The Stock Index Report by Carley Garner

[carleygarner]

September 24th, 2008


Warren, not Congress, delivered.


Investors are still clamoring to determine whether or not Congress will approve the bailout in a timely manner. Bernanke and Paulson were both in the spotlight trying to encourage lawmakers to take steps forward instead of backward. However, it was Warren Buffet that captured the headlines.



Buffet's Berkshire Hathaway Inc. announced yesterday that it will invest at least $5 billion in Goldman Sachs Group Inc. The news gave a shot of confidence into the market in overnight trade but uneasiness over a lack of action in Washington kept the buying under wraps.



According to Buffet, "Goldman Sachs is an exceptional institution." He added, "It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance." As far as I could find, Mr. Buffet had little to say about the $700 billion bailout and how it may affect his investment in Goldman.



Until Congress makes a decision, traders seem to be taking to the sidelines. Our contacts on the S&P floor noted that trade is quiet and so is the order flow. I can't blame people to be reluctant to have exposure in a market flooded with event risk. Those that insist trading should look to have proper risk management in place to prevent an explosion in volatility resulting in an explosion of their trading account.



According to Stephen Massocca, co-chief executive of Pacific Growth Equities in San Francisco, "I think you're seeing a lot of tough talk from politicians who don't want to seem like they're rolling over for Wall Street and normally, people would see that for what it is. But right now investors are exceptionally nervous."



I am currently neutral with a hope for higher prices but you know what they say about hope and trading...



I still see support at 1172 in the S&P and 10,758 in the Dow. A move to such prices would create attractive valuations in the markets.





Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.







S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade -





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.

· Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.

· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!

· You should have an order to buy this back at $1.50.



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading





Position Trade -









September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.



· September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!

· You should have an order to buy these back at 15.



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





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 Trade Recommendations


**There is unlimited risk in naked option selling and futures trading



Swing Trade -



Flat



Position Trade -



Flat









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.

 

[carleygarner]

Posting method

Just a quick question:
How come you use the same post over and over instead of making a new one each time?
Every time you up date your post we no longer have proof of when the first information was originally posted. Seems to me you would be much more credible making a new post each time.
Other than that keep up the good work.:cheesy:

Hello,

Thanks for your feedback. Many of the trades recommended on my newsletters remain as open positions for several days or weeks. The purpose of using the same template to post is to keep readers aware of any adjustements or thoughts on how the trade is doing. Each time that a recommendation is added, we note the date within the report but the time and date of the actual forum post is also recorded for all to see. This newseltter is heavily distributed throughout the web, so if it is verification of the timing that you need you should be able to confirm through the posting time and date in this forum as well as other sites.

We are relatively new to this forum and are still trying to work out the bugs, so to speak.

I hope that I understood your concern and have addressed it. Please let me know if you have any other suggestions or if I misunderstood.

Thanks,
Carley

 

[carleygarner]

September 25th, 2008


Wall Street cheer as rescue plan becomes a reality.


Investors were beginning to wonder whether Congress would come through with a bailout agreement or remain as gridlocked as the credit markets. Fortunately, lawmakers reported an agreement in principle on Thursday and plan on presenting it to the Bush administration within days.



Specifically, after two hours of negotiation Senator Chris Dodd stated, "We are very confident that we can act expeditiously." Utah Senator Bobb Bennet noted, "I now expect that we will indeed have a plan that can pass the House, pass the Senate (and) be signed by the president." The markets are considering the Bill all but finalized.



Under an alternative proposal, the government would provide insurance to companies that agree to buy frozen assets. This is different from the original version that involved the government purchasing the assets directly. The firms would be required to pay insurance premiums to the Treasury Department, thus the intention of this version of the plan is to put the burden back on Wall Street.



Also being thrown around in the debate is the possibility of the government taking ownership stake in the troubled companies instead of simply buying bad debt.



Clearly there are still a lot of details to be discussed, but at this point the market is happy that progress is being made. Testimonies earlier in the week didn't seem to be convincing the opposing opinions.



The S&P will likely run into resistance near 1235, whether or not it will have enough steam to get over this hurdle may depend on events in Washington. If the rally fails at noted levels, we may be in store for a rested of the lows. Assuming that this is the case, I will be extremely bullish. However, I am hesitant to jump on the bandwagon at current levels.



The major indices displayed impressive momentum, which tells me that tomorrow may be much of the same. Nonetheless, I think that the market is vulnerable to "buy the rumor sell the fact trade" which could lead to selling pressure in the later part of tomorrow's session.



The next major resistance in the NASDAQ is 1755, and if the circumstances are right we could be there tomorrow. Similar to the S&P, I have my doubts about the market making much progress beyond this point, at least for now.



Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.







S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade –





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.

· Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
· Place an order to buy back the 1060 put for $2.50, let's get this over with!



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.







Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading





Position Trade –









September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.



· September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!

· You should have an order to buy these back at 15.



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





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 Trade Recommendations


**There is unlimited risk in naked option selling and futures trading



Swing Trade -



Flat



Position Trade –



Flat







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.

 

[carleygarner]

September 26th, 2008


Cheers fade on politics as usual approach to credit bailout.


