September 15th, 2009

See DeCarley Trading in this September issue of Equities Magazine!

Good data lures more buying

Despite what appears to be a tired equity rally, good economic news continues to fuel the upside.  Better than expected retail sales and optimistic comments from Fed Chair Ben Bernanke enabled another moderate extension of the rally. However, it seems as though we are approaching “make or break” time in the stock indices.

Retail sales saw the largest jump in three years and the New York region manufacturing index rose to its best level in 2007.  Meanwhile, Bernanke announced that the worst recession since the 1930’s has “likely ended”.  The bulls have become slaves to the positive data in the face what seems to be overall bearish sentiment.  Ryan Larson, senior equity trader at Voyageur Asset management commented, “You want to say that the market is a little bit tired after the run we’ve had yet we continue to grind higher.”

The bearish undertone can be seen in the option pricing.  Long option players seem to be buying deep out-of-the-money puts in expectation (or maybe hope) for a large correction.  The skew in put premium is somewhat of a permanent factor when it comes to the stock indices, but it is even more obvious in today’s climate.

The overwhelmingly  bearish in the option market doesn’t necessarily make me feel confident in an immediate pullback.  After all, most speculators are wrong.  Nonetheless,  I will continue to lean cautiously lower from these levels as we are at or near the resistance areas that we have been noting.  Here are yesterday’s numbers:

We like the short side of the S&P from about 1055 and the downside of the Russell from just over 600.  The NASDAQ seems a bit toppy near 1688 but I can’t rule out a last ditch move to 1720ish.

* 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 are based the full sized S&P unless otherwise noted.

S&P 500 Futures and Options Trading Recommendations

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

Position Trade -

September 10 – Our clients were recommended to sell calls into the rally, most sold the 1095 or 1090 strikes in the October S&P options for $6.50 to $6.00 respectively.

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 -

September 10 – Sell 1 mini NASDAQ at 1683ish

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Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

www.CarleyGarnerTrading.com

www.DeCarleyTrading.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.