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Plenty of volatility, little progress

Thursday’s perfect storm of selling found some reprieve on Friday on news of a coordinated economic recovery “plan” in the Eurozone.  The plan comes with a hefty price tag and eliminates some of the uncertainty going into next week’s EU summit.  It is also likely that much of the buying going into the weekend was done by shorts locking in profits, or those that sold too late cutting losses.

Between Thursday’s weak economic data in the U.S. and China and Moody’s bank downgrades, the bears had a field day.  Nonetheless, after having a day to think things over some analysts (and apparently traders) are discrediting the credit downgrades.  Not only was this move well known before it actually took place, but it is difficult to justify the premise that banks are worse off now than they were during the credit crisis.  Either ratings were too high in the past or are too low now.

It might not seem like it, but the S&P has traded in a 50 handle range for over two weeks.  Within that range we’ve seen multiple 1% moves in each direction, and of course yesterday’s 2.4% bludgeoning.  This is a market in a clear state of confusion.

The chart is technically neutral but it probably won’t stay that way for long.  The month of June has a tendency to be choppy at best, with the 26th and the 29th posting gains less than 30% of the time.  The 28th is slightly bullish but can often be overshadowed by end of the quarter position squaring.  We wouldn’t mind seeing the market meltdown a little going into the end of the month because it would likely create buying opportunities.

The way we see it is 1310ish in the September must hold to avoid another washout that brings the market back to the mid to low 1260’s.  In the meantime, a dip to the 1306 area could be a good place to nibble on the long side but with limited risk.  Below there will be support in the mid to high 1290’s and then again 30 handles lower.  If the bulls succeed, the upside objective will be 1363ish.

If you are day trading, look for support near 1317 and 1306; resistance lies near 1336 and 1343.

* 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.

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

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

Futures and Options Trading Recommendations

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

Position Trade -

Flat

In other markets

6 – 22 Sell September crude 93/69 strangles for about $1,600 in premium (this was an adjustment from a previous strangle).

6 – 22 Sell August Yen 128.50 calls and 121.50 puts for about 75 ticks or $937.50 (this was an adjustment from a previous strangle to move into the next contract month).

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker @ www.DeCarleyTrading.com

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

Twitter

Facebook

Carley Garner Trading Education Books

*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.

Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years.  There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year.  While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing.  Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results.  No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations.  No representation is being made that price patterns will recur in the future.

Plenty of volatility, little progress is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

May 25, 2012

Staying cool under pressure can be a challenge for traders, here are a few tips (click here).

Browse Carley Garner’s Trading Education Books

Stock index futures opt for “safe” weekend

It is clear that equity traders were interested in risk reduction ahead of the long Memorial Day weekend.  After a good showing in early trade, prices slowly slid on light volume going into the close.  We aren’t putting much credence into today’s trade; it is our guess that many traders took the day off and those that did show up, left after the first couple hours of trade.  In other words, if you are a bear that is excited over the week close..you had better hold your horses.  Similarly, if you are a bull that is disappointed by the price action…close your eyes and don’t look again until Tuesday morning.  There is no reason to overreact to trade that takes place in a holiday environment and a lack of economic news.

From yesterday, but still valid:

Most technicians we talk to are looking for this current rally to extend to the mid 1330’s in the June S&P but have doubts as to whether or not we’ll see more than that.  However, our models suggest that 1360 is possible simply because the shorts seemed to pile on at poor prices and will have little patience for a bounce to the mid 1330’s.

Traders are paying more attention to European economic data, than our own.  While are friends overseas are posting weaker than expected numbers, we are consistently showing stability.  In the short term, the difference is irrelevant but in the long run it will matter.

The Euro rally quickly fizzled and made way to new lows, but we haven’t given up on the idea of a turn around.  Speculators appear to be holding record net short positions (tomorrow’s COT will confirm), and overly bearish markets sometimes run out of sellers.  The next support lies near 1.2480 and should hold, at least this trip down.  If so, we could see the 1360 technical area noted above.

We aren’t comfortable publishing day trading ideas for Tuesday simply because a lot can happen between now and then.  However, we are comfortable going into next week with this idea…If the bottom falls out, position traders might look to 1275/1280 as a place to play the long side.  Resistance lies near 1335 and again near 1360 (these are areas the bulls should scale back and the bears might want to key off of).

* 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.

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

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

Futures and Options Trading Recommendations

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

Position Trade -

5-17 Clients were advised to sell the June S&P 1320 put for  about $8 in premium ($400).

5-22 Clients were advised to buy back their S&P puts near 4.50 to lock in a small profit of about $175 per contract.

In other markets

4-2 Clients were advised to sell June soybean 1570 call options for 8.5 to 8.0 cents.

4-4 Clients were advised to sell corn strangles.  Strikes and fills varied slightly (730/600 strangles for 14.5 cents, or 720/605 strangles for about 16.5 cents)

4-10 Clients were advised to sell the June bond 135 puts for about 30 ticks.  Later in the session, we recommended to buy back the 143 calls at a loss (about 1′03 before considering profit on puts) and sell the 146 calls in their place.   The “new” strangle provides more room for error on the upside and carries a slightly bearish delta with plenty of profit potential if volatility erodes.

4-10 Clients were advised to buy back their 730 corn calls for about 3 cents to lock in a profit of about $250 before commission and fees.

4-18 Clients were advised to buy back their 1570 soybean calls for about 3 cents to lock in a profit of about $250 to $275 per contract before transaction costs.

4-19 Clients were advised to sell June Yen 127.5/118 strangles for about 72 ticks or $900 before transaction costs.

4-19 Clients were advised to adjust the remaining leg of the corn strangle by buying back their 605 puts and replacing the premium with June 640 calls and July 580 puts.  The roll over netted a credit of about 2 cents.  The 605 put sustained a loss of 14 cents but luckily gains on the short soybean call and corn call covered a majority of the pain.  We are now hoping for volatility to decrease to provide an opportunity to work out of the trade.

4-24 Clients were advised to sell June soybean 1590 calls for about 8.75 cents or $437.50.

4-25 Clients with plenty of margin (and guts) were advised to add to their short bean call position by selling the June 1650 calls for 9 cents (this price didn’t last long so some sold the 1630s for about the same price instead).

4-26 Those clients that were able to get the 1650 calls off at 9 cents, were advised to buy them back near 3 cents to lock in a quick profit of just under $300 per contract before commissions.

4-26 Clients were advised to roll their short Yen puts higher to rebalance the delta of the short strangle.  It was recommended to buy back the 118 puts for about 16 ticks to lock in a profit of about $262.50, and sell the 120 puts for about 37 ticks.

