March 13th, 2009

Register for a free 1-year subscription to Futures Magazine on www.DeCarleyTrading.com

Stock index futures keep composure

The three-day rally may have lost some if its luster, but it surely didn't fizzle as those in the past have.  There was a moderate amount of back and filling in early  trade, but buying (or additional short covering) eventually supported the major indices.  Many analysts were expecting stocks to succumb to selling pressure late in the day based on the premise that those long the market wouldn't want to hold positions over the weekend.  However, it seems that it was those traders short the market that were nervous about holding positions into the weekend. 

There is substantial event risk while the markets are closed.  G-20 finance officials are meeting in southern England to discuss differences on combating the global recession.  U.S. Treasury Secretary Timothy Geithner intends to persuade the European countries to increase spending.  However, with the exception of Great Brittain those "across the pond" are fighting for less spending and more regulation. 

We were correct in assuming that the markets would pull back a bit following the rally that brought the Dow over 10% from its lows.  However, we underestimated the strength a bit.  The major indices traded near our support levels, but never quite reached them.  Barring any G-20 surprises, this should be a good omen.  We believe that as long as the S&P holds 736 on Monday, and the Dow above 7,000 we could get a rally that pushes the S&P above 800 and the Dow near 7,800.   

I will be traveling over the weekend and it will prevent me from issuing a newsletter on Monday.  Feel free to contact me at your convenience. 

Have a great weekend!! 

* 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 3rd - I like buying the April 800 calls for about $7 in premium.

·         March 10 - Place an order to sell these for $15 or better.  You should be out of this by now, if not get out!!

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.

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