Futures Market Blog

March 3rd, 2009

Option traders, if “Commodity Options” can save you one tick…you will recoup most of your investment.  Get it now through Amazon.com (discounted) or Borders.com!

Slow data day, but lots of chatter

There were only a handful of government economic reports released during the session, but comments from President Obama and testimony by Fed Chair Bernanke and Treasury Secretary Timothy Geithner kept traders on their toes.  Some of the mid-day buying was enticed by Obama’s claim that share prices are a potentially good deal at current levels.  However, the good mood didn’t last.

Bernanke wasn’t the cheerleader today that he was a few weeks ago but all in all there wasn’t an overwhelmingly negative response to his Congressional testimony.  Lawmakers were relatively hard on the Fed chair when it came to the latest bailout of AIG.  Nonetheless, Mr. Bernanke insists that the economic recovery hinges on the government’s success in stabilizing the financial markets and this includes the larger players.  He didn’t speak highly of the operations of AIG and the circumstances that allowed for their demise.  “I share your concern, I share your anger.”  He added, “It’s a terrible situation, but we’re doing this to protect our financial system and to avoid a much more severe crisis in our global economy.”

On the economic front, GM sales in the U.S. dropped 53% in February.  The firm intends to produce 550,000 vehicles in North America next quarter.  In the same quarter in 2008, GM made 834,000.  Ford sales weren’t much better, they reported a decline of 48% last month.

In yesterday’s newsletter, we mentioned that we were looking for a “relief rally but suspect we will see a little lower before we see higher prices.”  Although, we did see lower prices in today’s session as we were predicting, it seems as though another day of declines is likely.  That said, it seems as though a major low is setting up.  If you are short this market, you should be playing with tight stops as the backlash could be vicious.  Option traders should be buying calls and selling puts…or all of the above.  I like buying the April 800 calls for about $7 in premium.

We see major support in the S&P at 677 but once the short squeeze begins we could see 791 in short order.  Support in the Dow is now 6,620 but with so many bears a turnaround could lead to a push toward 7,400.  We still see 1020 as the next major support 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.

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 -

March 2nd - Sell a March S&P 620 put for $7.25 or better ($362.50 in a mini and $1,812.50 for a full sized contract).  Place an order to buy this back at $3.  The risk is unlimited and the profit potential is limited to the premium collected.  Be careful with this one!

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

———-

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.

February 26th, 2009

Pick up your copy of “Commodity Options” published by FT Press in any major bookstore or online retailer!

Weak housing, weak jobs…weak stocks

An impressive overnight rally quickly fizzled….as they all do.  Nonetheless, the day wasn’t a disaster.  It certainly could have been given the poor economic news and the event risk over President Obama’s budget release.

According to the U.S. Census Bureau, new home sales were down 10.2% from December ’s pace and less about half of what it was a year ago.  Weekly jobless claims were equally as depressing.  The U.S. Labor Department reported that claims were up 36,000 to 667,000; this was the highest level in 16 years.

Also working against the indices; the FDIC announced that there were 252 banks that they have categorized as troubled; this is well above the 171 in the third quarter.

The White House released its 2010 budget on Thursday, given some of the inclusions it seems as though a moderate down day in equities should be considered a victory.  In fact, it seems as though the markets are vulnerable to a considerable slide in tomorrow’s session as investors and traders get a chance to look over the details regarding business and investment tax increases.  Additionally, President Barack Obama anticipates another $750 billion bank bailout this year.

Coming into today I was relatively confident that we would see the S&P rally to 800.  My assumption was based on the idea that technical short covering would have the ability to fuel a sizable rally.  However, following the mid-day sell off I began second guessing my original analysis.  In fact, I now believe that the odds favor more weakness before the market can turn around.  I am looking for about 735 on the downside in the S&P and 7,000 in the Dow.  The NASDAQ could see 1,095.

Our clients were recommended to take a profit on the March 660 puts this morning on the rally near an option premium of $4.20 for a profit of $190 per mini contract ($950 if you are trading the full sized S&P).

* 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 -

February 18 - Short March S&P 660 puts at $8, looking for a quick rally to cover.

• Buy this back at $3 or better to lock in a profit of $250 minus commissions on a mini and $1,250 minus commission on a full sized contract.

• February 26 - Our clients were recommended to take a profit on the March 660 puts this morning on the rally near an option premium of $4.20 for a profit of $190 per mini contract ($950 if you are trading the full sized S&P).

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

———-

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.

February 25th, 2009

Pick up your copy of “Commodity Options” published by FT Press in any major bookstore or online retailer!

Choppy trade as shorts cover on dips

Ben Bernanke seemed to have revived the financial markets, at least temporarily, for the second consecutive day.  At one point the S&P was trading nearly 20 points into negative territory; however, details provided for “stress tests” and the granting of immediate access to further government support from the $700 billion bailout fund managed to turn stocks around in late session trade.

Bernanke clearly stated that there are no talks in regards to nationalizing the banks.  Accordingly, the Treasury Department announced that the government is prepared to purchase preferred shares of bank stock that are convertible into common shares.  They expect to do so at a discount of 10% of their price before February 9th.