4-27 Clients were recommended to resell the 1650 calls for about 9 cents (again), thos that missed it sold the 1640s for about 9.

4-30 Clients that were lucky enough to sell the 1650 calls on Friday for 9 cents were advised to buy them back today at 4 to lock in a profit of 5 cents ($250 per contract) in a matter of days.

4-30 Clients were advised to offset their Yen 120 puts near 15 ticks to lock in a profit of about $250 per contract before commissions.

5-1 Clients were advised to offset their corn strangles (both the 680 July puts and the June 640 calls) at a profit of about $300 to prepare (reduce risk) for the USDA report next week.

5-1 Clients that sold the June soybean 1640 calls for about 9 cents on Friday were advised to buy them back for 3.75 today to lock in a profit of $250 to $275 before commissions.

5-1 Clients were advised to sell June Yen 121 puts for 30 ticks to re-strangle the market (lower the delta of the trade).

5-3 Clients were advised to lock in a profit on thier short 1590 calls of about $200 to $225 to exit prior to payroll report and USDA.

5-7 Clients were advised to sell July crude oil strangles in an attempt to capture overnight volatility.  We were able to get about $1.00 ($1,000) for the 83 puts and the 108 calls.

5-7 Clients were advised to sell the July 30-year bond 147 calls and 139 puts for about 60 ticks in premium (or $937.50).

5-9 Clients were advised to roll their 12750/1210 June Yen strangles into June 12850/12250 strangles.  Doing so locks in about $475 in profit on the originan trade (counting adjustments but not including transaction costs).  The “new” strangle was sold for about 60 ticks or $750.

5-9 Clients were advised to sell the July 30-year bond 149 call near 30 ticks (or $468.75).

5-10 Clients were advised to buy back their 149 call near 15 to lock in a profit of about $235 before commissions and fees.

5-10 Clients were advised to sell July soybean strangles using the 1570 calls and the 1360 puts for a total premium of 16 cents or $800.

5-14 Clients were advised to roll their original 147/139 strangles higher to the 149/141 strikes.  This gives the market more room to breathe and balances out the risk/delta.

5-14 We recommended that clients adjust their soybean strangles by buying back the existing options and selling the 1320 puts and the 1470 calls for about an even money swap.

5-15 As a matter of risk management, we advised clients to offset Yen strangles at a profit of about $300 per contract before commissions and fees.

5-15 Clients with plenty of margin and risk tolerance were advised to sell July Euro 120 puts for about 37 ticks, or $462.50.

5-16 Clients were advised to buy back their short July 108 crude calls, which were sold as part of a strangle with the 83 puts.  Most fills were reported near 17 cents, which equates to a profit of about $330 before commissions and fees.

5-18 Clients holding the 149/141 strangles were advised to roll the entire trade higher (the 151/143) strikes.  This keeps the trade balanced and gives the market plenty of breathing room.

5-18 Clients were advised to buy back the 83 crude oil puts back near 63 cents to lock in a small loss on the trade, but it is worth the peace of mind going into the weekend.  If the market sells off on Monday, we can resell them at better prices, if we get a sharp rally we’ll look at selling strangles.

5-18 Clients were advised to adjust their soybean strangles (hopefully for the last time) by buying back the 1470/1320 strangles back and selling the 1530/1360 strangle.  We are looking for a decline in volatility.

5-23 Clients were advised to buy back their soybean 1530 calls for a profit of about 10 cents or $500 (we are holding on to the puts hoping for a rebound in the futures price).

5-24 Clients were advised to buy back their July soybean 1360 puts and replace the premium with 1320 puts and 1480 calls.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker @ www.DeCarleyTrading.com

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

Twitter

Facebook

Carley Garner Trading Education Books

*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.

Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years.  There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year.  While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing.  Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results.  No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations.  No representation is being made that price patterns will recur in the future.

Stock index futures opt for “safe” weekend is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Staying cool under pressure can be a challenge for traders, here are a few tips (click here).

Browse Carley Garner’s Trading Education Books

Stock index futures eyeing key support levels

The aggressively hyped and under delivered facebook IPO, and uncertainty over global political meetings encouraged selling into Friday’s close.  Traders have had all weekend to think about things, rather than react and ask questions later (which was the case for much of last week) but only time will tell what the consensus will eventually be.

In our view, Friday’s move was likely more emotional than fundamental.  For instance, the health of the market, the economy, or even the tech sector isn’t necessarily reflected in demand for facebook shares.  Despite the IPO madness and the widespread reach of the service, the bottom line is that facebook revenues (like their users) are subject to fickleness.  Most users access the site for free and few click on the ads that serve to monetize the site for shareholders.  Also, it wasn’t that long ago that there was similar (but on a much smaller scale) excitement over Friendster and MySpace.

On a more critical note, the elephant in the room continues to be Greece and its inclusion (or not) in the Euro; furthermore, what will happen in either event.  At this juncture the market is viewing either outcome with critical glasses and doesn’t seem to approve of either scenario.  In either case, we believe that in the seemingly incompetent global leaders will find a way to avoid ripping the band-aid off to let the global banking system bleed to death.  Instead, we’ll more likely see a very slow and painful recovery….with lots of stimulus (money printing) and, therefore, overvalued assets.

The June S&P has broken beneath critical support levels and this opens the door to the possibility of a further slide early this week.  If we get it, look for GOOD support (and a potential reversal level) near 1275/1280.  Sometimes when markets look the worst, is exactly when they make a turn for the better.

* 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.

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

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

Futures and Options Trading Recommendations

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

Position Trade -

5-17 Clients were advised to sell the June S&P 1320 put for  about $8 in premium ($400).

In other markets

4-2 Clients were advised to sell June soybean 1570 call options for 8.5 to 8.0 cents.

4-4 Clients were advised to sell corn strangles.  Strikes and fills varied slightly (730/600 strangles for 14.5 cents, or 720/605 strangles for about 16.5 cents)

4-10 Clients were advised to sell the June bond 135 puts for about 30 ticks.  Later in the session, we recommended to buy back the 143 calls at a loss (about 1′03 before considering profit on puts) and sell the 146 calls in their place.   The “new” strangle provides more room for error on the upside and carries a slightly bearish delta with plenty of profit potential if volatility erodes.

4-10 Clients were advised to buy back their 730 corn calls for about 3 cents to lock in a profit of about $250 before commission and fees.

4-18 Clients were advised to buy back their 1570 soybean calls for about 3 cents to lock in a profit of about $250 to $275 per contract before transaction costs.

4-19 Clients were advised to sell June Yen 127.5/118 strangles for about 72 ticks or $900 before transaction costs.

