The Stock Index Report - Double top for stocks or double trouble?
C. Garner I DeCarley Trading - 05 March 2010
The drawback of writing a newsletter with relatively strong opinions in market direction is the substantial risk of being wrong...or in this case just early (we think). Unfortunately, our crystal ball was a bit cloudy earlier this week. We were right about the rally, but didn't anticipate it moving quite this far.
Our 1125 objective in the S&P has come and gone and while we still feel like the market will see a reversal sooner rather than later, we cannot overlook the possibility of a retest of the January highs. This would put the S&P just under 1150...or even moderately higher. The Russell on the other hand, has already surpassed its recent highs and is now trading in territory not seen since late 2008.
There are very valid arguments for the bear camp that are being overlooked (or over run) by this rally, but sometimes fundamentals simply don't matter. The market is panicked...shorts are panicking and being squeezed out and the last of the sidelined cash is panicking to get in.
The employment numbers weren't positive, but their implications were. They jobs picture is bad enough to prevent Fed rate hikes but it isn't bad enough for investors to recall the possibility of a double dip recession. Nonetheless, some analysts are vocalizing the opposite. "Eight months into the much-touted recovery, the economy should be adding jobs not just losing jobs at a slower pace," noted Peter Morici, an economist for the University of Maryland.
There is some resistance in the S&P near 1138 but 1148 seems very possible target before a reversal can occur. The NASDAQ is facing resistance near 1900, and in the Russell this equates to about 669.
* 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
February 19 - Our clients were advised to sell the April 1165 calls for about $7.50, fills were coming in near $7.25 and a handful at $7.50.
March 5 - Clients with ample margin and guts, were recommended to add to this position by selling the 1165 calls for $9.50.
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
March 3 - Sell 1 e-mini NASDAQ at 1878 or better
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
DeCarleyTrading.com
CarleyGarnerTrading.com
1-866-790-TRADE
Local : 702-947-0701
*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.
About the Author:
Carley Garner - Senior Market Analyst and Broker, Stocks & Commodities Magazine Columnist and Author - Carley Garner is a Magna Cum Laude graduate of the University of Nevada Las Vegas, from which she earned dual bachelor’s degrees in both Finance and Accounting. Carley jumped into the options and futures industry with both feet in early 2004 and has become one of the most recognized names in the business. Throughout her fast paced career, Carley has been featured in the likes of Stocks and Commodities, Futures, Active Trader, Option Trader, Your Trading Edge, and Pitnews Magazine. Carley is often interviewed by news services such as Reuters and Dow Jones Newswire, and has been quoted by the Investor’s Business Daily and the Wall Street Journal. She has also been known to participate in Radio interviews. Carley's book titled “Commodity Options” was published by FT Press, a division of Prentice Hall, and is now available through all major book outlets. She has recently completed her second book, which is slated to be available in early 2010. Her e-newsletters The Stock Index Report and the Bond Bulletin are widely distributed and have garnered a loyal following; she is also proactive in providing free trading education, for details visit http://www.carleygarnertrading.com/. To register for a complimentary subscription to her daily newsletters, the Stock Index Report and the Bond Bulletin, visit www.DeCarleyTrading.com!
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. |