Stress tests conducted by the government to ensure that the banks have enough capital to survive a downturn are expected to be completed by the end of April.  The results of the test will determine whether or not additional assistance is needed and will test their ability to survive even rougher conditions than they now face.

Investors seemed to enjoy the details of the plan, or at least the bears saw it as enough of a threat to cover short positions.  However, the indices are plagued with a “sell all rallies” mentality.  Until the attitude toward the markets change, this will prevent any sustainable gains.  That said, the only event that is capable of triggering such a dramatic change in sentiment is a large short squeeze.  Once the market reminds the bears that there are no “free lunches”, stability may return.

Today’s choppy trade and weak close has thrown off our technical analysis a bit.  There is still substantial risk of a short covering rally, thus the bears should avoid getting comfortable.  In fact, we see potential for over 800 in the S&P and 7,800 in the Dow.  However…Wednesday’s late day sell off may lead to another flush out before the rally can occur.  We like selling puts and or buying calls against sharp weakness.  If we do get a flush out of the longs and a spike in the VIX you may want to consider one by two ratio put spreads as an attempt to take advantage of the volatility.  The spread could be used for speculative bears or as a hedge against bullish positions.

* 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 -

February 18 - Short March S&P 660 puts at $8, looking for a quick rally to cover.

• Buy this back at $3 or better to lock in a profit of $250 minus commissions on a mini and $1,250 minus commission on a full sized contract.

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

——————-

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.

February 24th, 2009

Pick up your copy of “Commodity Options” published by FT Press in any major bookstore or online retailer!

Bernanke sparks rally on Wall.

Federal Reserve Chairman Ben Bernanke offered some temporary solace from the doom and gloom portrayals that have plagued the media.  While Bernanke was clearly disappointed in the current health of the economy, he predicted that the there is a “reasonable prospect” that the recession will end this year.  With that said, he also noted that the economy is likely to continue contraction in the first half of 2009.

Bernanke’s proclamations weren’t necessarily the rosy picture that we would like to see, but it was enough to tweak the nerves of the shorts.  As those with bearish positions began to cover, buy stops were triggered to add frenzy to the buying.

While “Big Ben” may have been the catalyst to the rally; it is up to President Obama to keep the torch lit.  He will be speaking tonight at 9 pm EST in regards to his plans to help stabilize the financial system.  He is also expected to prep the public on the idea that more “stimulus” could be necessary.

In yesterday’s market commentary, we noted the possibility on a short covering rally compliments of the plethora of speeches out of Washington…so  far so good.  We could see some back and filling  but overall we are still looking for the projections made in yesterday’s newsletter:

Believe it or not, we think that the S&P could make its way back to 817 in the coming week or two and the Dow could see 7,800.  Resistance in the NASDAQ will be found at 1205…assuming that we can get a short covering bounce.

* 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 -

February 18 - Short March S&P 660 puts at $8, looking for a quick rally to cover.

• Buy this back at $3 or better to lock in a profit of $250 minus commissions on a mini and $1,250 minus commission on a full sized contract.

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

————–

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.

February 23rd, 2009

Pick up your copy of “Commodity Options” published by FT Press in any major bookstore or online retailer!

Equity Index Futures are consistently weak.

The trend is your friend and the bears seem to be enjoying the relentless selling and intermittent opportunities to sell into rallies.  Today’s selling came on the heels of an overnight rally that brought  the S&P futures near 786 in the electronic night session.  It was noted that the price destruction appeared to be more dependent on a lack of interest in the market than overwhelming selling.

Coming into the week we were leaning slightly higher, but aware of the possibility of an S&P retest of the November lows.  Now that we are here, we are growing increasingly bullish but cautious.  I cannot think of a time in which investor sentiment has been at such dismal levels and this is often a precursor to a bear market bounce.  Even in November, the weakness was panic driven as opposed to an outright lack of faith in the system as we are experiencing now.  Warren Buffet always says, “Be fearful when others are greedy and greedy when others are fearful”.  If the indices can hold support, we could be in store for a surprisingly large short squeeze.   On the contrary, all bets should be hedged or monitored closely as a break down may easily lead to the infamous capitulation in which you do not want to be on the wrong side of.

Additionally, in the coming days President Obama and Tim Geithner will have an opportunity to “redeem” themselves in term of policy clarity.  Any possible shred of hope in the new administration’s plan may be enough to catalyze the short covering rally that we are predicting.  That said, I think that we have all noticed the correlation between the stock market and speeches from the Obama camp.  Tomorrow President Obama will address a joint session of Congress and Fed Chairman Bernanke will testify before the Senate Banking Committee on monetary policy at 10 am Eastern.

Believe it or not, we think that the S&P could make its way back to 817 in the coming week or two and the Dow could see 7,800.  Resistance in the NASDAQ will be found at 1205…assuming that we can get a short covering bounce.

* 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 -

February 18 - Short March S&P 660 puts at $8, looking for a quick rally to cover.

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

—————

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.