4-19 Clients were advised to adjust the remaining leg of the corn strangle by buying back their 605 puts and replacing the premium with June 640 calls and July 580 puts.  The roll over netted a credit of about 2 cents.  The 605 put sustained a loss of 14 cents but luckily gains on the short soybean call and corn call covered a majority of the pain.  We are now hoping for volatility to decrease to provide an opportunity to work out of the trade.

4-24 Clients were advised to sell June soybean 1590 calls for about 8.75 cents or $437.50.

4-25 Clients with plenty of margin (and guts) were advised to add to their short bean call position by selling the June 1650 calls for 9 cents (this price didn’t last long so some sold the 1630s for about the same price instead).

4-26 Those clients that were able to get the 1650 calls off at 9 cents, were advised to buy them back near 3 cents to lock in a quick profit of just under $300 per contract before commissions.

4-26 Clients were advised to roll their short Yen puts higher to rebalance the delta of the short strangle.  It was recommended to buy back the 118 puts for about 16 ticks to lock in a profit of about $262.50, and sell the 120 puts for about 37 ticks.

4-27 Clients were recommended to resell the 1650 calls for about 9 cents (again), thos that missed it sold the 1640s for about 9.

4-30 Clients that were lucky enough to sell the 1650 calls on Friday for 9 cents were advised to buy them back today at 4 to lock in a profit of 5 cents ($250 per contract) in a matter of days.

4-30 Clients were advised to offset their Yen 120 puts near 15 ticks to lock in a profit of about $250 per contract before commissions.

5-1 Clients were advised to offset their corn strangles (both the 680 July puts and the June 640 calls) at a profit of about $300 to prepare (reduce risk) for the USDA report next week.

5-1 Clients that sold the June soybean 1640 calls for about 9 cents on Friday were advised to buy them back for 3.75 today to lock in a profit of $250 to $275 before commissions.

5-1 Clients were advised to sell June Yen 121 puts for 30 ticks to re-strangle the market (lower the delta of the trade).

5-3 Clients were advised to lock in a profit on thier short 1590 calls of about $200 to $225 to exit prior to payroll report and USDA.

5-7 Clients were advised to sell July crude oil strangles in an attempt to capture overnight volatility.  We were able to get about $1.00 ($1,000) for the 83 puts and the 108 calls.

5-7 Clients were advised to sell the July 30-year bond 147 calls and 139 puts for about 60 ticks in premium (or $937.50).

5-9 Clients were advised to roll their 12750/1210 June Yen strangles into June 12850/12250 strangles.  Doing so locks in about $475 in profit on the originan trade (counting adjustments but not including transaction costs).  The “new” strangle was sold for about 60 ticks or $750.

5-9 Clients were advised to sell the July 30-year bond 149 call near 30 ticks (or $468.75).

5-10 Clients were advised to buy back their 149 call near 15 to lock in a profit of about $235 before commissions and fees.

5-10 Clients were advised to sell July soybean strangles using the 1570 calls and the 1360 puts for a total premium of 16 cents or $800.

5-14 Clients were advised to roll their original 147/139 strangles higher to the 149/141 strikes.  This gives the market more room to breathe and balances out the risk/delta.

5-14 We recommended that clients adjust their soybean strangles by buying back the existing options and selling the 1320 puts and the 1470 calls for about an even money swap.

5-15 As a matter of risk management, we advised clients to offset Yen strangles at a profit of about $300 per contract before commissions and fees.

5-15 Clients with plenty of margin and risk tolerance were advised to sell July Euro 120 puts for about 37 ticks, or $462.50.

5-16 Clients were advised to buy back their short July 108 crude calls, which were sold as part of a strangle with the 83 puts.  Most fills were reported near 17 cents, which equates to a profit of about $330 before commissions and fees.

5-18 Clients holding the 149/141 strangles were advised to roll the entire trade higher (the 151/143) strikes.  This keeps the trade balanced and gives the market plenty of breathing room.

5-18 Clients were advised to buy back the 83 crude oil puts back near 63 cents to lock in a small loss on the trade, but it is worth the peace of mind going into the weekend.  If the market sells off on Monday, we can resell them at better prices, if we get a sharp rally we’ll look at selling strangles.

5-18 Clients were advised to adjust their soybean strangles (hopefully for the last time) by buying back the 1470/1320 strangles back and selling the 1530/1360 strangle.  We are looking for a decline in volatility.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker @ www.DeCarleyTrading.com

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

Twitter

Facebook

Carley Garner Trading Education Books

*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.

Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years.  There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year.  While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing.  Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results.  No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations.  No representation is being made that price patterns will recur in the future.

Stock index futures eyeing key support levels is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Staying cool under pressure can be a challenge for traders, here are a few tips (click here).

Browse Carley Garner’s Trading Education Books

E-mini S&P’s triple bottom is now a sexta-bottom…but is it a bottom (and is that a word)?

The June ES futures contract spent the entire week trading in a 20 handle range between about 1340 and 1360.  Unfortunately, for those trying to trend trade, the market moves from one side of the price envelope to the other were swift and convincing.  As a result, we suspect that there were several traders on bad footing (ie. bulls repeatedly buying the highs and the bears selling into the lows).  It isn’t difficult to image how quickly the losses can pile up, and most likely the frustration as well.  This is important because now that emotions are involved, and traders have substantial amounts of skin in the game, the break out (in either direction) will be all the more dramatic.

It feels like this dip will eventually prove to be a buying opportunity, despite the “sell in May” mantra and what is becoming overwhelmingly bullish sentiment.  Nonetheless, the door is still open for one more slide into the low 1330s.  A print at this price would be sufficient to flush the sell stops out of the market and finally retest the March lows the technicians have been eying.

There is little news to support (or force down) equities on Monday, but starting on Tuesday we’ll get a plethora of economic news including CPI, manufacturing data and later in the week the latest in housing and the minutes of the latest FOMC meeting.  In our estimation, the week’s data could be supportive to bullish but Monday is a wild card.

If you are a bull, you might want to consider the low 1340s as a place to nibble, but save the big guns for a possible plunge into the low 1330s (or even the high 1320s).  If you are a bear, congratulations but in my opinion you want to be of the mindset of reducing risk and taking profits.

From yesterday but still valid:

Helping to aid our bullish tilt in equities is what we believe to  be a potential reversal in the currency markets.  The U.S. Dollar Index has made its way into the mid 80’s which marks the upper end of the multi month trading range.  This time of year is typically directionless in currencies; accordingly, we are expecting resistance to hold for now.  If so, the weaker dollar could provide support to stocks.

