April 13th, 2009

If you like this newsletter, you will love my book "Commodity Options"!  Now available at any major book outlet.

Stocks suffer on retail sales

A flat Producer Price Index, suggesting that deflation could become a near-term problem (while inflation is the longer-term concern) and weak retail sales took the wind out of the sails of bulls.  However, it was continued concerned over the banking sector that kept pressure on stocks.  

Goldman's earnings surprise and pledge to raise $5 billion to repay TARP money, seems to have backfired on banks.  The financial giant reported earnings early yesterday after the closing bell and doubled estimates.  Nonetheless, traders saw the estimates as "sandbags" and scoffed at the lack of transparency.  Traders are eagerly awaiting JP Morgan and Citigroup earnings due out later this week. 

Retail sales slumped by 1.1% last month taking some of the silver lining away from the economy.  As a result, equities shaved off morning gains and spent the rest of the session well into negative territory.

Speeches delivered by President Obama and Ben Bernanke failed to ignite the bulls but at least they didn't trigger a massive wave of liquidation as has sometimes been the case. 

With earnings season in full swing, economic data thin and options expiration looming we could be in for a volatile week.  The big news will be JP Morgan's earnings on Thursday before the bell and Citigroup on Friday morning.  However, Charles Schwab released tomorrow before trade begins will be of interest to many speculators.  Each of these events can be considered wildcards, but my gut tells me that it is going to be very difficult to meet the standards of Wall Street even if earnings are enough to meet or beat analyst estimates.  After all, Goldman more than doubled the first call and matched their numbers from a year ago but still struggled to keep investors pleased.

Intel reported after the bell to beat estimates but fell flat when compared to last year's numbers.  However, this wasn't a surprise and the futures market reacted accordingly by shrugging off the news.

We are looking lower in the indices.  Our first target in the S&P is 818, 1270 in the NASDAQ, 7,700 in the Dow and just under 430 in the Russell.

* 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 –

Flat

Russell 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 –

April 3 - If you followed our recommendation, you would be short a mini NASDAQ from 1337.

·         On April 9 we recommended to buy an April 1350 call against this position for about $375.

·         April 14 - You may have opted to take a profit on this position on today's dip, if not look to buy it back near 1275.

*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.