October 13th, 2009

“Your book (Commodity Options) just paid for itself 358 times today…I’d call that a good investment any day!!!  I’m buying 2 next time”~Jonas Miller.  (*Past performance isn’t indicative of future results). Pick up a copy of “Commodity Options” at any major bookstore or online outlet!

Pause, but the rally might not be over

Today was one of the slowest, in terms of volume and action, trading days of the year.  Investors are clearly on hold ahead of the onslaught of earnings and economic data.

The earnings bar seems to have been set extremely low, and this might keep the market in good spirits for much of the season.  However, we worry that while earnings might hold prices in the near-term but once they are out of the picture the market could struggle.

Don’t forget that the declining dollar, although an overall negative, does offer something positive.  Multinational corporations will likely be helped by the falling dollar due to the fact that a large chunk of business is conducted overseas.

Many traders remain skeptical of this rally but that is probably the exact reason that we will continue to rise.  The S&P is up over 60% from the March lows, but that doesn’t mean that we can see 1100 in the coming week or two.  According to Bank of America/Merrill Lynch global Research, investors are below the normal 60% equity allocation…simply put, not all of the buyers are in.  Additionally, investor bullish sentiment is being measured at 35.1%, which also points higher.

On the other hand, short trading interest on the NYSE and the NASDAQ are declining and this signals that the bears are giving up.

What does this mean?  Last week we pointed out resistance in the S&P near 1075 and so far it has held.  However, we are bearish but we aren’t convinced that the market is ready to go down from here.  Look for another run into the mid to high 1080’s and possibly our next resistance area near 1095.  Should this happen, we believe that it will be a great place to be a bear.

We are still looking for 1075 in the NASDQ and 625 in the Russell as preliminary objectives.  However, there seems to be a good chance that the Russell will reach 635 or so before the rally fizzles.

* 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 -

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Russell Futures and Options Trading Recommendations

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

Position Trade -

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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 -

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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.