October 22nd, 2009

Carley will be speaking at a Trader’s Library event in Las Vegas during the Trader’s Expo, check it out: http://www.traderslibrary.com/conferences/tlforum2009vegas/index.html

Another head fake

Yesterday’s late day selling and this morning’s early morning follow through turned out to be nothing more but another buying opportunity for the bulls.  The pattern is consistent but traders still appear to have a hard time swallowing the optimistic pill.

The day’s news was mixed and so was the earnings, but the market made its way higher on what seemed to be “mulligan” trade.  In the last 30 minutes of the cash market open, the S&P dipped sharply and unexpectedly on news of a Wells Fargo downgrade.  Today was the markets way of eliminating the overreaction and enabling a “do over”.

In late day trade, there was news of a substantial number of call spreads sold in the SPX.  This infers that a large player is either bearish the market despite the afternoon bounce or was long the spread and has given up on the prospects of a strong rally in the coming weeks.

Coming into the session, it seemed as though our downside target of 1062 in the S&P was on the horizon.  However, after reaching a low near 1070 the market turned on a dime.  It is tough to say whether 1070 was “it” for the correction and we are headed higher (if so, look for 1108) or if the day’s gains were simply technical shake out.  For now, we will refrain from making any predictions until we can get a better handle on the price action.

In the meantime, significant support in the S&P lies at 1063 and resistance is near 1108.  In the NASDAQ, look for 1720 to be major support and 1777 as resistance.  Similar levels in the Russell can be found at 583 and 627.

* 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 -

October 14 – Our clients were recommended to sell calls against today’s equity market strength.  Fills on the November 1135’s were coming in near 7.50 and some sold the 1040’s at 7.25.  We feel as though the market might move a little higher in the near-term but like the prospects over the next week or two.

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 -

Flat

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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.