carleygarner
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March 25, 2011
Follow me on Twitter @carleygarner!
Stock index futures climb the wall of worry
A higher GDP revision, stable crude oil futures and a lack of any compelling headlines encouraged continued short covering ahead of the weekend. Market mentality is a far cry from what it was just a few weeks ago when traders were reluctant to be long over the weekend, and most speculators (it seemed) wanted to be short the market. We have now gotten back to the "buy on dips" price action and it feels as though this move has a little room to run.
Keep in mind that equity market seasonal patterns are calling for a late March downturn as funds liquidate holdings for end of the quarter statements. With this in mind, it doesn't make sense to get overly bullish but we do think there will be higher prices before any "real" selling comes in.
Also helping stocks to move higher, a handful of firms offered better than expected earnings and projections numbers. For one, Oracle reported at 78% jump in income. Blackberry mobile device maker, Research in Motion beat the street's expectations of earnings but failed to excite investors with forecasts.
Portugal's (and Europe's) debt issues aren't souring the rally, but at some point we think it will become a popular trade to bet against the Euro and this could put some pressure on equities in the coming weeks.
In the meantime, we are looking for the June S&P futures to test resistance near 1333, but our objective will be the mid 1340's at which time we could turn bearish. Similar levels in the Russell future will be 830 and a little over 840. If you are looking to get into the market on a dip, near term support in the ES lies at 1297ish and 811ish in the Russell.
* 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 -
March 16 -
Implied volatility was high as traders scrambled to buy puts. Our clients were recommended to sell the April 1130 puts for about $9 in premium. This trade has unlimited risk, but seems to provide attractive odds of success given that it is over 100 points out of the money with just over 30 days to expiration.
March 21 - Clients were advised to buy back the 1130 puts for about $3.00 to lock in a profit of $275 or more per contract (depending on fills) before commissions and fees.
*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.
Follow me on Twitter @carleygarner!
Stock index futures climb the wall of worry
A higher GDP revision, stable crude oil futures and a lack of any compelling headlines encouraged continued short covering ahead of the weekend. Market mentality is a far cry from what it was just a few weeks ago when traders were reluctant to be long over the weekend, and most speculators (it seemed) wanted to be short the market. We have now gotten back to the "buy on dips" price action and it feels as though this move has a little room to run.
Keep in mind that equity market seasonal patterns are calling for a late March downturn as funds liquidate holdings for end of the quarter statements. With this in mind, it doesn't make sense to get overly bullish but we do think there will be higher prices before any "real" selling comes in.
Also helping stocks to move higher, a handful of firms offered better than expected earnings and projections numbers. For one, Oracle reported at 78% jump in income. Blackberry mobile device maker, Research in Motion beat the street's expectations of earnings but failed to excite investors with forecasts.
Portugal's (and Europe's) debt issues aren't souring the rally, but at some point we think it will become a popular trade to bet against the Euro and this could put some pressure on equities in the coming weeks.
In the meantime, we are looking for the June S&P futures to test resistance near 1333, but our objective will be the mid 1340's at which time we could turn bearish. Similar levels in the Russell future will be 830 and a little over 840. If you are looking to get into the market on a dip, near term support in the ES lies at 1297ish and 811ish in the Russell.
* 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 -
March 16 -
Implied volatility was high as traders scrambled to buy puts. Our clients were recommended to sell the April 1130 puts for about $9 in premium. This trade has unlimited risk, but seems to provide attractive odds of success given that it is over 100 points out of the money with just over 30 days to expiration.
March 21 - Clients were advised to buy back the 1130 puts for about $3.00 to lock in a profit of $275 or more per contract (depending on fills) before commissions and fees.
*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.
