May 1st, 2009

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Statistically positive, but actual upside marginal

Based on historical statistics, today was slated to be a positive day.  However, after posting the best month in nine years, the major indices took the opportunity to take a breather by spending much of the session waffling near unchanged.  Long-term investors are likely anchored on the fence between missing the next up-move and taking profits from what has been an incredible run. 

Consumer confidence figures beat expectations and shifted early morning pessimism into optimism.  Economists are looking for the consumer to pull the economy out of its rut, and consumer sentiment is the stepping-stone. 

As much as I would like to confidently disclose our stance in the market, there are simply too many mixed signals to sift through.  I still feel as though we could easily see 930/940 in the S&P in the coming month or so should the economic data continue to be optimistic.  However, action on a daily chart is suggests a possible retest of the 850 area.  With that said, even if the market is going to 940 selling into sharp rallies has worked nicely on the way up and could still be the way to go in the coming days.  However, it is imperative that bears patiently wait for great intra-day opportunities.  There is little room for error in this market and "forced" trades have been painful lessons for many shorts in this market. 

We see resistance in the S&P near 887 and again at 902, daily support lies at 849.  Dow traders should look for resistance near Thursday's highs (8,277) and then again near 8,400.  500 continues to hold the Russell in check, but we see 520 as a possibility.  1400 in the NASDAQ remains critical, but it feels like the tech sector wants to go higher.  If so, the next major resistance area is 1495...this should be interesting.

My weekend will be spent dealing with a broken main water line, hope yours is better than mine!!

* 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.