October 8th/11th, 2010
The equity markets have entered into a mindset that bad economic news is actually good news. The argument for this lies in the fact that weak numbers force the U.S. currency even lower but even more important; it paves the way for QE2. After all, the worse the economy appears the quicker the Fed will be to react...and that is what this rally has been all about anyway.
Coming into the employment report, the market wasn't asking for much and it got even less. However, the knee-jerk selling was short and sweet; by the end of the session the bulls had, once again, come out on top.
It is getting harder and harder for traders to fight the tape and in a world in which bad news is good news...is good news bad news? If you want to play this market from the short side, be sure to do it on rallies to resistance areas, sloppy sells aren't going to work in this environment.
It is clearly the tail wagging the dog in the financial markets...as goes the dollar, so goes EVERYTHING else (in the opposite direction). This is a pattern that won't easily be broken but hopefully the earnings season will attract some of the market's attention.
Going into the close, the December S&P futures failed to break above the 1165 resistance we mentioned in yesterday's report. The next significant resistance will be 1175, but some are noting 1168 as a trouble area for the bulls. For now, we are holding a sell on rallies mentality, but caution against chasing the market lower. This hasn't worked in weeks!
Resistance in the Russell lies at 695 and in the NASDAQ at 2050.
* 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 6 - Clients were advised to sell the November S&P 1215 calls for about $8, fills ranged from $7.50 to $8.00.
Senior Analyst / Commodity Broker
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.
Disclosure: No personal positions