Stock and Commodity Quote Ticker
| Another new high in stock index futures? |
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 *All rights reserved. Reproduction or distribution of this newsletter without prior consent is strictly prohibited. October 20, 2011 Sign up for our next FREE webinar with PFGBest, "Decoding the COT Report", click here!Another new high in stock index futures?It was another volatile session in the equity markets, but this time around the volatility was far more erratic than what we have seen in the past. Chaotic trade such as this tends to be a precursor of a large move in one direction or the other...unfortunately, the immediate direction is tough to call because it is likely dependent on this weekend's European headlines. Due to unstable conditions we will refrain from making any bold directional calls, but what we can say is that sharp rallies to levels noted later in this newsletter might turn out to be opportunities for the bears.Despite the miraculous recovery in equities, investor sentiment appears to remain overwhelmingly bearish. It is easy to see how position traders might get comfortable being bears with prices at the top of what has been carved out of the trading range. In fact, 1230 is the "textbook" example of a selling level based on support and resistance...and the market's initial reaction near this price was an immediate sell-off. Nonetheless, with so many bears complacently expecting a downdraft...we are wondering if the exact opposite scenario will incur. After all, potentially positive developments out of this weekend's European summit might be the excuse the market needs to trigger the buy stops above. As mentioned in a previous newsletter, our sources on the trading floor believe there are "buy stops galore" above 1230...and don't stop until the mid to high 30's. With this in mind, it seems positive news from across the pond could mean 1240ish in the December S&P, at which point we will likely be comfortable being bears. If you are following the Russell, a similar rally would put us in the mid-to-high 730's, and near 2445 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 factored into current prices, any references to such does not indicate future market action. Please note: An e-mini S&P and e-mini NASDAQ chart are used because they 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.   Futures and Options Trading Recommendations**There is unlimited risk in naked option selling and futures trading Position Trade -Flat In other Markets...9 - 6 - Some clients are holding synthetic puts in the 5-year note in which they are short December futures contracts and long December 123 call options. Depending on entry, total (limited) risk on the trade is between $700 to $800 and we have until late November for something to happen.10-7 Clients were advised to sell a December 5-year note 121.50 put for about 24 ticks. This reduces the cost of the trade and hedges against a possible bounce during the holiday weekend. 10-11 Clients were recommended to offset the short 5-year note future and the short 121.50 put for a combined profit of about $900 before commissions and fees and dependent on exact entry and exit prices. However, losses on the original hedge (long 123 calls) diminish the profit. We are looking for a Treasury recovery to give us an opportunity to offset the long call at a much better price (smaller loss). 10-20 Clients were advised to liquidate the remaining 5-year note 123 call at 13 to salvage some of the premium paid to insure the previous trade. 10-11 Clients were recommended to sell strangles in the November Euro (142/128 for conservative traders and 140/130 for aggressive traders), or December crude oil (98/67 for conservative traders and 96/70 for aggressive traders). (Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information) Carley GarnerSenior Analyst / Commodity BrokerDeCarley Tradingcgarner@DeCarleyTrading.com1-866-790-TRADELocal : 702-947-0701http://www.facebook.com/decarleytradingcommoditybrokerhttp://twitter.com/carleygarnerhttp://www.linkedin.com/in/carleygarnerhttp://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. |
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