8 days in the green, can the rally keep it up?
Commoditytrader.com - Tue, 09 Mar 2010 20:07:55 -0500

According to our trusty sources on the CME floor, the last 11 times that the S&P has closed positive for 8 consecutive sessions the next trading day has seen a red close 81% of the time. This ignores magnitude but seems to be evidence that the market might be a little overheated up here.

Based on conversations that I have had with other analysts/traders, it is clear that the current rally has pummeled the bears into submission. It appears as though, many have run out of capital and conviction and have therefore, moved to the sidelines. Unfortunately, this can often be a precursor to a market reversal. Remember, markets tend to cause as much pain as suffering to speculators as possible and a reversal from here would catch the complacent bulls sleeping and act as the thorn in the side of the bears that have thrown in the towel.

Also, the headlines have gone from bearish to bullish and S&P 1300 seems to be back into conversations. However, it is the exact bullish sentiment that is luring sidelined cash into the market that makes me doubt the ability of recent gains to hold.

We don't know where the exact highs of this move will be, and if you have been following this newsletter you have likely realized that we turned bearish far too early into this rally. Nonetheless, we can't "buy" into this move.

We are sticking to yesterday's technical numbers...Resistance in the S&P near 1148 (but our floor brokers think 1153ish). The NASDAQ should struggle near 1921 with the next technical level being 1940 (ouch!). The Russell faces resistance at 673 and then again at 682.

* 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 -

March 9 - Sell 1 mini Russell @ 682 OB

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
1-866-790-TRADE
Local : 702-947-0701

www.DeCarleyTrading.com
www.ATradersFirstBookonCommodities.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.