March 30th, 2009

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Equities rally in to quarter end

Sidelined cash made its way to the market for what many are calling end of the quarter window dressing.  The bounce is somewhat expected given the large losses suffered in the previous two trading sessions. 

It is hard to gauge the health of the market, or lack of, on what has transpired in the previous couple of sessions due to end of quarter allocations and position squaring.  Likewise, traders will likely be making adjustments ahead of this week's G20 meeting and employment report. 

Going into tomorrow, without so many distractions I would say that a close in the S&P above 800 is highly bullish and we could be in store for a retest of the highs, maybe even the 850/860 area that we were looking for before yesterday's collapse.  Conversely, a close below 800 should lead to another sweeping move to major support levels near 760.  However, I am finding it difficult to make any concrete decisions in terms of what to expect in as we approach the week's end. 

I will admit that I am a bit surprised in the lack of follow through selling into today's session.  I didn't expect Wall Street to accept the government's new role in running big business.  Whether it is necessary or not is a debate that will likely never end, but a one-day temper tantrum by the broad market seems to have downplayed the relevance of the argument.  Tomorrow may be more telling, as mentioned, today's trade was dominated by end of the quarter/month action.

Friday's employment report will continue to be an attention grabber.  Analysts are expecting another draw of nearly 650k jobs and an unemployment rate of 8.5%.  Unfortunately for the bears, numbers of this magnitude have become commonplace and no longer pack the punch that they used to. 

Once again, we are approaching tomorrow relatively neutral but will be slightly leaning lower.  We see significant resistance in the S&P near 831 and again at 855.  On the other hand, support should be found at 783 and 761.  Similarly, resistance in the Russell futures should be found near 443 and possibly a high as 455 with the help of economic and political news; support lies at 413 and again near 395.

* 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-Russell chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.

Russell 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.