 

The market has made mid-day recoveries in each of the last three sessions but that doesn’t necessarily mean the bulls are out of the woods.  We sure wouldn’t want to be short this market, but we wouldn’t recommend being blindly bullish either.  If ever there is a time to remember the simple rule…buy the dips and sell the rips, it is now.  You can’t get too comfortable, or too greedy, in this market!

* 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.

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

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

Futures and Options Trading Recommendations

**THERE IS UNLIMITED RISK IN NAKED OPTION SELLING AND FUTURES TRADING

Position Trade -

Flat

In other markets…

4-2 Clients were advised to sell June soybean 1570 call options for 8.5 to 8.0 cents.

4-4 Clients were advised to sell corn strangles.  Strikes and fills varied slightly (730/600 strangles for 14.5 cents, or 720/605 strangles for about 16.5 cents)

4-10 Clients were advised to sell the June bond 135 puts for about 30 ticks.  Later in the session, we recommended to buy back the 143 calls at a loss (about 1′03 before considering profit on puts) and sell the 146 calls in their place.   The “new” strangle provides more room for error on the upside and carries a slightly bearish delta with plenty of profit potential if volatility erodes.

4-10 Clients were advised to buy back their 730 corn calls for about 3 cents to lock in a profit of about $250 before commission and fees.

4-18 Clients were advised to buy back their 1570 soybean calls for about 3 cents to lock in a profit of about $250 to $275 per contract before transaction costs.

4-19 Clients were advised to sell June Yen 127.5/118 strangles for about 72 ticks or $900 before transaction costs.

4-19 Clients were advised to adjust the remaining leg of the corn strangle by buying back their 605 puts and replacing the premium with June 640 calls and July 580 puts.  The roll over netted a credit of about 2 cents.  The 605 put sustained a loss of 14 cents but luckily gains on the short soybean call and corn call covered a majority of the pain.  We are now hoping for volatility to decrease to provide an opportunity to work out of the trade.

4-24 Clients were advised to sell June soybean 1590 calls for about 8.75 cents or $437.50.4-25 Clients with plenty of margin (and guts) were advised to add to their short bean call position by selling the June 1650 calls for 9 cents (this price didn’t last long so some sold the 1630s for about the same price instead).

4-26 Those clients that were able to get the 1650 calls off at 9 cents, were advised to buy them back near 3 cents to lock in a quick profit of just under $300 per contract before commissions.

4-26 Clients were advised to roll their short Yen puts higher to rebalance the delta of the short strangle.  It was recommended to buy back the 118 puts for about 16 ticks to lock in a profit of about $262.50, and sell the 120 puts for about 37 ticks.

4-27 Clients were recommended to resell the 1650 calls for about 9 cents (again), those that missed it sold the 1640s for about 9.

4-30 Clients that were lucky enough to sell the 1650 calls on Friday for 9 cents were advised to buy them back today at 4 to lock in a profit of 5 cents ($250 per contract) in a matter of days.

4-30 Clients were advised to offset their Yen 120 puts near 15 ticks to lock in a profit of about $250 per contract before commissions.

5-1 Clients were advised to offset their corn strangles (both the 680 July puts and the June 640 calls) at a profit of about $300 to prepare (reduce risk) for the USDA report next week.

5-1 Clients that sold the June soybean 1640 calls for about 9 cents on Friday were advised to buy them back for 3.75 today to lock in a profit of $250 to $275 before commissions.

5-1 Clients were advised to sell June Yen 121 puts for 30 ticks to re-strangle the market (lower the delta of the trade).

5-3 Clients were advised to lock in a profit on their short 1590 calls of about $200 to $225 to exit prior to payroll report and USDA.

5-7 Clients were advised to sell July crude oil strangles in an attempt to capture overnight volatility.  We were able to get about $1.00 ($1,000) for the 83 puts and the 108 calls.

5-7 Clients were advised to sell the July 30-year bond 147 calls and 139 puts for about 60 ticks in premium (or $937.50).

5-9 Clients were advised to roll their 12750/1210 June Yen strangles into June 12850/12250 strangles.  Doing so locks in about $475 in profit on the original trade (counting adjustments but not including transaction costs).  The “new” strangle was sold for about 60 ticks or $750.

5-9 Clients were advised to sell the July 30-year bond 149 call near 30 ticks (or $468.75).

5-10 Clients were advised to buy back their 149 call near 15 to lock in a profit of about $235 before commissions and fees.

5-10 Clients were advised to sell July soybean strangles using the 1570 calls and the 1360 puts for a total premium of 16 cents or $800.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

*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.

Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years.  There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year.  While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing.  Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results.  No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations.  No representation is being made that price patterns will recur in the future.

E-mini S&P’s triple bottom is now a sexta-bottom…but is it a bottom (and is that a word)? is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Carley was recently interviewed on the nationally syndicated radio show, Your Money Matters…click here to listen (scroll to middle of page).

Who left the barn door open? Stock index futures bulls are running!

It has been a running of the bulls type of week on Wall Street despite a rocky start in early Monday morning futures trade.  Compliments of one of the best earnings seasons in history (at least based on low expectations coming in), the June S&P picked up about 1.7% and the NASDAQ well over 2%.

First quarter earnings growth was originally forecasted to be around 3%, but with the earnings season well underway analysts are now calling for 7% growth.  Annual S&P earnings growth rate is expected to be about 9% for 2012.  As we all know, tech stocks have been leading the charge; stronger than expected earnings reports from Apple and Amazon have propelled prices higher as about 73% of all companies reporting have “beat the street”.

Seasonal patterns suggested the month of April would conclude with a rally; anybody that trusted history likely fared well this week.  Next week (and even next month) gets a little trickier.  After checking with multiple seasonal data sources, it seems there are some slight disagreements in regard to the timing of the infamous “sell in May and go away” trade.  Similarly, stock market performance during the month of May has been rather inconsistent.

According to the Stock Trader’s Almanac, 15 of 20 Mays between 1965 and 1984 were negative but between 1985 and 1997 May was the best month with 13 consecutive gains.  Since 1997, the market has been nearly split for the month of May, but since 1952, in years of a Presidential election Mays have underperformed.  With all of this in mind, we have to enter the month with a near-term bullish bias but will be looking for better prices to  be a bear.

According to our sources, the first two days in May have a tendency to be positive and our chart work tells us Monday (April 30th) could see some follow through buying.  Accordingly, we are looking for the June S&P to see 1413ish in the coming sessions with a run to 1430 possible should we continue to get positive news.  If we are wrong, first support comes in near 1381ish.