Yesterday's enthusiasm over a potential band-aid to the credit crisis quickly faded as late night meetings in Washington seemed to result in a step backward. President Bush begged Congress to "rise to the occasion" but investors are losing passion with every passing minute. According to White House press secretary Dana Perino, "We don't have any reason to believe that we can't get it done by Monday." Accordingly, that is I will approach the markets going into next week.



It is important to note that this week was a historically bearish time for stocks. The week after the September Triple witching has seen the Dow down 14 of the last 17 according to the Stock Trader's Almanac. In fact, the end of September has been notoriously weak for equities. September 29th is known for portfolio window dressing and has been known to produce some large down days on Wall Street.



On a brighter note, the Stock Trader's Almanac states that October ends what are known as "the worst six months" of the Dow and S&P and is actually the best performing month since 1998.



You may have also heard the mantra, "buy Rosh Hashanah and sell Yom Kippur". If you were to do this, you would go long the stock indices on September 30th and sell on October 9th. I don't have any data on how one may have fared buy utilizing this simple rule but if I remember correctly it hasn't been a profitable venture in the long run. However, we are grasping for straws here and this seems like as good as reason to be bullish as any. After all, the typical fundamentals such as market multiples have been thrown out the window for the time being.



Overall I like the upside of the equity markets but I respect the fact that there is potential for another whirlwind of selling. The S&P becomes attractive near 1164 and the Dow near 10,670. Major support in the Russell 2000 can be found near 680, and the NASDAQ could slide to as low as 1608.



If you are holding the short put recommendations below, I still feel as though they are properly distances from the market and with only 21 days to expiration should continue to be held. However, I would also recommend holding the 1 by 2 put spreads as a means of hedging the downside risk.





Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.







S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.

· Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.

· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!

· Place an order to buy back the 1060 put for $3.00, let's get this over with!



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading




Position Trade







September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.



· September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.



· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!

· You should have an order to buy these back at 20.



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





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 Trade Recommendations


**There is unlimited risk in naked option selling and futures trading



Swing Trade -



Flat



Position Trade



Flat







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.

 

[carleygarner]

September 29th, 2008


Stocks crumble at the hands of Congress.


Fear and panic began to spread on Wall Street as Congress failed to pass the proposed rescue plan. According to sources, approximately 70-80% of the locals on the NYSE were expecting the plan to pass. The disappointment of the outcome was widespread and the wound to investor confidence was deep.



For those that watched the turmoil unfold (assuming that your computer didn't freeze from data overload) the site was nothing less than astonishing. S&P futures seemed to be dropping in increments of 5 to 10 handles and the Dow slipped 400 points in a matter of minutes. According to Chris Johnson, President of Johnson Research Group, "Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that." He added, "This isn't a market for the timid."



Personal incomes rose a better-than expected .5% but consumer spending fell to its lowest level in six months. However, there were few paying attention...Investors were too busy trying to preserve capital. Money immediately fled Wall Street and made its way toward the Treasury markets. As a result, the yield on the 3 month Treasury bill fell to an annual rate of far less than half of a percentage point.



Putting a number on the level of panic in the market, the CBOE's VIX (Volatility Index) peaked at over 45 in today's session. This was the highest reading since 2002 and shows that the capitulation that the "talking heads" have been warning about is finally here. The Dow suffered its biggest losing day in history,



For those that have the short put options recommended below, I hope that you also took our advice in placing the 1 by 2 ratio writes as an intrinsic hedge against the risk of market declines. Today, that piece of mind likely came in very handy.



Where to go from here? Timing is everything, but capital preservation is just as important. If you don't trust yourself to make rational decisions in this trading environment, don't enter the market. If fear and greed could be quantified, they would probably be running at unfathomable levels.



As depressing as the day has been I can't help but think that October will bring better days. If you are willing to face the consequences, it is a good time to be looking at put selling the premiums are unbelievably inflated allowing for distant strike prices but take my advice and use option spreads as an intrinsic hedge.





Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.







S&P Futures and Options Trade Recommendations




**There is unlimited risk in naked option selling and futures trading





Position Trade





September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.





September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.



September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.



· This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.

· Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.

· Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!

· Place an order to buy back the 1060 put for $3.00, let's get this over with!



September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.





Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading





Position Trade





September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.



· September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.



· September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!

· You should have an order to buy these back at 20.



September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!





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 Trade Recommendations


**There is unlimited risk in naked option selling and futures trading



Swing Trade -



Flat



Position Trade



Flat







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.

 

[carleygarner]

September 30th, 2008

Dead cat bounce...but will it last?


Congress and President Bush insist that another version of the rescue bill will be on the table in a matter of days causing short covering in equities. While there may have been a moderate amount of bargain hunting in today's session, follow through buying was absent and by tomorrow the rally may be too. However, the immediate direction of the market is almost solely dependent on progress made in Washington.

Lawmakers scrambled to revise the "bail out bill", the late day boost in the equity indices was in large part reports that the SEC is working with FASM on revisions to fair value accounting. This could be potentially big in terms of banks and the way that they must account for their assets.

