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Carley Garner
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Senior Market Analyst and Broker, Stocks & Commodities Magazine Columnist and Author Carley Garner is an experienced futures and options broker and co-owner of DeCarley Trading in Las Vegas, Nevada. She is also the author of "Currency Trading in the FOREX and Futures Markets",... More
My company:
DeCarley Trading
My blog:
The Stock Index Report
My book:
A Trader's First Book on Commodities
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  • Stock Index Futures down, but maybe not out (yet)
    Carley will be speaking at the Trader's Expo in Las Vegas, entry is complimentary with expo registration.  Click here to sign up!
     

    November 11th, 2010


    Stock Index Futures down, but maybe not out (yet)
     
     
    According to sources, insider selling is near al all time high.  It was reported that $4.5 billion worth of shares were sold by top executives last week, and $16 billion over the last 60 days.  This is the most since October 2007 (near the market highs).  These are stats that simply cannot be ignored; however, timing is everything and the jury is still out as to whether the highs of this move are in. 
     
    Additionally, there is chatter of investor sentiment being "too bullish" and we agree.  When the public grows complacent in the markets and begin chasing performance, the odds favor a rude awakening.  Although the market doesn't issue a memo when the reversal occurs, this doesn't feel like an absolute top (yet).  The selling seems to be too tame, and with option expiration looming we doubt the market would be willing to give option traders the gift of a sell off.  From what we understand, there are several short call traders caught on the wrong side of this move and they could be looking to buy futures to cover their exposure. 
     
    Despite retail investors being overly bullish, retail traders still seem to be overly bearish...and when most are looking for one thing to happen, the other usually does.  We aren't exited about market fundamentals, but the market "feels" firm and a weekly chart suggests 1240 to 1250 in the December S&P could be seen before a reversal can occur.  For now, we are going to go on this premise.  Besides, the POMO program picks back up tomorrow...
     
    We can't rule out moderately new lows, support lies at 1195 and then again near 1186 but we feel like any large dip in tomorrow's trade could be an opportunity for the bulls.  On the way up, first resistance could be found near 1227 in the December S&P, 2210 in the NASDAQ and 744ish in the Russell. 
     
    If you purchased ES puts as a lottery ticket play, you might want to consider selling them at a small profit should the selling continue into early trade tomorrow.
     
    * 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 factored into current prices, any references to such does not indicate future market action.
     
    Please note: An e-mini S&P and e-mini NASDAQ chart are used because they 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.
     
    Futures and Options Trading Recommendations
    **There is unlimited risk in naked option selling and futures trading
     
    Position Trade -
     
    October 8 - Puts are cheap! We like buying the December 1150's near $8, or lower strikes.
     
     
     
    Carley Garner
    Senior Analyst / Commodity Broker
    DeCarley Trading
    cgarner@DeCarleyTrading.com
    1-866-790-TRADE
    Local : 702-947-0701
     
     
    *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.
     
    Nov 11 3:55 PM | Link | Comment!
  • New highs on Monday for stock index futures, but then what?
    Carley will be speaking at the Trader's Expo in Las Vegas, entry is complimentary with expo registration.  Click here to sign up!
     
    New highs on Monday for stock index futures, but then what?
     
    November 4th, 2010
     
    Whether the current rally is justified, artificial, or any other adjective the nay-sayers have thrown at it, it is for REAL.  We aren't surprise to see the S&P at current levels, but we are surprised that it has made it here without a correction...or even a pullback.  In this newsletter we have been claiming any pullback would be a buying opportunity, but it appears as though the patient longs were simply left out of this one as most (including us) thought that a deeper dip would be likely before seeing prices well into the 1200's. 
     
    Monday is the Fed's last scheduled POMO (Permanent Open Market Operations) day and it is also (of course) a Monday, which have seen buying interest more often than not.  The large short interest among large traders could also start to come into play as they are likely starting to feel the heat and might look to throw in the towel and cover.  Also, the monthly charts are pointing toward 1240ish, and the mid 1230's marks the 62% retracement of the entire plunge lower.  With all of this in mind, it seems as though stock index futures are setting up for new highs on Monday. 
     
    On the other hand, the market has grown tremendously overbought and remains vulnerable.  Stock index futures are now trading above the April highs, and I doubt any of us have forgotten about the May 6th flash crash and the subsequent selling pressure across the board. 
     
