February 24th, 2009

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Bernanke sparks rally on Wall.    

Federal Reserve Chairman Ben Bernanke offered some temporary solace from the doom and gloom portrayals that have plagued the media.  While Bernanke was clearly disappointed in the current health of the economy, he predicted that the there is a "reasonable prospect" that the recession will end this year.  With that said, he also noted that the economy is likely to continue contraction in the first half of 2009. 

Bernanke's proclamations weren't necessarily the rosy picture that we would like to see, but it was enough to tweak the nerves of the shorts.  As those with bearish positions began to cover, buy stops were triggered to add frenzy to the buying. 

While "Big Ben" may have been the catalyst to the rally; it is up to President Obama to keep the torch lit.  He will be speaking tonight at 9 pm EST in regards to his plans to help stabilize the financial system.  He is also expected to prep the public on the idea that more "stimulus" could be necessary.

In yesterday's market commentary, we noted the possibility on a short covering rally compliments of the plethora of speeches out of Washington...so  far so good.  We could see some back and filling  but overall we are still looking for the projections made in yesterday's newsletter:

Believe it or not, we think that the S&P could make its way back to 817 in the coming week or two and the Dow could see 7,800.  Resistance in the NASDAQ will be found at 1205...assuming that we can get a short covering bounce.   

* 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 –

February 18 - Short March S&P 660 puts at $8, looking for a quick rally to cover. 

·         Buy this back at $3 or better to lock in a profit of $250 minus commissions on a mini and $1,250 minus commission on a full sized contract.

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.