Talk of higher FDIC insurance limits also seemed to be looked at in positive light. Doing so could prevent the burden of some investors spreading their deposits among several banks and in turn prevent untimely withdrawals from institutions in which solvency is in question.

Sources are noting that approximately 70% of those on the floor believe that a rescue package will be passed shortly and are positioning themselves accordingly.

It was clear yesterday that the market was full of fear and panic and had really overdone itself. However, now that the dead cat bounce as come and gone many are wondering whether Congress will be able to save the markets from another probe at the lows regardless of a bill being passed or not. This very well could be part of the bottoming process, but there is no telling how much "pain" the markets will have to endure before confidence in the system is regained. I am still comfortable with distantly placed short puts, but it takes a substantial amount of risk tolerance to be exposed in this market.

If you are holding any of the short puts or put ratio spreads below, patience will be a virtue. The explosion in volatility has resulted in an exponential increase in premium values creating somewhat disappointing losses. However, from an intrinsic standpoint (where the futures price is in relation to the strike prices of the options) I believe that the trades are still promising. In fact, stand to be largely profitable assuming that the volatility decreases.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.



Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat



Position Trade -

Flat





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.

 

[carleygarner]

October 2nd, 2008



Chaotic Fundamentals = Chaotic Trade


Many on Wall Street are expecting the bailout package to be approved, but there is now widespread pessimism as to how helpful it may be. Some are suggesting that the plan was never enough to ward off a recession and others simply think that the time that has elapsed has allowed too much damage to progress.

Recent days have been strung with disappointing economic data but in a strange way, this may actually be constructive for the markets going into mid-October. The markets tend to do a good job of pricing in the "worst" and with turmoil in the credit markets and what seems to be the beginning of a recession underway it is likely that the bears are already positioned in the markets and the weak bulls have been frightened out. October is known for being the "bear killer" according to the Stock Trader's Almanac and 2008 has entered the month as a prime candidate.

Our sources on the combined CME/CBOT floor remain bearish, but note that the markets may have some upside potential going into the election. I lean to the upside in the intermediate term but the direction of the markets from now into next week is quite frankly a crap shoot. I live in Vegas; there is no need to roll the dice in the markets so I won't attempt to pretend as if I know what is going to unfold.

My models are suggesting that we at or near long term support levels in the S&P, however, confidence in my models has diminished along with the market's confidence in the system. Nonetheless, the 1120 and 1100 pose strong support in the broad based index and barring any Congressional or non-farm payroll surprises it should hold. Likewise, there seems to be a floor in the Dow near 10,420 and the NASDAQ near 1500. Would I put my chips on the table? Probably not...if you are already in or must get in, play this with options and spreads such as those previously recommended on this newsletter (below). However, regardless the strategy used the stakes are high.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat


Position Trade -

Flat







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.

 

[carleygarner]

October 3rd, 2008


Congress rules the roost


The equity markets deflected a bullet shot by the nonfarm payroll data but that was only the beginning. The rest of the day was spent speculating on the outcome of the Congressional bail-out vote. Despite yesterdays panic plunge traders seemed to be a bit more optimistic in Friday's session, although much of the buying can likely be attributed to shorts covering their positions. Sadly, at this point I think that any green on the screen is welcomed regardless of the motives behind it.

The U.S. economy lost 159,000 jobs last month, but data released in prior months was revised higher. On a net basis the numbers seemed to be in-line with expectations. However, the spotlight was stolen by news by news of Wells Fargo looking to acquire Wachovia for $15 billion despite earlier discussions with Citigroup. Citi is now demanding that Wachovia call the deal off due to claims that their agreement is legally binding. The willingness of capitalism to finally rear its head without government intervention may have put a temporary floor in equities.

All eyes, including those standing on the trading floors, were glued on the television as Congressional votes were tallied. The Déjà Vu was quite eerie but the outcome was thankfully much more welcomed by Wall Street than Monday's fiasco. Hopefully we (Main Street) will sleep better this weekend. This bill won't work any miracles but hopefully it will stop the bleeding.

Monday will be much more telling as to the overall opinion of the bill passing especially after witnessing the "buy the rumor sell the fact" trade that occured post bail-out. However, I am still leaning toward the upside in the near-term. In yesterday's report I mentioned support in the S&P at 1120, 10,420 in the Dow and 1500 in the NASDAQ all of which were pretty close to today's lows. This doesn't necessarily mean that the market is out of the woods, but it does lead me to believe that a bounce to 1200 in the S&P is a real possibility. Likewise, momentum may take the Dow to 11,030 and the NASDAQ to 1670.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


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 Trade Recommendations


**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat






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.

 

[carleygarner]

October 6th, 2008


Investors hit the panic button.


It was one of the most detrimental trading days on Wall Street in years. Selling pressure in the equity markets has surpassed what many models and fundamental measures indicate is reality. However, unfortunately when valuations are tied to human emotion logic can be overlooked.

The selling is said to be largely in part to the realization that the government rescue plan wasn't the overnight sensation that some were hoping for. Others note that today's selling wasn't hedge fund related but rather driven by retail investors that simply weren't happy with the bottom line of their brokerage statements which were likely recently received.

