Stocks flat-line but make history

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Fri, Mar 12 2010, 22:25 GMT
by Carley Garner

DeCarley Trading | View company’s profile

The day’s economic data was mixed, the volume was light and the market was directionless. According to our sources on the CME floor, most of the locals had left for the day by mid-session and this made for extremely quiet market conditions.

The S&P has never settled higher 11 days in a row (cash or futures) but came close to doing so today. The cash S&P 500 index settled down a quarter, just under positive territory. The June futures contract traded sideways into the close but eventually settled in the green. It wasn’t glamorous (flossy, flossy) but it was 11 consecutive positive closes for the first time.

There was some early morning excitement over a stronger than expected retail sales report, but the rally quickly faded. A disappointing Michigan consumer sentiment reading prevented the market from recovering.

Where will the market go from here? We wish we knew. All we can say is that the odds are in favor of a pullback and what goes up usually goes down faster. Unfortunately, it is nearly impossible to pinpoint the price at which the short-covering will have run its course.

There continues to be a large amount of put (and put spread) buying in the indices as well as call (and call spread) buying in the VIX. This suggests that investors are looking to insure their portfolios and more likely speculators are looking for a pullback. However, this has been the case for over a week now and the market has relentlessly rallied anyway.

If you are a bear in this market, you had better be sure to get good entry prices and this means selling on rallies rather than selling weakness. Going into Monday we see resistance in the S&P near 1153 and then again near 1163, similar resistance in the NASDAQ will be 1940 and near 683 in the Russell.

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

**Seasonality is already 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 -

February 19 – Our clients were advised to sell the April 1165 calls for about $7.50, fills were coming in near $7.25 and a handful at $7.50.

March 5 – Clients with ample margin and guts, were recommended to add to this position by selling the 1165 calls for $9.50.

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

Position Trade -

March 9 – Sell 1 June mini Russell @ 682 OB

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 -

March 3 – Sell 1 e-mini NASDAQ at 1878 or better

Published on Fri, Mar 12 2010, 22:34 GMT