Enthusiasm over yesterday's rate cuts faded in early trade but light holiday trade looks to be favoring the upside anyway.  The Fed is said to be "all in" and many are wondering whether there are any more cannons to fire, or if things are even worse than previously thought given the magnitude of the Fed's move. 

Based on the pressure that the markets have endured in recent months, it is somewhat encouraging to see stability in the face of disappointing news.  Larger-than-expected losses reported by Morgan Stanley could have meant trouble for the fragile equity markets, but in the end resiliency prevailed.  The firm posted a loss of $2.37 billion, equal to $2.34 per share, for the fiscal fourth quarter.  The news was a bit unsettling given Goldman Sachs first quarterly loss since going public in 1999. 

OPEC agreed to slash 2.2 million barrels from its daily production on Wednesday, but the market didn't see to believe them.  Remember, a cartel only works if all parties actually participate.  Nonetheless, it was the single largest production cut on record.  Additionally, outsiders Russia and Azerbaijan announced that they would be reducing the amount of petroleum that the put on the market.  Energy traders continue to be more concerned with plummeting demand, than they are with the supply side of the equation.  Along with sky-high energy prices came inefficient production and higher costs of production.  Many analysts are looking for prices below production costs (now in the mid $30's I believe) before enough wells drop offline to allow for price stabilization. 

The nonchalant trade in today's session leaves the near-term direction somewhat questionable.  I am leaning higher, but wouldn't bet on either direction.  There will likely be better opportunities to be a bear, so I don't recommend jumping in front of this light volume rally.  Don't forget, the days surrounding Christmas are typically bullish.  Also, many are saying that the "big traders" and fund traders have taken time off for the holidays and small specs are driving prices.  This is theory of course, but I do stand by my assumption that lighter volume will translate in to equity market gains.  My upside target in the S&P is 945 with the potential for 960 by sometime next week.  Likewise, the Dow looks to be shooting for 9,170 and the NASDAQ 1273. 

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.

 

**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.

 

**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.

 

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

*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.