If you are day trading, look for support near 1388 and again near 1381; resistance lies near 1404 and then 1413.

* 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.

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

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

Futures and Options Trading Recommendations

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

Position Trade -

Flat

In other Markets

3-30 Clients were advised to sell June Bond strangles using the 143 calls and the 131 puts for a combined premium of 60 ticks ($937.50).

4-2 Clients were advised to sell June soybean 1570 call options for 8.5 to 8.0 cents.

4-4 Clients were advised to sell corn strangles.  Strikes and fills varied slightly (730/600 strangles for 14.5 cents, or 720/605 strangles for about 16.5 cents)

4-9 Clients were advised to buy back the June 131 puts for about 10 ticks to lock in a profit of about 20 ticks before commission and fees ($312.50).  We are recommending to leave the short calls open for now.

4-10 Clients were advised to sell the June bond 135 puts for about 30 ticks.  Later in the session, we recommended to buy back the 143 calls at a loss (about 1′03 before considering profit on puts) and sell the 146 calls in their place.   The “new” strangle provides more room for error on the upside and carries a slightly bearish delta with plenty of profit potential if volatility erodes.

4-10 Clients were advised to buy back their 730 corn calls for about 3 cents to lock in a profit of about $250 before commission and fees.

4-18 Clients were advised to buy back their 1570 soybean calls for about 3 cents to lock in a profit of about $250 to $275 per contract before transaction costs.

4-19 Clients were advised to sell June Yen 127.5/118 strangles for about 72 ticks or $900 before transaction costs.

4-19 Clients were advised to buy back the 135 put for about 11 ticks to lock in a profit of about $300 before commissions and fees.  We then made a recommendation to sell the 138 for about 30 ticks.  This brings the delta on the strangle to even and cushions the trade with a little more premium collected.

4-19 Clients were advised to adjust the remaining leg of the corn strangle by buying back their 605 puts and replacing the premium with June 640 calls and July 580 puts.  The roll over netted a credit of about 2 cents.  The 605 put sustained a loss of 14 cents but luckily gains on the short soybean call and corn call covered a majority of the pain.  We are now hoping for volatility to decrease to provide an opportunity to work out of the trade.

4-24 Clients were advised to sell June soybean 1590 calls for about 8.75 cents or $437.50.

4-25 Clients with plenty of margin (and guts) were advised to add to their short bean call position by selling the June 1650 calls for 9 cents (this price didn’t last long so some sold the 1630s for about the same price instead).

4-26 Those clients that were able to get the 1650 calls off at 9 cents, were advised to buy them back near 3 cents to lock in a quick profit of just under $300 per contract before commissions.

4-26 Clients were advised to roll their short Yen puts higher to rebalance the delta of the short strangle.  It was recommended to buy back the 118 puts for about 16 ticks to lock in a profit of about $262.50, and sell the 120 puts for about 37 ticks.

4-27 Clients were recommended to resell the 1650 calls for about 9 cents (again), those that missed it sold the 1640s for about 9.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

http://www.facebook.com/decarleytradingcommoditybroker

http://twitter.com/carleygarner

http://www.linkedin.com/in/carleygarner

http://www.DeCarleyTrading.com

http://www.CurrencyTradingtheBook.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.

Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years.  There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year.  While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing.  Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results.  No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations.  No representation is being made that price patterns will recur in the future.

Who left the barn door open? Stock index futures bulls are running! is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

For information or to purchase Carley Garner’s latest book, Currency Trading in the FOREX and Futures markets visit http://www.currencytradingthebook.com/

Will options expiration save stock index futures?

Equities lost ground ahead of the weekend but with options expiration on tap, the markets might find a way to find a short-term low early next week.  More often than not, equities have a tendency to trade firmer on the Monday through Wednesday heading into the monthly expirations, and with the market trading at a relative discount it seems the stage might be set for such a move.

Friday’s bloodshed actually started Thursday evening following “disappointing” news of a smaller than expected GDP figure in China.  Nevertheless, China is still growing at a rate of 8%…and I have a hard time seeing that as a complete disaster.  Adding fuel to the fire was activity in the credit default securities that increased the cost of insuring Spanish debt.  In other words, today’s selling was based on fear of the fundamentals of other economies rather than domestic issues.  Obviously, the globe has become a melting pot of economies in which we are all linked together so this is something we should accept for the long haul.

The banks were hit hard on Friday over concerns of a European debt crisis bleed but the fact that we will hear the latest earnings reports from major banks next week likely sparked some of the manic trading.  If bank stocks were able to lead the market lower this week, they are capable of doing the opposite next week (assuming their earnings numbers are a meet, or beat).

According to the Stock Trader’s Almanac, the income tax deadline (Monday this time around) is generally bullish and in line with our seasonal research, they claim the Dow has only been down five times since 1981 on the Monday before the April expiration.

If we get some follow through selling on Sunday night/Monday morning, look for support in the June S&P near 1359 and 1348.  If we get an expiration rally, we’ll be looking for the mid to low 1390’s.  If we’re wrong about the market finding a bottom, the next major area of support is 1330ish.

If you are day trading, look for support at the levels mentioned above and intraday resistance near 1378 and 1386.

* 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.

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

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

Futures and Options Trading Recommendations

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

Position Trade -

Flat

In other Markets…

3-30 Clients were advised to sell June Bond strangles using the 143 calls and the 131 puts for a combined premium of 60 ticks ($937.50).

4-2 Clients were advised to sell June soybean 1570 call options for 8.5 to 8.0 cents.

4-4 Clients were advised to sell corn strangles.  Strikes and fills varied slightly (730/600 strangles for 14.5 cents, or 720/605 strangles for about 16.5 cents)

4-9 Clients were advised to buy back the June 131 puts for about 10 ticks to lock in a profit of about 20 ticks before commission and fees ($312.50).  We are recommending to leave the short calls open for now.

4-10 Clients were advised to sell the June bond 135 puts for about 30 ticks.  Later in the session, we recommended to buy back the 143 calls at a loss (about 1′03 before considering profit on puts) and sell the 146 calls in their place.   The “new” strangle provides more room for error on the upside and carries a slightly bearish delta with plenty of profit potential if volatility erodes.

4-10 Clients were advised to buy back their 730 corn calls for about 3 cents to lock in a profit of about $250 before commission and fees.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

http://www.facebook.com/decarleytradingcommoditybroker

http://twitter.com/carleygarner

http://www.linkedin.com/in/carleygarner

http://www.DeCarleyTrading.com

http://www.CurrencyTradingtheBook.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.

Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years.  There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year.  While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing.  Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results.  No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations.  No representation is being made that price patterns will recur in the future.

