carleygarner
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View a video of Carley Garner discussing swing trading with Trader Kingdom: http://www.traderkingdom.com/market...lysis-to-predict-intermediate-term-volatility
January 21st, 2011
Option expiration volatility, but stock index futures unch'd on the close
Blockbuster earnings reported by GE brought stock indices back from the dead but the rally was relatively short-lived. By the close of trade, the S&P was hovering near unchanged while the NASDAQ and the Russell fell into the red.
Today was option expiration for stock index futures as well as Treasuries and the grains. Accordingly, the door to volatility was left wide open and that's exactly what we saw. Given the day's special circumstances and overall directionless trade, we are having a difficult time making any bold predictions going into Monday. Instead, we'd like to see how things look early next week.
Thus far, market action has been relatively healthy and the selling moderate. However, the market doesn't send out a memo to notify investors when this will change and there are some black clouds forming that could signal a somewhat deeper correction.
For instance, investors looking to defer taxes tend to begin locking in profits in mid-January...and there are a lot of profits to be had for those long the market. Similarly, the relentless rally has likely enabled the accumulation of sell stops.
The relationship between equities and currencies is somewhat broken; nonetheless, if the greenback makes a recovery (which we think it will) stocks could struggle to regain footing.
In yesterday's newsletter, we mentioned the likely scenario of "temporary" technical buying with resistance in the S&P near 1285/87 and we got it. Unfortunately, the crystal ball going into the weekend isn't as clear. For now, we will stick with the premise that selling pressure in the indices isn't exhausted just yet. A break and close beneath 1266 could lead to 1240 in short order; in the meantime be on the lookout for resistance near 1290 and support at 1266.
The Russell will enter the week with less favorable footing but also seems to be a bit oversold with support near 770 and 765ish. Therefore, if you want to be a seller we recommend trying to hold out for a bounce to 783 or so.
* 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 -
December 30th - Clients were advised to sell the February S&P 1310 calls for $7.50/$8.00.
January 20 - Clients were advised to buy these back at a small profit to exit the trade.
*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.
January 21st, 2011
Option expiration volatility, but stock index futures unch'd on the close
Blockbuster earnings reported by GE brought stock indices back from the dead but the rally was relatively short-lived. By the close of trade, the S&P was hovering near unchanged while the NASDAQ and the Russell fell into the red.
Today was option expiration for stock index futures as well as Treasuries and the grains. Accordingly, the door to volatility was left wide open and that's exactly what we saw. Given the day's special circumstances and overall directionless trade, we are having a difficult time making any bold predictions going into Monday. Instead, we'd like to see how things look early next week.
Thus far, market action has been relatively healthy and the selling moderate. However, the market doesn't send out a memo to notify investors when this will change and there are some black clouds forming that could signal a somewhat deeper correction.
For instance, investors looking to defer taxes tend to begin locking in profits in mid-January...and there are a lot of profits to be had for those long the market. Similarly, the relentless rally has likely enabled the accumulation of sell stops.
The relationship between equities and currencies is somewhat broken; nonetheless, if the greenback makes a recovery (which we think it will) stocks could struggle to regain footing.
In yesterday's newsletter, we mentioned the likely scenario of "temporary" technical buying with resistance in the S&P near 1285/87 and we got it. Unfortunately, the crystal ball going into the weekend isn't as clear. For now, we will stick with the premise that selling pressure in the indices isn't exhausted just yet. A break and close beneath 1266 could lead to 1240 in short order; in the meantime be on the lookout for resistance near 1290 and support at 1266.
The Russell will enter the week with less favorable footing but also seems to be a bit oversold with support near 770 and 765ish. Therefore, if you want to be a seller we recommend trying to hold out for a bounce to 783 or so.
* 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 -
December 30th - Clients were advised to sell the February S&P 1310 calls for $7.50/$8.00.
January 20 - Clients were advised to buy these back at a small profit to exit the trade.
*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.