According to Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, "The fact is people are scared and the only thing they're doing is selling." He added, "Investors are cleaning out portfolios and getting rid of everything because nothing seems to be working." According to sources, at one point during the day the selling was so extreme that only 67 stocks rose on the NYSE and 3,155 dropped.

Domestic markets were plagued by global issues (as if we didn't have enough problems of our own). Some speculations are calling for even worse credit conditions in Europe, which is even more difficult to treat due to a lack of centralized government.

Traders are making it clear that they would like to see a global rate cut, and policy makers may be listening. France suggested an emergency G8 meeting sparking a recovery from the day's lows.

I will be the first to admit when I am wrong in my analysis, and the previous couple of weeks have proven to be a glaring example of mis-speculation. Friday's newsletter was written before the close and turned out to be inaccurate by the time they were actually emailed and posted. Adding salt to the wounds, the support levels that I had pointed out, turned out to be only the beginning in terms of the market's overall downside target. Based on communications with others in the industry, there is widespread devastation in trading accounts. Although shorts likely had a great day, many of them could have been chopped out in the volatility before the drop and may have missed the pay day that they had been searching for.

If you are holding the short options and option spreads below, I believe that there is a good chance that come expiration things will look much better. The one by two spreads are a great way to hedge price risk but they can backfire if volatility spikes and that is exactly what we saw today. Capitulation trade has forced the VIX to levels near 60 and the highest that I can remember and possibly date back to the tech bubble days. As time value erodes, assuming that volatility implodes the short option values will drop at a surprising speed. If and when this occurs, what now looks like a scary proposition could easily turn into something much more fruitful. With that said, the stakes have never been higher, if you can't take the heat get out of the kitchen. Call me if you need help getting out of these!!

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled.


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance.

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat






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.

 

[carleygarner]

October 7th, 2008


Calmer trade but similar result; can earnings save the market?



The volatility was subdued on Wall Street relative to yesterday's fiasco. However, the ending result was very similar. Stock indices across the board traded decisively lower. I can sense that the bulls are getting tired and the last shred of confidence has been stripped from the markets. In the past these have been signs of a near-term bottom, but we have never had the fundamental distress in the marketplace that we are seeing now.

Nonetheless, markets will be markets. Prices don't go straight up or straight down. Therefore, the shorts will eventually be caught off guard by a short squeeze. Judging by the size of the drop and the high numbers of short speculators in the market, if and when the covering begins the rally may be surprisingly swift and large.

If you are a bear, congratulations but be cautious at these levels. If you are a bull, you may be at the brink of throwing in the towel and I can't blame you. However, the domestic markets have been in similarly dismal situations before and each and every time stocks have managed a recovery, unfortunately this may take some time.

As a futures trader you likely have a much shorter time horizon and are interested in what will transpire in the coming days. Unfortunately without a crystal ball there is no way to predict what will happen tomorrow or the next day. What I can say is that there are an unprecedented number of buy stops lining the upside and if they are triggered could force the indices much higher without the help of actual buying by fresh longs.

The longs are being forced to sell their positions and this is adding pressure to the markets. The problem is that many retail traders are facing margin and lack of capitalization and riding out the downturn in anticipation of a corrective bounce may not be possible. I have seen this before, and will likely see it again. The markets have a tendency to flush out the bulls before it is capable of making progress to the upside. It gets harder and harder to watch each time but the outcome is almost always the same.

If you are holding the short options and option spreads below, I believe that there is a good chance that come expiration things will look much better. The one by two spreads are a great way to hedge price risk but they can backfire if volatility spikes and that is exactly what we are seeing. Capitulation trade has forced the VIX to levels near 60 and the highest that I can remember and possibly date back to the tech bubble days. As time value erodes, assuming that volatility implodes the short option values will drop at a surprising speed. If and when this occurs, what now looks like a scary proposition could easily turn into something much more fruitful. With that said, the stakes have never been higher, if you can't take the heat get out of the kitchen. Call me if you need help getting out of these!!

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled. (See adjustments below)


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance (see adjustments below).

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat







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.

 

[carleygarner]

October 8th, 2008


Global rate cut delivered, lackluster rally.



The global market "meltdown" continued in overnight trade regardless of actual market fundamentals, technically oversold conditions and seasonally supportive tendencies. This "no end in sight" decline has worn on the bulls. Earnings season has been swept under the rug in light of much bigger and better news stories, but it may be the market's last hope at a recovery...even if it is temporary.

We are all well aware of the carnage and have likely taken on a whole new outlook on the markets and in trading in general. Luckily, what we are seeing is an event that has historically only occurred about once a decade. That doesn't make either of us feel better about it today, but it does remind us that trading is about patterns and markets are about cycles. Just as the bear cycle has consumed our economy there will be days of exuberance and excess at some point in the future.

Traders and investors can learn a lot by history if they are capable of stepping out of the current environment and looking at things objectively (this is much easier said than done).

According to the Stock Trader's Almanac, October is known as the jinx month due to crashes in 1929, 1987 and the 554 point drop in the Dow on October 27, 1997. The market also suffered large losses during the October's of 1978 and 1979 and don't forget about Friday the 13th in 1989. I guess we should have seen this coming...

