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Incredible volatility ends the week on a positive note

May 21st, 2010

 

See Carley at the Trader’s Expo in LA, join us on June 11th to talk about “Trading Commodities Like a Girl” https://secure.moneyshow.com/msc/caot/registration.asp?ts=t&sid=caot10&newReg=t&scode=018859

 

Incredible volatility ends the week on a positive note

 

The major indices ended the week on a positive note but volatility and dramatic draw downs have taken its toll.  It seems as though the panic selling has been overdone for now.  We can’t rule out new lows a bit later this summer but we also feel as though a technical bounce is well overdue. 

 

A majority of the selling was triggered by uncertainty in the health of the European credit markets.  It is true, if Europe doesn’t contain their debt problems it could promote frozen credit markets in the U.S.  That would be a serious hurdle for the already fragile recovery to overcome.  Nonetheless, Europe will eventually accept the fact that reform is necessary and chances are they will take the necessary action to avoid another credit collapse.  In the meantime, the U.S. markets will need to deal with the fact that European leaders are in the drivers seat.  If not, the turmoil could continue. 

 

Also weighing on prices is the passing of the Senate overhaul of financial regulation.  However, some speculate that the final bill isn’t as suffocating as some had anticipated and could be enough to allow a relief rally. 

 

We weren’t necessarily looking for a retest of the flash crash lows, but that is exactly what happened…and that seemed to be exactly what was needed to give the bears the green light to cover shorts.  We have been wrong about the pace of this downturn, but we can’t help but feel that there will be some back and filling from here.  If so, look for resistance in the S&P near 1108 and 1128.  If we are wrong, support lies at 1044 and then again near 1036.

 

 

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data.  However, market analysis and commentary does.  Charts provided by Track ‘n Trade, Gecko software.

 

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

 

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini.  Unless otherwise noted, profit and loss will be based on the mini version.

 

 

S&P 500 Futures and Options Trading Recommendations

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

 

Position Trade -

May 10 – After several adjustments, and challenging market conditions, our clients have been recommended to hold the short June 1100 puts.  We are underwater considerably on the position but hope to be able to recoup as the market stabilizes.

 

 

May 20th – Clients were recommended to roll the June 1100’s into the June 970 and the July 970.  Doing so enabled them to recoup most of the premium, while giving the market some breathing room and keeping some exposure in the faster eroding June options.  However, for this move to work we need lower volatility!

 

 

 

Russell 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

 

Position Trade -

 

Flat

 


Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

 

http://www.DeCarleyTrading.com

http://www.ATradersFirstBookonCommodities.com

 

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

 

There is substantial risk of loss in trading futures and options.

 

Past performance is not indicative of future results.  The information and data in this report were obtained from sources considered reliable.  Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities.  Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

 

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