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*All rights reserved. Reproduction or distribution of this newsletter without prior consent is strictly prohibited. April 5th, 2010
Quarter/week starts with a bang Mutual fund Monday was the theme following Good Friday's employment numbers. Despite historical stats suggesting that today was bearish for equities, the major indices moved relentlessly higher on light, but decisive, volume. What is being called a "melt up" has been magnified by panicked buyers, both those caught with losing short positions and those rushing in after sitting out much of the rally. Investors have been bombarded with solid economic news. The government claims that the U.S. economy added 162,000 jobs, the Institute of Supply Management reported an increase in its services index and the National Association of Realtors said that its seasonally adjusted index of sales agreements rose 8.2% in February from January. The markets can't go up forever but sometimes they sure make it feel as though they can and this happens to be one of those times. Danny Riley, one of our floor brokers on the CME floor said it best "The higher they go, the more pregnant they become." At some point, investors will begin paying attention to crude oil and its propensity to cripple growth at current or higher levels. Up until now, higher energy prices has worked in favor of stocks as traders assume that higher crude equates to higher demand and thus a stronger economy. Nonetheless, this point of view might begin to falter going forward.
Last week we mentioned that the S&P could be headed to 1184, and as much as we didn't want to see it we did. The markets have spent the last several months pricing in a recovery, now that we are finally seeing signs of such we could be in store for "buy the rumor sell the fact trade". That said, we and others thought that weeks ago and were quickly proven wrong. It is tough to be a buyer up here and those that do might eventually be sorry but in the meantime fighting the trend has been a rough game. If you are a bear, but sure to patiently wait for good entries and be quick to take profits. We think that there might be some stops above 1184, if run would put us near 1187 but the next "good "resistance might not be until 1194. Look for resistance in the Russell near 965 and then again at 970 and near 1995 in the NASDAQ. * 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. Charts provided by Track 'n Trade, Gecko software. **Seasonality is already be factored into current prices, any references to such does not indicate future market action. Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.  S&P 500 Futures and Options Trading Recommendations **There is unlimited risk in naked option selling and futures trading Position Trade - February 19 - Our clients were advised to sell the April 1165 calls for about $7.50, fills were coming in near $7.25 and a handful at $7.50. March 5 - Clients with ample margin and guts, were recommended to add to this position by selling the 1165 calls for $9.50.March16 - Clients were advised to roll half of their short call position into the April 1185/1100 strangle. March 17 - Clients were advised to roll the remaining 1165 calls into the May 1190 calls to give the market some breathing room. March 31 - Clients were advised to buy back the short 1100 puts for $1.75 in premium April 1 - Clients were recommended to roll any existing April 1185 calls into the May 1215 calls for a small credit (about .50). This moves the risk away from the market and lowers the delta considerably.  Russell Futures and Options Trading Recommendations **There is unlimited risk in naked option selling and futures trading Position Trade - March 9 - Sell 1 June mini Russell @ 682 OB 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 - March 3 - Sell 1 e-mini NASDAQ at 1878 or better
Carley GarnerSenior Analyst / Commodity BrokerDeCarley Tradingcgarner@DeCarleyTrading.com1-866-790-TRADELocal : 702-947-0701http://www.DeCarleyTrading.com http://www.ATradersFirstBookonCommodities.com *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. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. |