Will options expiration save stock index futures? is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Click here to check out the latest Futures for You column in Stocks & Commodities Magazine, written by Carley Garner of DeCarley Trading!

Stock Index Futures unch’ed ahead of payroll data

The U.S. government will release its widely anticipated employment report to a miniscule audience.  Most traders will likely sleep through the announcement due early tomorrow morning rather than wake up to thinly traded markets and a limited time frame to react to the news.  Although the lack of market participation has the potential to wreak havoc in the event of a large miss in the headline figure, we doubt it will happen.  Instead, it seems more likely tomorrow morning will be a relative non-event ahead of a long weekend.

In yesterday’s newsletter we mentioned S&P support in the mid 1380’s and that area held on Thursday.  Whether that continues to be the case will be highly dependent on the employment report.  Most traders are looking for 200,000 jobs added across both private and public sectors.  I believe that anything above 180,000 will be considered a positive.  The bears will likely need 150,000 or below to get some really downside spill pressure.

If you are a position trader, you are likely best off going into tomorrow’s data flat the market.  Light volume and event risk make holding substantial positions nothing more than a crap shoot.  With that said, should there be a substantial rally tomorrow or early next week, traders might look to initiate bearish positions near 1424, and perhaps more aggressively near 1436.  We often see tax selling pressure in the second week of April; therefore, any sharp rally might be good for a short-term bearish trade.

If the report is a disappointment, we could see a slide into the mid 1360’s.  The chart says this might be a place for the bulls to step in, but we aren’t willing to get comfortably bullish following the best quarter in a decade.

We aren’t comfortable providing day trading support and resistance numbers ahead of a long weekend because a lot can change between now and Monday.  As always, if you have a trading account at DeCarley Trading, feel free to contact us on Monday for guidance.

* 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.

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

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

Futures and Options Trading Recommendations

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

Position Trade -

3-13- It was recommended that clients sell the May S&P 1450 calls for about $8.75 in premium or $437.50 per contract.

4-4 Clients were advised to buy back their May S&P 1450 calls for about $6.  This locks in a small profit of anywhere from $100 to $150 before transaction costs depending on fills.  We felt it was worthwhile to exit ahead of the payroll report to lighten risk exposure.

In other Markets…

3-26 It was recommended to clients that they sell the May 141 30-year bond calls and the May 133 puts for a combined premium of about 46 ticks or $718 before commissions and fees.

3-30 Clients were advised to buy back their short bond 133 puts (part of strangle above) at 7 ticks, to lock in a profit of about $280 per contract before commission (fill prices fluctuate slightly).

3-30 Clients were advised to offset their bond calls on the pullback at a price of about 17 ticks to lock in a small profit on this leg of the strangle, but a respectable $380 (approximately depending on fills and before transaction costs) when considering the profit on the call strike.

4-2 Clients were advised to sell June soybean 1570 call options for 8.5 to 8.0 cents.

4-4 Clients were advised to sell corn strangles.  Strikes and fills varied slightly (730/600 strangles for 14.5 cents, or 720/605 strangles for about 16.5 cents)

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

http://www.facebook.com/decarleytradingcommoditybroker

http://twitter.com/carleygarner

http://www.linkedin.com/in/carleygarner

http://www.DeCarleyTrading.com

http://www.CurrencyTradingtheBook.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.

Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years.  There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year.  While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing.  Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results.  No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations.  No representation is being made that price patterns will recur in the future.

Stock Index Futures unch’ed ahead of payroll data is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Sign up for our next complimentary online trading webinar, Currency Option Trading: FOREX vs. Futures hosted by PFGBEST on March 22nd at 3:30 pm Central.

Climactic Quadruple Witch

Today marked the first day in a long while in which economic data was less than stellar.  However, it didn’t really matter.  Momentum traders are pushing prices to the limits, the shorts are getting squeezed, and sidelined cash (or cash in Treasuries) is making its way into equities.  Once the ball is rolling, it is sometimes difficult for prices to turn the corner (as evidenced by the Feb/March rally).

The Consumer Price Index showed an increase in price pressures to the tune of 0.4%, but the move was expected.  Industrial production and the latest reading on consumer confidence missed expectations.  Although these alone aren’t reason to sell, it might be enough to at least get buyers to pause.

Last month’s crude rally has essentially flat lined, but energies have a tendency to rally in late March through April.  Should we see what has been the norm on average over the last 15 years, crude oil might make a run at new highs.  This is something traders should keep on their radar.  After all, the positive correlation between crude oil and the S&P has fizzled; should WTI crude rallies back above $110 it will probably be back on the front page of newspapers.  We doubt that $110 will be enough to cripple market sentiment but $115 isn’t out of the question and somewhere in that general area seems to be the line in the sand between tolerable and threatening.

Bullish sentiment has grown to incredibly high levels.  In fact, we are near levels not seen since the peak in 2007.  While that alone doesn’t mean traders should “sell the farm”, it certainly is reason for caution.

Today’s trade was a non-event; likely due to the fact that the March options and futures were both expiring.  Our guess is there were numerous bearish traders (short March calls and futures) that held on to the bitter end.  If so, the market’s natural reaction will be to back and fill early next week (at least on Sunday night and early Monday).

We are sticking to yesterday’s overall idea:

We continue to see risk of a blow off rally to the 1417 area in the S&P and near 2730 in the NASDAQ.  However, momentum indicators are suggesting the market might be capitulating.  If so, the bears (if there are any left) might finally get what they are looking for and should be on the lookout for these levels as possible entry prices.

If you are day trading, resistance comes in near 1402, and then 1409 (and of course 1417); support near 1393 (soft), 1388 and then 1376.

* 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.

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

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

Futures and Options Trading Recommendations

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

Position Trade -

2-8-  We typically recommend short options, or even long options, simply because the risk are lower and there is much more room for error.  However, given the circumstances we are willing to go out on a limb and recommend selling the NQ futures contract at the current level (near 2540).  The next resistance is near 2562, so traders with plenty of margin might consider adding at that price.  Similarly, conservative traders might try to hold out for a possible move to 2560ish before entering the initial position.  Our initial downside target will be about 2450 in the March contract.

2-9 Clients were advised to liquidate any “add-on” positions near 2540 (for those  trading multiples only).

*Clients still involved in the NASDAQ trade have sold May 1520 puts for about 32 points to hedge their upside risk.

3-13- It was recommended that clients sell the May S&P 1450 calls for about $8.75 in premium or $437.50 per contract.

In other Markets…

2-16 – We advised clients to sell March 124 Yen puts for about 29.