    If the short squeeze continues, as we think it might, look for the S&P to trade in the mid to low 1230's on Monday, the NASDAQ could see 2210ish and the Russell might be going for its April highs in the mid-740's.  However, it will be difficult for the market to move much above these technical areas in the short-term.
     
    Puts are getting cheap!  The December 1150 puts settled near $8 and might be trading near $6.  This option was trading in the high $20's on October 27th!  If you want to get closer to the action, it might be possible to buy the 1170's for about $9. 
     
    Don't forget the definition of a bull market, "A random market movement causing an investor to mistake himself for a financial genius."
     
     
     
    * 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 factored into current prices, any references to such does not indicate future market action.
     
    Please note: An e-mini S&P and e-mini NASDAQ chart are used because they 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.
     
    Futures and Options Trading Recommendations
    **There is unlimited risk in naked option selling and futures trading
     
    Position Trade -
     
     Flat
     
     
     
    Carley Garner
    Senior Analyst / Commodity Broker
    DeCarley Trading
    cgarner@DeCarleyTrading.com
    1-866-790-TRADE
    Local : 702-947-0701
     
     

     
    *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.
     
     
    Nov 05 10:45 PM | Link | Comment!
  • Good employment report, caps Treasury futures rally
    Carley will be speaking at the Trader's Expo in Las Vegas, entry is complimentary with expo registration.  Click here to sign up!
     

    November 4th, 2010

     
    Good employment report, caps Treasury futures rally
     
    It has  been an exciting week in Treasuries, yet the December 30-year bond futures settled near unchanged on the week. In fact, the long bond hasn't moved much in three weeks despite somewhat dramatic re-pricing in the 5 and 10-year note futures. 
     
    A reading of 151,000 in the non-farm payrolls came in at double the expectations, yet the unemployment rate didn't budge from 9.6%.  However, pending home sales represented the bullish case; they were reported to be a draw of 1.8%.
     
    Judging by today's action, the primary driving force was likely position squaring ahead of the weekend and in the aftermath of three of the largest fundamental events of the year (Fed, election, employment report).  Additionally, the market is facing the last of the scheduled POMO on Monday (the new schedule will be released on November 10th) and a 10 year and 30 year Treasury auction.  The 30-year faces a challenge in that the Fed will no longer be putting a substantial amount of money into this space, without support from the Fed's POMO program it will be necessary for the long bond to muster up some buying interest from "actual" investors. 
     
    The disconnect between the long and short end of the curve has us a little gun shy in making bold calls in the long bond and waiting for early next week to re-assess the situation.
     
    In the last newsletter we stated: "The 10-year note on the other hand, propped by Fed purchases, could grind higher to the 128 area. At this point we might consider being a bear. "  The late Thursday, early Friday highs were enough to meet this objective and leaves us slightly (and cautiously) leaning lower.  That said, it feels like the mid-128's could be seen.  Patient bears should wait for this price. 
     
    * 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 factored into current prices, any references to such does not indicate future market action.
    Treasury Bond and Note Option and Futures Trading Recommendations
    **There is unlimited risk in naked option selling.
     
    October 8 - Clients were advised to purchase the December 121.5 call and sell the futures.  The total (limited) risk on the combo is ranges from $500 to $600 depending on fills.  This trade has 50 days to expiration and opens the door for theoretically unlimited profit potential. 
    ·         On October 27th, clients were commended to buy back their 5-year note futures, fills were reported near 120'28.5 - 130'30.5ish.  On October 29th we recommended to offset the long 5-year note calls near 34 (those trading multiples peeled off on the previous day at a moderately lower price)
    ·         Profits varied based on timing of entry and exit but in most cases was similar to the amount risked on the trade.
     
    **October 26 - We recommended our clients sell the December bond 125 puts for about 27.  Fills were coming in at 26 and 27. 
     
    November 2- Clients were recommended to offset the 125 puts near 12 to lock in a profit ahead of the Fed announcement.
     
    Carley Garner
    Senior Analyst / Commodity Broker
    DeCarley Trading
    cgarner@DeCarleyTrading.com
    1-866-790-TRADE
    Local : 702-947-0701
     
     
    *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.
     
    Nov 05 10:38 PM | Link | Comment!
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