Futures Market Blog

February 18th, 2009

See DeCarley Trading’s “Trade Like a Girl” article in the March issue of Stocks Futures and Options Magazine!

Stocks waffle on Obama’s $75 billion mortgage relief plan.

The long awaited mortgage relief plan was essentially a non-event.  The $75 billion attempt to alleviate foreclosures and the pressure they are causing in the financial markets was unveiled in a speech delivered by President Obama in Arizona.

New home construction fell to a record annual rate of 466,000 in January making news of the mortgage bailout plan bitter-sweet.  Although more expensive than previously expected,  the Obama administration claims that their proposal will keep 9 million people from losing their homes.  The plan includes the easing of refinancing for people that are upside down on their loan to rates that are subsidized by the government.  It also provides incentives to mortgage lenders in order to promote action to help those on the verge of foreclosure.  According to the President, it is worthwhile for the responsible citizens to support the plan to help their struggling neighbors as failure to do so will impact everyone.  Clearly, the markets aren’t necessarily convinced and if the they are…they are bitter.

While analysts are arguing that the big three auto companies would be better off filing for bankruptcy protection, motor city CEO’s would “rather not go down that road”.  At the same time, GM is claiming that they will be out of cash by March in the absence of another government injection of capital.

It is hard to justify being a bull given the dreary market sentiment and dismal economic news.  However, it is times like this that offer the best opportunities.  The major indices are oversold and although it may be in their destiny to see lower prices we are due for a corrective rally.  Now is a great time to buy lottery tickets, I like February calls with strike prices near 800.  If you are an option seller, I like selling puts into weakness but caution that you would want to stick with the March options and strike prices at or below 660.

It seems as though most of the sell stops have been triggered and support near 785 through 778 (despite a today’s temporary break-down) will hold for now.  In the meantime, we should see a rebound to 820 or as high as 830 as short traders cover positions.  The Dow came very close to reaching our major support level near 7,400 which supports a recoil rally that could extend to 7,900 should the buy stops lining the upside begin to trigger.

* 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 -

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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 -

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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 -

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Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
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.

02.06.09

Unemployment comes in worse than expected at 7.6 with a job loss of -598K. As a stand alone data point this would be a debt market positive but the market is looking beyond this, even looking past a 39.50 print for front month oil. Instead with the yield on the 10 year backing up towards 3.0%, the debt market is looking at supply to finance the stimulus.

Have a good weekend.

Current views, speculations and suggestions

Mar Yen: potential reversal day. Stand aside.
Mar Swiss: negative with res at 86.16
Mar EC:  neg with res at 128.75
Mar Canadian: pos with support at 80.07
Mar BP:  pos with support at 142.20
Mar ES: neg with res at 854.00
Mar NQ: pos with support at 1182.00
Mar Russell: pos with support at 441.50
Mar Mini Dow: neg with res at 8110
Mar Silver: positive with support at 12.37
Mar crude:  neg with res at 41.60

Longer term spread idea: from 12.22 we are long April crude at 44.90 and short Dec crude at 52.50 for a differential of 7.60.  On 1.07 could have bought April at 52.10 and sold Dec at 59.83 for 7.73.

Mar Soybeans: positive with support at 9.54
Mar Wheat: neg with res at 5.82
Mar Ten Year: neg with resistance at 122.25

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International Markets

Mar Euro Bund: pos with support at 121.70
Mar Dax:  positive with support at 4407
Mar NK:  pos with support at 7960

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N.B.: if you initiate a trade using any of these numbers use a stop at least equivalent to 2 ½%. Repeat: use stops.  Don’t think about using stops. Use stops.

Futures trading entails considerable risk and is not for everyone. An account can lose more than its initial investment. Stops are not necessarily filled at the stop level. Past performance is not a guarantee of future results.