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. 

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

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.