carleygarner
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Tips for day traders from Carley's Stocks & Commodities column, Futures for you: http://www.traders.com/Documentation/FEEDbk_Docs/2011/01/fut4you.html
December 17th, 2010
Santa could support stock index futures short-term, but intermediate-term?
Santa Claus came in September for stock market bulls but might but he might be overextending his welcome in the coming weeks. We still "like" the equity markets overall, but with the major indices coming off of a monstrous 2 year rally and with many of them trading near two standard deviations from the mean on long-term charts (monthly) it is hard to believe there won't be some sort of a breather in the near future.
Historically, the markets tend to get a January dip as those with open profits from 2010 attempt to defer tax liabilities. Also, this is when liquidity comes back to the markets following what is typically a light volume drift higher during the month of December.
In recent weeks we have been talking about the overly bullish market sentiment within this newsletter. It is difficult to find a business news station or mainstream print article that isn't projecting higher equity markets for the remainder of 2010. In fact, some of the most popular market sentiment gauges are sitting at extreme bullish levels not seen since the April highs.
Our friends on the CME floor pointed out that according to Bespoke investments, there isn't a single analyst from one of the major banks who believes equity prices will decline next year; the average expected return is 10%. We happen to agree with them, but as we have all learned the hard way...timing is everything. Even if the markets to move higher by the end of 2011, buyers at this level will likely have to ride out a large down turn or two and might not have the conviction to make it to the other side.
Accordingly, we have to view the overly bullish sentiment as reason to be a bear in the near-term. Don't forget, most traders lose money and if you are with the masses you are probably wrong. Also, if all of the bulls have already bought in, it could be difficult to sustain gains as the buying dries up.
We can't rule out one last move up as we approach the holiday weekend and traders are sparse, look for resistance in the S&P near 1253ish and in the Russell at 784 and 790. Resistance in the NASDAQ comes in near 1255ish.
Next week is expected to be very thinly traded, yet there is a healthy number of economic releases. If at all possible, it is a good idea to cut back on your trading or even move to the sidelines completely...unless of course you are a glutton for punishment!
* 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.
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 10 - Clients were advised to sell the January S&P 1280 call, fills were reported from $6 to $7.50 in premium.
*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.
December 17th, 2010
Santa could support stock index futures short-term, but intermediate-term?
Santa Claus came in September for stock market bulls but might but he might be overextending his welcome in the coming weeks. We still "like" the equity markets overall, but with the major indices coming off of a monstrous 2 year rally and with many of them trading near two standard deviations from the mean on long-term charts (monthly) it is hard to believe there won't be some sort of a breather in the near future.
Historically, the markets tend to get a January dip as those with open profits from 2010 attempt to defer tax liabilities. Also, this is when liquidity comes back to the markets following what is typically a light volume drift higher during the month of December.
In recent weeks we have been talking about the overly bullish market sentiment within this newsletter. It is difficult to find a business news station or mainstream print article that isn't projecting higher equity markets for the remainder of 2010. In fact, some of the most popular market sentiment gauges are sitting at extreme bullish levels not seen since the April highs.
Our friends on the CME floor pointed out that according to Bespoke investments, there isn't a single analyst from one of the major banks who believes equity prices will decline next year; the average expected return is 10%. We happen to agree with them, but as we have all learned the hard way...timing is everything. Even if the markets to move higher by the end of 2011, buyers at this level will likely have to ride out a large down turn or two and might not have the conviction to make it to the other side.
Accordingly, we have to view the overly bullish sentiment as reason to be a bear in the near-term. Don't forget, most traders lose money and if you are with the masses you are probably wrong. Also, if all of the bulls have already bought in, it could be difficult to sustain gains as the buying dries up.
We can't rule out one last move up as we approach the holiday weekend and traders are sparse, look for resistance in the S&P near 1253ish and in the Russell at 784 and 790. Resistance in the NASDAQ comes in near 1255ish.
Next week is expected to be very thinly traded, yet there is a healthy number of economic releases. If at all possible, it is a good idea to cut back on your trading or even move to the sidelines completely...unless of course you are a glutton for punishment!
* 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.
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 10 - Clients were advised to sell the January S&P 1280 call, fills were reported from $6 to $7.50 in premium.
*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.
