December 3nd, 2008

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Stocks up 7 out of the last 8.

It was a choppy trading session, but the bulls managed a victory.  Today's close in positive territory was the seventh in the last eight trading session, unfortunately for the bulls the single down day was a painful one. 

The markets have shown a considerable amount of resiliency in the face of dismal economic data.  However, we have always known that the markets would improve before the data actually did.  The lows seem to be near as valuations have priced in a large discount for the horrible data that is expected in the coming months.  In other words, once all of the bad news is known and traders have reacted accordingly there will be nobody left to sell.  This is a longer-term perspective (six months) but a concept that you should have going forward. 

Thursday and Friday will be very decisive days for the major indices.  Not only will we see market moving data such as retail sales and the employment report but broad based measures of the market are resting on critical technical levels.  Simply put, the make or break area for the S&P is 866.  We have repeatedly witnessed the December contract come back to this point.  Today's close above this pivotal number bodes well for the bull camp.  In fact, if the market can trade consistently above 861 tomorrow there is a good chance that we will see 950 in the coming day.  On the other hand, if retail sales data triggers selling the index may be destined for 775 before becoming attractive again.  The hurdle in the NASDAQ sits at 1166 with support at 1045 and resistance at 1286.

From a purely technical standpoint, the Dow looks much healthier.  Today's close well above 8,450 suggests that a move to 9,150 is underway.

The markets are relatively mid-range, so we don't have a strong sense of direction either way.  However, we continue to lean towards a higher bias.

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 –

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300. 

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 –

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

Swing Trade -

Flat

There is substantial risk of loss in trading futures and options.