However, October has also been dubbed the "Bear Killer" by the Stock Trader's Almanac. The month of October has bred reversals in the following post World War II markets: 1946,1957,1960,1962,1966,1974,1987,1990,1998, 2001 and 2002.

October is also given credit for the end of the "worst six months of the market" and has been the best performing month for both the Dow and the S&P in the past 10 years.

Based on historical standards, October is a great time to be a stock buyer. However, buyers must have confidence in the system and as of today that is something that seems to be holding the markets back.
The markets and its participants are trading on emotion rather than logic and this always complicates things. However, history doesn't lie and it tends to repeat itself. Let's see what happens.....I see support in the S&P near 969 and resistance near 1025. Likewise, resistance in the Dow should be found at 9,663 and support near 9,218. The NASDAQ must get above and hold 1395, while support lies at 1332 and 1289.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled. (See adjustments below)


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.



Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance (see adjustments below).

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat






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.

 

[carleygarner]

October 9th, 2008


7 days and counting...


Today was the seventh day of carnage and turning the tide doesn't seem to be an easy task. Despite a Treasury market that seemed to sell off on optimism over progress in the credit market, analysts are blaming much of today's weakness on a lack of progress.

Stock investors aren't happy with the actions taken by the Fed and other policy makers, they want results. Unfortunately, it is going to take time for the effects of recent moves to impact the economy and the credit markets.

Most economists agree that we are in a recession, but most also agree that with proactive government policy the possibility of the "Great Depression II" is slim. Nonetheless, investors are scared and until we can get confidence back in the system the financial markets will suffer. The Fed has taken drastic measures to correct the fundamental damage that has occurred to the economy but restoring market psychology will be a daunting task.

Trading in today's session started out much tamer than that of recent days, but ultimately qualified as another volatile day. The S&P futures traded in a 40 point range, while the Dow covered about 170 points in morning and afternoon trade but news of GM weakness caused another wave of liquidation.

"Until we kind of stabilize I think you're going to see these gyrations for quite some time," stated Stephen Carl, principal and head of equity trading at The Williams Capital Group. "We're stuck in a morass and I think it's going to take quite some time to come out of it."

All eyes are on the weekend G7 meeting which is aimed at staving off the global economic crisis. According to sources, the Treasury department is looking to directly inject capital into U.S. banks by the end of October. Despite rate cuts by central banks around the world, investors are hoping that global politicians will be able to effectively cooperate during and after the G7. Even if officials aren't able to pull themselves together for the greater good, they had better portray that image...otherwise more misery could be ahead.

Now is the time to buy lottery tickets! Buy the October S&P 500 1050 calls for $6 in premium or less (you could have gotten filled today for closer to $5). You may also like the November 1180 calls for about the same amount.

We don't have any clients in the trades below, but are showing them for the sake of transparency. If you are involved in any of these markets or trades and would like advice or help, please contact us.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -


September 5 - Try selling the September 1160 put for $4 or better, it will take continued weakness to get filled. (See adjustments below)


September 9 - If you were trading the mini version, you should have been filled on this today. Those trading the full sized contract likely were not filled and should keep the order working in tomorrow's session. We are giving the market plenty of room to move, but this must be handled with care.

September 11 - I recommend placing an order to buy this option back for a $1 in premium, this would be a profit of $150 on each mini and $750 on each full sized before commissions and fees and assuming that you are able to get filled at the prices noted.

• This option traded at $1, but didn't go through it. You likely weren't filled, keep the order working on Monday but don't get greedy. If it costs a little more, take your profit and run.
• Hopefully you exited this trade on Friday, if so you may want to resell this option. If you are still holding on, look to exit on the next significant bounce. Preferably at $1.50 or less. Contact me for guidance.
• Clients were advised to roll this trade into the October options by buying back the Sept. 1160 put and selling the Oct. 1060. At the time this could have been done at a debit of $1.25. It is better to be safe than sorry!
• Place an order to buy back the 1060 put for $3.00, let's get this over with!

September 18 - If you prefer the big board, based on today's settlements it may be possible to buy the November 1160 put and sell 2 of the 1080's for near even money. Assuming an even money fill, this trade makes something from 1160 to 1000. The maximum profit of $20,000 occurs if the market is at 1080 at expiration, the risk is unlimited (equivalent to being long a futures) below 1000.


Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.



Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -




September 5 - Sell the September Dow 10,600 puts for 50 or better. This can be done in the mini or the full sized. Call me for additional guidance (see adjustments below).

• September 15 - This order should have been filled today. Look to buy this back for 10 or better! Don't get greedy, if we get a large bounce take a profit. There may be a chance to resell it.

• September 18 - Clients were advised to roll into the next option month by buying back the 106 puts and selling the 97 puts, at the time this could have been done for a debit of 2 ticks. We wanted out of this market's way!
• You should have an order to buy these back at 20.

