its fourth quarter profit jumped 12%, well above analyst projections. IBM’s surprised numbers are a good start, but we will need some follow through positive earnings if we want to see some follow through buying in the indices.
Like the market, we may have allowed ourselves to become a little “too bearish” after yesterday’s plunge. Despite a chart telling me that a bounce was looming, I choose to focus on the fear that suggested that an immediate drop was imminent. Accordingly, I passed on making bullish recommendations. After taking an objective step back, I respect the fact that the “bear market bounce” could extend to 975 in the S&P, 8,420 in the Dow and 1205 in the NASDAQ. With that said, markets typically don’t go straight up or down.
While things look good today, I am not convinced that we will avoid a retest of the November lows at some point in the near future. Rumor has it that there are significant sell stops in the S&P through 845 or so, but the buying may begin drying up from there. Look for resistance near yesterday’s highs and again at the previously mentioned 975.
I apologize for the brevity; we are traveling to an Introducing Brokerage conference hosted by our clearing firm, PFG. We believe that this opportunity will promote the growth and evolution of DeCarley Trading and in turn allow us to provide our clients with better service. Unfortunately, the obligation will prevent me from distributing this newsletter on Thursday and Friday. However, I will be available by email, phone and instant message as always. Feel free to contact me.
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 -
January 15 - If you took our advice in yesterday’ report to sell the February e-mini 630 puts for $8, we recommend being quick to take a profit. It may be possible to buy it back for $2 or $3 tomorrow.
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
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Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701
www.DeCarleyTrading.com
*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.
