carleygarner
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November 11th, 2010
Stock Index Futures down, but maybe not out (yet)
According to sources, insider selling is near al all time high. It was reported that $4.5 billion worth of shares were sold by top executives last week, and $16 billion over the last 60 days. This is the most since October 2007 (near the market highs). These are stats that simply cannot be ignored; however, timing is everything and the jury is still out as to whether the highs of this move are in.
Additionally, there is chatter of investor sentiment being "too bullish" and we agree. When the public grows complacent in the markets and begin chasing performance, the odds favor a rude awakening. Although the market doesn't issue a memo when the reversal occurs, this doesn't feel like an absolute top (yet). The selling seems to be too tame, and with option expiration looming we doubt the market would be willing to give option traders the gift of a sell off. From what we understand, there are several short call traders caught on the wrong side of this move and they could be looking to buy futures to cover their exposure.
Despite retail investors being overly bullish, retail traders still seem to be overly bearish...and when most are looking for one thing to happen, the other usually does. We aren't exited about market fundamentals, but the market "feels" firm and a weekly chart suggests 1240 to 1250 in the December S&P could be seen before a reversal can occur. For now, we are going to go on this premise. Besides, the POMO program picks back up tomorrow...
We can't rule out moderately new lows, support lies at 1195 and then again near 1186 but we feel like any large dip in tomorrow's trade could be an opportunity for the bulls. On the way up, first resistance could be found near 1227 in the December S&P, 2210 in the NASDAQ and 744ish in the Russell.
If you purchased ES puts as a lottery ticket play, you might want to consider selling them at a small profit should the selling continue into early trade tomorrow.
* 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 -
October 8 - Puts are cheap! We like buying the December 1150's near $8, or lower strikes.
*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.
November 11th, 2010
Stock Index Futures down, but maybe not out (yet)
According to sources, insider selling is near al all time high. It was reported that $4.5 billion worth of shares were sold by top executives last week, and $16 billion over the last 60 days. This is the most since October 2007 (near the market highs). These are stats that simply cannot be ignored; however, timing is everything and the jury is still out as to whether the highs of this move are in.
Additionally, there is chatter of investor sentiment being "too bullish" and we agree. When the public grows complacent in the markets and begin chasing performance, the odds favor a rude awakening. Although the market doesn't issue a memo when the reversal occurs, this doesn't feel like an absolute top (yet). The selling seems to be too tame, and with option expiration looming we doubt the market would be willing to give option traders the gift of a sell off. From what we understand, there are several short call traders caught on the wrong side of this move and they could be looking to buy futures to cover their exposure.
Despite retail investors being overly bullish, retail traders still seem to be overly bearish...and when most are looking for one thing to happen, the other usually does. We aren't exited about market fundamentals, but the market "feels" firm and a weekly chart suggests 1240 to 1250 in the December S&P could be seen before a reversal can occur. For now, we are going to go on this premise. Besides, the POMO program picks back up tomorrow...
We can't rule out moderately new lows, support lies at 1195 and then again near 1186 but we feel like any large dip in tomorrow's trade could be an opportunity for the bulls. On the way up, first resistance could be found near 1227 in the December S&P, 2210 in the NASDAQ and 744ish in the Russell.
If you purchased ES puts as a lottery ticket play, you might want to consider selling them at a small profit should the selling continue into early trade tomorrow.
* 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 -
October 8 - Puts are cheap! We like buying the December 1150's near $8, or lower strikes.
*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.