September 18 - Take advantage of the volatility through ratio put spreads!! Premiums are "fat", you can buy an October Dow 10,700 put and sell 2 of the 10,200 puts for close to even money. Assuming an even money fill, this trade pays off something above 9,700!! The maximum profit is $5,000 on the full sized contract and $2,500 on a mini and occurs if the market is trading at 10,200 at expiration. The risk is unlimited below 9,700!


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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat







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.

 

[carleygarner]

October 10th, 2008


Lack of trust, capitulation, horror...What else is there to say?


CNBC and other media outlets have been yearning for capitulation in order for this market to find a bottom. If today's open wasn't capitulation, I don't know what is. The Dow plunged about 400 points from already desperate levels on the open of the NYSE. The VIX topped at 76.94, the highest reading ever (there was a slightly different measure during the '87 crash so we can't really compare), I can't imagine much more fear and panic than this.

At this point, the market has surpassed fundamentals or rationality so it doesn't seem helpful to write about the day's events. From what I can see, things are scary but the world isn't coming to an end. The market may not recover Monday, or even next month but it is just a matter of time. Don't forget that there is now an estimated $50 trillion on the sidelines looking for a home and in the long run equities may be the place.

From a short-term point of view, as many of you likely are if you are reading this, the direction of the market is all but certain. Most of my contacts in the industry and on the trading floor are noting that the "big players" are on the sidelines. If professional floor traders are sitting this market out, I think it makes sense that retail traders do the same. Don't trade unless you have to.

Now is the time to buy lottery tickets! Buy the October S&P 500 1050 calls for $6 in premium or less (you could have gotten filled today for closer to $5). You may also like the November 1180 calls for about the same amount.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -

October 10 - Buy the October e-mini 1050 calls for $6 or better and or the November 1180 calls for about the same premium, you likely would have been filled much better.

Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -


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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Swing Trade -

Flat


Position Trade -

October 10 - Buy the October 1430 calls for 15 points.






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.

 

[carleygarner]

October 13th, 2008


Government bank aid turns out to be stock market Band Aide


Wall Street was cheering on Columbus Day but it wasn't the holiday that had everyone excited. After 7 of the worst days in stock market history, word of government pledges to prop up banks triggered a sharp short covering rally. The day's gains were large but were a drop in the bucket compared to the losses sustained in recent weeks and months.

The major indices found resistance areas early and had difficulty but unlike we have witnessed in the past the sellers were nowhere to be found. There is a strong possibility that many of the sellers were caught at much worse levels and were looking at dips as a chance to get out with smaller losses.

While the bottom seems to have been made for now, the market isn't out of the woods. There are still a lot of untold stories and undiscovered obstacles. According to news sources, Denis Amato, chief investment officer at Ancora Advisors, said it's too soon to say whether the market has started to carve out a bottom and that the credit markets where many companies turn to for day-to-day loans will need to loosen for stocks to hold their gains. He added, "I think we had enough negatives last week that if the government steps in we could have a pretty nice run. Is it off to the races? No, I don't think so. We have a lot of stuff to work through".

It will likely take a while for the sidelined cash to make its way to the markets and I don't think that today's rally was confirmation enough to make this happen. Nonetheless, short covering alone could fuel an impressive two to three day recovery barring any unforeseen governmental intervention. The S&P may see prices above 1,100 in the coming week or two, while the Dow has the potential for 10,340 in the near term. These targets may seem impossible but to put it in perspective, we were there a little over a week ago.

I hope you were able to buy those calls on Thursday and Friday as we were suggesting. It doesn't recoup the pain and suffering inflicted as the market collapsed but it helps.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -

October 10 - Buy the October e-mini 1050 calls for $6 or better and or the November 1180 calls for about the same premium, you likely would have been filled much better.

Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -


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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

October 10 - Buy the October 1430 calls for 15 points.






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.

 

[carleygarner]

October 14th, 2008


Volatility continues to wreak havoc in equities.


The greatest bear market plunge in history was followed by the biggest one day rally in history; unfortunately the story doesn't end there. Volatility has taken hold of the markets and the end doesn't seem to be near. Daily ranges in the S&P span lengths that used to be covered in a month's time, and we haven't seen such percentage moves since the Great Depression. It isn't difficult to figure out why many floor traders have simply taken to the sidelines.

The U.S. has pledged to stabilize the financial markets through the means of purchasing bank shares and raising insurance coverage on deposits. Actions of this nature have not been seen since the Depression era and despite opponents is said to be an attempt at preserving capitalism not destroying it. The markets seemed to approve of the efforts in early trade, but uncertainty and emotion eventually took over trading.

Perhaps it was the comments made by Treasury Secretary Paulson that reminded investors of what is at stake. According to Paulson, "We regret having to take these actions. Today's actions are not what we ever wanted to do -- but today's actions are what we must to restore confidence to our financial statement." He added, "Government owning a stake in any private U.S. company is objectionable to most Americans, me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.

Some chartists were pointing out 981 as a critical pivot point in the S&P; this spot also marks the 38% retracement of the drop. My original target was above 1100 in the S&P but today's action suggests that we may be headed for the 50% retracement near 950. The Daily high of 1066 was 34 points away from my projection but in today's market that isn't as off the mark as it once was. In other words, it seems as though the short covering correction has occurred and unless the market can sustain 981 in tomorrow's session selling pressure may be too much for the S&P. A close above 981 may prove me wrong and resume the uptrend to levels near 1100.