2-22 – Clients were advised to sell April Yen 120 puts for about 30 ticks.

2-22 – Clients were advised to offset their March Yen 124 puts at a loss of about 40 ticks and to sell the April 121 puts for about 40 in an attempt to recoup the premium.

3-2 – Clients were advised to exit short April Yen 121 puts at a loss of about $425, and to sell April 126 calls and 119.50 puts for $1,000 in premium.  The goal is to recoup the premium lost as volatilty dies.

3-5 – Clients were advised to sell April Euro strangles using the 127 puts and the 136.50 calls for about 61 ticks or $762.50.

3-7 – Clients were advised to sell May crude oil strangles using the 123 calls and the 90 puts.  Premium collected was near $1.04 ($1,040).

3-12 – Any client holding short 120 puts in the Japanese Yen were advised to sell April 125 calls near 38 ticks to lower the delta of the exposure (mitigate risk to the downside) ahead of the BOJ announcement.

3-13 – Clients were advised to buy back the 125 calls sold yesterday to lock in a quick profit of about $250 per contract as well as the April 126 call sold earlier in the month as part of a strangle for a profit of about $300 before transaction costs.  The corresponding puts are underwater, we hope to offset them in the near future or re-sell calls on a rally.

3-13- Clients were advised to buy back their May crude oil strangles for a quick profit of about $460 before commissions and fees.

3-13 – Clients were advised to buy back short Euro 136.50 calls near 7 ticks to lock in a profit of $275 per contract (22 ticks).  We will continue to hold the short put side of this trade.

3-14 Clients were advised to buy back any remaining Yen puts (119.50’s and 120’s) at a sizable loss (depending on fills, some well over $1,000) and replace them with May 116’s and 115/124 strangles, respectively.  We’ll look to recoup losses in upcoming strangle trades in crude/Euro.

3-14 Clients were advised to sell the May132 30-year bond put for about 29 ticks.

3-14 Clients were advised to buy back  their short Euro 127 puts for about 19 ticks to lock in $175 per contract (added to the profit on the call side of this trade, the total profit was about $450 before transaction costs).

3-15 Some sold 131’s for about 28 ticks

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

http://www.facebook.com/decarleytradingcommoditybroker

http://twitter.com/carleygarner

http://www.linkedin.com/in/carleygarner

http://www.DeCarleyTrading.com

http://www.CurrencyTradingtheBook.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.

Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years.  There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year.  While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing.  Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results.  No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations.  No representation is being made that price patterns will recur in the future.

Climactic Quadruple Witch is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Click here to sign up for our next Free trading webinar…FOREX Trading Math!

See DeCarley Trading’s article on using the COT for FOREX analysis in this month’s issue of Currency Trading Magazine (Click here for free electronic download).

We rarely recommend shorting a futures contract but…

Rather than going on and on about the day’s action and trying to assess why prices behaved the way they did, we are going to go in a different direction….NASDAQ futures.

Thanks to high flying stocks such as Apple, the NASDAQ 100 futures contract has been quietly creeping higher despite widespread skepticism over the tech sector.  Also, few have forgotten the infamous tech bubble in which the shorts were massacred on the way up and the bulls on the way down…not many survived.  Accordingly, it is often the “forgotten” index.  Nonetheless, it might offer traders the bears the best opportunity in regard to high probability trades and potential reward.

Large speculators are currently (or at least according to the latest COT Report) holding a record net long position in the e-mini NASDAQ (NQ) of 108,650 contracts.  The previous record was set in late 2004, at 95,765; in light of this we think it is fair to say the long tech trade is overcrowded.  Although the e-mini S&P is technically overbought, it isn’t experiencing a massively one sided position like the NASDAQ is.

From a technical standpoint, the March NASDAQ future currently has an RSI reading of over 90%.  If you are familiar with the RSI, you are aware that it is among the slower of the oscillators to suggest a market is overheated and anything over 70% in is considered to be extreme pricing.  Needless to say, the current 90% value is screaming overbought.  This alone doesn’t guarantee the market will turn the corner (after all, nothing does) but in my 7.5 year career I’ve only encountered such an extreme rally a handful of times.  Also, NASDAQ futures have traded lower in only 3 of the previous 26 sessions, and the red closes were modest.  As we know, extreme prices are often followed by mean revision trade in which the market corrects from an overextended level to an equilibrium…and that is what we feel the NASDAQ could soon be doing.

We typically recommend short options, or even long options, simply because the risk are lower and there is much more room for error.  However, given the circumstances we are willing to go out on a limb and recommend selling the NQ futures contract at the current level (near 2540).  The next resistance is near 2562, so traders with plenty of margin might consider adding at that price.  Similarly, conservative traders might try to hold out for a possible move to 2560ish before entering the initial position.  Our initial downside target will be about 2450 in the March contract.

If you are trading the S&P, our intraday support and resistance models continue to work well (despite the fact that we got bearish too early).  Look for resistance in the March S&P near 1352 and then again at 1365ish; resistance lies near 1340 (soft), 1336 and then 1328.  Daily support falls at 1307 should we get a watershed move.

* 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.

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

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

Futures and Options Trading Recommendations

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

Position Trade -

1-18 We recommended that clients sell the March S&P 1370 calls for about $9.00 in premium or $450 per mini contract.

In other Markets…

1-17 Clients were instructed to sell a March futures contract near 123′20 and to purchase a June 123.5 call option as insurance.  This trade offers limited risk and unlimited profit potential.

1-23 Clients were advised to lock in a profit on the short 5-year note futures contract near 123.  Depending on fill prices, this leg of the trade netted about $550 to $600 per contract before transaction costs.  We are still holding the long call that was purchased for protection.

1-23 – Clients were recommended to sell the March Bond 134 puts for about 29 ticks, or $453.

1-23 – Clients were advised to sell March Euro strangles.  It was recommended that those holding long 137 calls (as a flyer just in case of a short covering rally)  sell the 136.5/123 strangles for about 69 ticks or $862.50.  Traders without this long call, sold either the 138/122 strangle or the 127.50/122 strangle for about 44 ticks or $550.

1-25 – Clients were advised to buy back their short 134 puts for about 13 ticks prior to the Fed announcement.  Assuming an entry of 29 and exit of 13, the profit was $250 per contract  before commissions.

1-25 - It was recommended that our clients re-sell the 5-year note futures contract (bought back at a profit on Monday, see above) near 123′23.    In light of the profit on the first entry, this is now nearly a free trade (ignoring transaction costs and slippage), limited (almost no) risk and unlimited profit potential from here.

1-25 – Clients were advised to sell March strangles using the 137 puts and the 147 calls for about 47 ticks or $735.

