July 13th, 2009

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Stable crude, stocks rally

We have been pointing out the correlation between equities and crude oil and have mentioned that stocks will need a turnaround in the crude pit in order to get a rally going.  However, as it turns out…all that the market needed was for crude prices to stop going down.  With the August crude contract trading near unchanged for much of the day, a green light was given to buy equities ahead of the bulk of the earnings season.

It seems as though much of the day’s buying was short covering and/or buy stop running.  Accordingly, it doesn’t necessarily mean that investors are expecting positive earnings, but what it does indicate is that the bears are a bit concerned over the possibility of less than horrific earnings.

Most stock market journalists and commentators are attributing the day’s gains to comments made by market analyst Meredith Whitney who claimed that Bank of America shares are inexpensive based on the firm’s assets.  Whitney is highly respected by the bears in that she has offered one of the more pessimistic, and later we discovered accurate, assessments of the banking business.  Accordingly, those short bank shares scrambled to exit their positions by buying the shares back.  The buying frenzy bled into other sectors and light volume allowed the rally to extend beyond what many thought possible based on last week’s trade.

Nonetheless, our predictions were surprisingly accurate…sometimes it is better to be lucky than good!  We have reached our target in the S&P of just under 900 and nearly reached our target in the Russell of 500 and 1450 in the NASDAQ.  From here we feel like moderately higher prices may be in store for tomorrow as the short squeeze continues but we can’t help but feel as though the buying will dry up, at least for now.

* 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 -

July 7th- We recommended to sell the August S&P 760 puts for $6.50 or better

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 -

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.