I hope you were able to buy those calls on Thursday and Friday as we were suggesting. It doesn't recoup the pain and suffering inflicted as the market collapsed but it helps.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -

October 10 - Buy the October e-mini 1050 calls for $6 or better and or the November 1180 calls for about the same premium, you likely would have been filled much better.
• Hopefully you were able to get out of these this morning at much better levels. If now, work an order to sell them at $12 or better to lock in a profit.

Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat

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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

October 10 - Buy the October 1430 calls for 15 points.
• If you missed this trade, cancel the order.






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.

 

[carleygarner]

October 15th, 2008


Volatility continues to wreak havoc in equities.


Reality of a grim economic outlook and continued turmoil in the credit markets has overshadowed policy makers' attempts at stabilizing the financial markets. Stock traders tend to have "fast" personalities and the simply aren't satisfied with the slow motion progress being made in the credit thaw. We may be in the process of putting in a bottom, but it isn't over yet. I hope that I am wrong, but it looks like the S&P is destined for 875 and possibly a retest of Friday's lows.

Early economic data set a negative tone for the session. Weak retail sales and a surprisingly low NY Empire State Index had investors on the defensive. The Fed Beige book released much later in the day certainly didn't brighten the outlook. According to the Fed, the economy continued to worsen in light (or dark) of the credit problems. The report didn't offer any unknown information, but the market didn't appreciate the reminder that difficulties in obtaining loans have choked economic growth.

The agony of a faltering economy seems to be flushing out many of the weak hands in equities. As long as panic ensues, so will the stock market plunge. As mentioned above 875 seems to be the next resting point for the S&P and the Dow may be heading for 8,356 before things get any better. The NASDAQ, on the other hand, won't find support until 1196. If the slaughter continues, it may be a good time to shop around for long call options in the mini indices. Stay tuned for details....


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.



S&P Futures and Options Trade Recommendations


**There is unlimited risk in naked option selling and futures trading


Position Trade -

October 10 - Buy the October e-mini 1050 calls for $6 or better and or the November 1180 calls for about the same premium, you likely would have been filled much better.
• Hopefully you were able to get out of these this morning at much better levels. If now, work an order to sell them at $12 or better to lock in a profit.
• You should be out of these by now, if not you might as well hold on...

Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations

**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat

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 Trade Recommendations

**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat





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.

 

[carleygarner]

October 16th, 2008


Roller coaster trade on Wall Street...volatility can't last forever.


Another wild trading day in equity indices have many wondering how long this volatility can sustain itself. What we do know is that volatility spikes have never been sustainable. However, what we don't know is how far the spike can go. The volatility index as measured by the CBOE's VIX reached another all time high of 81 and change during today's session. Prior to September, most were of the assumption that a reading of 40 was an unsustainable spike. Now we are finding ourselves wondering if, like we once did in regards to crude oil, the VIX can break the century mark.

For once, it was nice to use the word crash to describe something other than the stock market. The Philly Fed report on Mid-Atlantic factory activity crashed to an 18 year low in the month of October. The index dropped to -37.5 from a reading of 3.8 in September. We haven't seen these numbers since October of 1990. Dana Saporta, economist at Dresdner Kleinwort in New York commented, "The data, put simply, were horrendous coming out of the Philadelphia Fed region today."

In my book (on the shelves in January 2009) "Commodity Options" it states that despite common mantra regarding volatility and options, it is also true that volatility can lead to despair. In fact, I argue that volatile market conditions produce more misery than anything else. I have mentioned in this newsletter that many of the "big traders" on the floor are claiming to be on the sidelines for the time being simply because it is easier to lose 50 handles in the S&P than it is to make it. There are horror stories circulating the pits of crushed dreams. One in particular was a heartbreaking story of a local that was blown out of positions today on the open and later said to have committed suicide on the train tracks in downtown Chicago. Naturally, not all of the stories are negative. I have personally witnessed unimaginable gains in the last week or so of trade, we are talking percentages in the thousands....However, I still believe that unless you have nerves of steel it may be best to take a week or two off from the markets.

The NASDAQ futures reached our target of 1196 as mentioned in yesterday's report, and seems to be ready for another short covering rally. I don't see much in its way until major resistance at 1488. In yesterday's newsletter, we called for 875 in the December S&P futures, and today's low of 865 wasn't off of the mark. I have to admit, I was thrown off a bit during intraday trade...but I am now relatively confident in looking for higher prices. I see resistance near 1080.


Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.


S&P Futures and Options Trade Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

October 10 - Buy the October e-mini 1050 calls for $6 or better and or the November 1180 calls for about the same premium, you likely would have been filled much better.
• Hopefully you were able to get out of these this morning at much better levels. If now, work an order to sell them at $12 or better to lock in a profit.
• You should be out of these by now, if not you might as well hold on...

Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Futures and Options Trade Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat

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 Trade Recommendations
**There is unlimited risk in naked option selling and futures trading

Swing Trade -

Flat

Position Trade -

Flat






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.

