December 5th, 2008

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Shorts scramble to cover on lack of follow through selling.

Employers slashed 533,000 jobs last month; economists were shocked but the markets weren't.  The market had been anticipating a surprisingly negative jobs number, and the data delivered.  The biggest job decline in 34 years forced the unemployment rate to 6.7% but failed to force stocks lower.  Although the indices made honorable attempts to sell off following the news, short traders quickly became nervous as follow through selling failed to materialize. 

Today's news brings the job loss tally to 1.9 million while the number of unemployed has risen by 2.7 million.  Adding salt to the wounds, General Motors Corporation announced that they will be letting another 2,000 workers go in February. 

Sometimes when all of the bad news is out, it is good news for the markets.  Although stocks haven't been able to make notable progress in recent weeks there is a much better tone to trade.  Unlike October patterns, late November and early December dips have been met with some buying.  Each of the indices closed above what I consider to be the "make or break" technical levels.  Friday's tend to be questionable in terms of integrity due to position squaring ahead of the weekend.  Nonetheless, today's session seemed to be a victory for the bulls.  If this assumption is correct, next week should prove to be an early Christmas on Wall Street.  I am looking for 945 in the S&P, 9,130 in the Dow and 1278 in the NASDAQ.  Let's see what happens.

Sorry so short, have a nice weekend.

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 –

November 12 - Our clients were advised to buy the December e- mini S&P 500 1030 calls for $6 in premium or $300. 

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 –

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

Swing Trade -

Flat

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