carleygarner
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High expectations for earnings season
April 6th, 2010
Join us on April 8th for a free webinar with PFG on "Demystifying Treasury Futures": http://www.pfgbest.com/webinar/eventSummary.asp?skey=332215675
High expectations for earnings season
Despite a moderate overnight pullback, the bullish bias in equities remains dominant. Investors seem to be zoning in on the good news and disregarding the bad. Nonetheless, the market has spent the last year pricing in the recovery that is just now showing signs of existence. The question remains whether or not the recovery will keep up with the market. Likewise, higher crude oil prices might have signaled demand in the marketplace (aka economic growth) early on but if the energy rally continues to mature it could cripple the global recovery.
The start of the second quarter means we will soon be hearing how firms did in the first. Throughout history, markets have had a tendency to price in high expectations only to be disappointed in the results...even if they are reported to be better than anticipated. In other words, with the bar set so high it might take gangbuster numbers to hold prices at such lofty levels. With that said, the magnitude of this rally was (arguably) unpredictable in the first place and there is no telling when the frenzy might end.
This week's Treasury auctions could have a profound impact on trade on Wall Street. After all, less demand for the government securities translates into higher borrowing costs for the government and eventually corporations.
Our 1184 resistance area held the S&P down temporarily, but it didn't last. We suspect that there are likely buy stops accumulating above, if run we could see the mid 1190's. Similar, resistance in the Russell should be just over 700. The NASDAQ hasn't reached our distance resistance of 1995, but these prices could be possible on stop running.
* 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 Garner
Senior Analyst / Commodity Broker
DeCarley Trading
[email protected]
1-866-790-TRADE
Local : 702-947-0701
http://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.
April 6th, 2010
Join us on April 8th for a free webinar with PFG on "Demystifying Treasury Futures": http://www.pfgbest.com/webinar/eventSummary.asp?skey=332215675
High expectations for earnings season
Despite a moderate overnight pullback, the bullish bias in equities remains dominant. Investors seem to be zoning in on the good news and disregarding the bad. Nonetheless, the market has spent the last year pricing in the recovery that is just now showing signs of existence. The question remains whether or not the recovery will keep up with the market. Likewise, higher crude oil prices might have signaled demand in the marketplace (aka economic growth) early on but if the energy rally continues to mature it could cripple the global recovery.
The start of the second quarter means we will soon be hearing how firms did in the first. Throughout history, markets have had a tendency to price in high expectations only to be disappointed in the results...even if they are reported to be better than anticipated. In other words, with the bar set so high it might take gangbuster numbers to hold prices at such lofty levels. With that said, the magnitude of this rally was (arguably) unpredictable in the first place and there is no telling when the frenzy might end.
This week's Treasury auctions could have a profound impact on trade on Wall Street. After all, less demand for the government securities translates into higher borrowing costs for the government and eventually corporations.
Our 1184 resistance area held the S&P down temporarily, but it didn't last. We suspect that there are likely buy stops accumulating above, if run we could see the mid 1190's. Similar, resistance in the Russell should be just over 700. The NASDAQ hasn't reached our distance resistance of 1995, but these prices could be possible on stop running.
* 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 Garner
Senior Analyst / Commodity Broker
DeCarley Trading
[email protected]
1-866-790-TRADE
Local : 702-947-0701
http://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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