 

[carleygarner]

October 20th, 2008


VIX below 60!


While the current market conditions are a far cry from stability, beggars can't be choosers and the rally is welcomed. The CBOE's volatility and "fear" index has finally dipped below 60. These are still historically high levels but do offer a glimmer of hope for the near future. We may not have seen the ultimate lows, but it is clear that the market has shaved some of the panic and that should lead to continued gains in the coming session or two.



The credit market is slowly but surely coming back to life and causing investors to wonder if current market valuations have overestimated the impact of the current or impending recession. The light at the end of the tunnel has sparked a 300 plus point rally in the December Dow Jones futures contract and a nearly 40 point positive move in the S&P 500 futures. The buying was orderly suggesting that the rally wasn't blindly fueled by the running of buy stops as we have been seeing in recent recovery attempts.



Tepid buying may also be the effect of less than flattering, but not as gloomy as once thought, comments made by Ben Bernanke. According to the Fed chair, the economy is likely to be "weak for several quarters with some risk of a protracted slowdown".



"The market liked what Bernanke had to say, and there were hints that he's leaving the door open for further moves in terms of rate cuts or economic stimulus," claims Ryan Larson of Voyageur Asset Management. He continued, "And, with credit easing in slow baby steps, the market has started to realize that this is going to be a process."



I am looking for prices as high as 1054 in the S&P and 9,842 in the Dow before reaching significant resistance. Don't be surprised to see the December NASDAQ futures rally to 1449 by the end of the week.





Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.





S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading



Position Trade -



Flat



Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Jones Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading





Position Trade -



Flat



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



Swing Trade -



Flat






Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

[email protected]

1-866-790-TRADE

Local : 702-947-0701

DeCarley Trading - Futures, Options, Integrity- Commodity Broker Redefined






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.

 

[carleygarner]

October 21st, 2008


Stocks digest rally, but don't throw in the towel.


Today's trade was somewhat encouraging for the bulls. A sharp rally in yesterday's session was met will selling pressure today, but the bearish tone was relatively controlled. This is in stark contrast to market activity witnessed in the previous weeks in which panic overtook rationality.



Earnings were mixed, but believe it or not I consider that to be a good thing. The market has priced in disaster, so anything less than that is a sign of hope. Among headlines were DuPont Co. announced that it will be lowering its 2008 forecasts, Caterpillar Inc. earnings slipped due to higher material costs, and Pfizer Inc. topped estimates.



The Fed made another move toward credit market normalcy this morning through the introduction of a new program to finance the purchase of assets from money market mutual funds. the announcement didn't trigger a rally, but it may have avoided the massive waves of selling that have become so common.



From a technical standpoint, as well as market sentiment, I am holding onto my long bias in the next couple of trading days. I feel as though as long as the December S&P 500 futures contract can stay above 950 the rally should continue to prices above 1000 and as high as 1040. Likewise, the Dow may be headed for 9,750 assuming that it can hold above 9,000.



Despite the premise that October is known as the time to be a buyer of tech stocks, I have grown weary of the NASDAQ's ability to hold recent gains. While I would like to see the index participate in a broad market rally, I can't help but feel that the bears have their eye on 1150.





Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.





S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading



Position Trade -



Flat



Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.





Dow Jones Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading





Position Trade -



Flat



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



Swing Trade -



Flat








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.

 

[carleygarner]

October 23rd, 2008


Poor earnings, negative forecasts and Greenspan's salt in the wounds.


It was another day of uncertainty on Wall Street, neither the bulls nor the bears could claim success. We have been calling for a retest of the recent lows, and the major indices gave it a valiant effort in today's session. Some may point out that today's trade is a textbook example of a key reversal, but I argue that this doesn't "feel" like the bottom.

I could be wrong, but going into a weekend it seems like the major indices will have a difficult time holding today's late session rally. Assuming that I am right, the December S&P may be headed to 810 or slightly under. A retest of the lows in the Dow could actually mean a probe to 7,812.

NASDAQ futures nearly met our 1150 target. However, given today's action I am looking for slightly lower. I think the December futures will reach 1140 shortly.

We have had little economic news this week, making this morning's Greenspan speech all the more exciting. The former Federal Reserve Chairman Alan Greenspan told Congress on Thursday that he is "shocked" at the failure in the credit markets. He admitted that he was "partially" wrong to resist regulation of some securities. Specifically, he claims that despite concerns "this crisis, however, has turned out to be much broader than anything I could have imagined." He added, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity - myself especially - are in a state of shocked disbelief." The comments weren't necessarily optimistic and share prices reflected.

Scott Fullman, director of derivatives investment strategy for WJB Capital Group said it best, "...you can buy a BMW at Toyota prices". Bargain hunters are beginning to come to the markets but there is still concern that there will be better buying opportunities.




Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations are based the full sized S&P unless otherwise noted.


S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

October 22 - Sell the November 500 put for $4 or better. It will take substantial weakness for this to get filled.

October 22 - Buy lottery tickets on the dip! I like the November 1050 calls for $6 in premium.

Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.


Dow Jones Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading


Position Trade -

Flat

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

Swing Trade -

Flat






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.