1-26 – We recommended that clients offset their long March Euro 137 calls near 40 ticks to lock in a profit of about $250 per contract.  This leaves our short strangle unhedged.

1-30- Clients were advised to buy back their 137/147 bond strangles, for a small loss and replace the premium by selling the 140/149 strangles…to give the market a little bit of breathing room.

2-3 – Clients were advised to buy back their 147 calls to lock in a profit on that side of the trade.  Fills were reported near 7 ticks, depending on client entry this was a profit of anywhere from $230 to $312 per contract.

2-3 – Clients were recommended to buy their 140 puts back at a small loss ( about $230 per contract) and sell a 139/145 March strangle to replace the premium for about 1′04 ($1,062.50).

2-7- We advised our clients to buy back their short 122 and 123 puts in the Euro to lock in a profit on that leg of the trade.  We are still holding the short Euro call portion of the trade.  Profits on the 122 puts ranged from $212.50 to $250, most made about $300 on the 123 puts.

2-8 – Clients were advised to sell the March Euro 137 put for about 31 ticks to convert the naked calls  back into a strangle.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

http://www.facebook.com/decarleytradingcommoditybroker

http://twitter.com/carleygarner

http://www.linkedin.com/in/carleygarner

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.

We rarely recommend shorting a futures contract but… is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Click here to sign up for our next Free trading webinar…FOREX Trading Math!

Up to 50% off of Carley Garner’s books at BN.com, use promo code G2C3DJDYC9867 (mystery discount taken upon check out on one item)

Traders on hold, non-farm on tap

While scouring the headlines of business news websites and ran across a few that included the text “time to buy stocks”.  I always find it interesting that the equity markets are the only place where people look to buy things after they have become more expensive.  If you went to a hardware store and discovered that it cost 15% more than it did at the end of November, you would probably be apt to forgo the purchase and wait for a sale.  Yet, when stocks are on the rise investors clamor to chase them higher.  For buy and holders (with EXTREMELY) long time horizons, this might be a strategy that works out, but for those trading on leverage, timing is everything.

As contrarians, we tend to want to be the opposite of others are compelled to do.  Simply, we like the idea of buying things when they are cheap and selling them when they are expensive.  This is the type of thing that sounds great on paper, but isn’t always as easy to implement.  Nonetheless, current equity market pricing doesn’t seem to be a screaming deal.  Instead, buyers at this level run a probable risk of being forced to withstand the pain of a correction before being rewarded.

We’ll be the first to admit that the current rally has extended beyond our original expectations, but that doesn’t mean it is time to buy.  In fact, it is time for the bulls to be more cautious.  With the VIX now well under 20, the financial markets appear to be “due” for an increase in volatility and that would most likely mean corrective action in equities.  According to the Consensus Bullish Sentiment, about 71% of market participants are bullish; likewise, only 18.9% of those surveyed for the AAII Index are bearish.  Although markets can stay overbought and irrational longer than many of us can stay solvent, these sentiment readings are vigorously waiving red flags.

We don’t advocate jumping in front of the freight train, but it could be worthwhile to have some long lottery ticket puts under the market (NASDAQ puts are particularly cheap).  We like anything with a strike of 2350 or lower in the March options.  You might also want to consider an option spread in which risk is shifted away from immediate prices to provide room for error.   For instance,  you should be able to buy the March e-mini S&P 1300 put, sell the 1250 put and the 1370 call for a total cash outlay of about $100.  The risk is unlimited above 1370, but the trade profits as much as 50 handles $2500 if the futures price is below 1250 at expiration.

We could see a spike high before rolling over on tomorrow’s employment report.  Look for resistance in the S&P near 1333 and then again near 1339…these are the levels that bears might want to consider playing the downside from.  In the meantime, intraday support lies at 1315 (soft), 1307 and then again near 1299.

From a previous newsletter but you might find it interesting if you missed it.  Thus far the market isn’t cooperating…but we haven’t changed our mind:

We tend to be optimists, but we simply can’t get too excited about the recent equity rally.  The lack of back and filling on the way up, signals an unhealthy ascend.  In such scenarios, it often doesn’t take much to turn the tides dramatically.  This is especially true in an environment such as this where event risk is running rampant.  Also, earnings have been overall supportive and, therefore, have triggered some significant intraday rallies.  However, we wonder what will occur once earning season is behind us.  Will there be the same constant trickle of positivity that it will likely take to keep this boat moving in the same direction?  We have our doubts.

Futures and Options Trading Recommendations

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

Position Trade -

1-18 We recommended that clients sell the March S&P 1370 calls for about $9.00 in premium or $450 per mini contract.

In other Markets…

1-17 Clients were instructed to sell a March futures contract near 123′20 and to purchase a June 123.5 call option as insurance.  This trade offers limited risk and unlimited profit potential.

1-23 Clients were advised to lock in a profit on the short 5-year note futures contract near 123.  Depending on fill prices, this leg of the trade netted about $550 to $600 per contract before transaction costs.  We are still holding the long call that was purchased for protection.

1-23 – Clients were recommended to sell the March Bond 134 puts for about 29 ticks, or $453.

1-23 – Clients were advised to sell March Euro strangles.  It was recommended that those holding long 137 calls (as a flyer just in case of a short covering rally)  sell the 136.5/123 strangles for about 69 ticks or $862.50.  Traders without this long call, sold either the 138/122 strangle or the 127.50/122 strangle for about 44 ticks or $550.

1-25 – Clients were advised to buy back their short 134 puts for about 13 ticks prior to the Fed announcement.  Assuming an entry of 29 and exit of 13, the profit was $250 per contract  before commissions.

1-25 - It was recommended that our clients re-sell the 5-year note futures contract (bought back at a profit on Monday, see above) near 123′23.    In light of the profit on the first entry, this is now nearly a free trade (ignoring transaction costs and slippage), limited (almost no) risk and unlimited profit potential from here.

1-25 – Clients were advised to sell March strangles using the 137 puts and the 147 calls for about 47 ticks or $735.

1-26 – We recommended that clients offset their long March Euro 137 calls near 40 ticks to lock in a profit of about $250 per contract.  This leaves our short strangle unhedged.

1-30- Clients were advised to buy back their 137/147 bond strangles, for a small loss and replace the premium by selling the 140/149 strangles…to give the market a little bit of breathing room.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

http://www.facebook.com/decarleytradingcommoditybroker

http://twitter.com/carleygarner

http://www.linkedin.com/in/carleygarner

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.

Traders on hold, non-farm on tap is a post from the TradingMetro blog, DeCarley Trading Stock Index Report. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.