April 23rd, 2009

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Traders feeling the whipsaw

Futures traders are likely suffering from whipsaw (similar to whiplash) from the previous handful of trading sessions.  Just when it seems as though the market is going to pick a direction for the day, it turns on a dime.  This is somewhat typical to see in the heart of earnings season but it never seems to get less annoying.  

With all of the volatility, neither the bulls nor the bears have made progress.  The market has spent 12 of the last 15 days trading at or near 840 for at least some point during the session.

In terms of quantity, Thursday was a big day for earnings announcements.  However, Friday's trade will likely be more effected by earnings news.  Before the bell several large and somewhat "bellwether" firms will be reporting.  Included are 3M, Ford, Honeywell and Xerox.

We noticed a typo in yesterday's report, it should have read...  "We see near term resistance in the S&P near 851, and have support at 833 and again near 823 again.  Should the market fail to see follow through buying tomorrow, we could be in store for a move to 775."  Sorry for any confusion that this may have caused.

As for today, we are sticking to our original assessment

We have noted resistance in the S&P near 851 and that it was critical for the market to hold above it in order to avoid a market controlled by the bears.  Today's late day selling into the close leaves me looking cautiously lower in the indices.  The S&P will need to break below 830 support, but I can't help but feel that we will see sub-800 at some point in the near future.  That said, day traders may look to sell into rallies.  We prefer to wait for a break down to capitalize on overvalued puts.  I will keep you posted. 

I certainly wouldn't "bet the farm" as the markets are extremely choppy, but the Dow seems destined for 7,600.  The NASDAQ maybe in store for 1300 again.

* 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

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.