 |
Dow/Nasdaq Report
by: Carley Garner
|
|
|
May 7th, 2008
**Be sure to see my monthly column “Futures for You” in Stocks and Commodities!!!
The major stock indices have experienced several large ranging days in recent trade, but the progress hasn’t been too impressive. In fact, today’s losses wiped away much of the Friday/Monday rally. Lower equities overseas and a relentless rally in crude oil both worked against the Dow and Nasdaq in today’s trade.
The June futures peaked out at nearly $124 per barrel following an announcement yesterday that Goldman Sachs is predicting oil prices as high as $200. The consumer is considered to be the life-line of the economy, if discretionary spending is reallocated to transportation and food we could see a large weight handing around the neck of theU.S. economy.
All is not lost for the Dow and the Nasdaq despite today’s dismal performance. The market has arguably moved too hastily from the March lows and needs to digest gains. With that said, I see support near 12,768 and at 12,349. Assuming that 12,768 holds we could see a rally to 13,187. Although it isn’t appearent by looking at today’s session, the market has been in an uptrend since the middle of March. While today was a large down day, it wasn’t enough to break technical barriers.
Believe it or not, I think that the market is leaning higher. Until the up-trend channel is broken it seem logical to ride the wave rather than fight it.
I am recommending that my clients remain flat. If you were holding the short 133 position recommended below, you should have bought this option back for a nice profit. Yesterday this option could have been bought back for 15 ticks as recommended ($75 in the mini and $150 in the full sized). If you would like to trade options using this strategy, please contact me.
Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.
Dow Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade –
April 18th – My clients were advised to sell May Dow 133 calls for 50 or better (this can be done with the mini options or the full sized).
April 29th – Place an order to buy this back for 15 or better
You should have been filled at 15 for a profit of 35 points before considering transaction costs!!
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 Recommendation
**There is unlimited risk in naked option selling and futures trading
Position Trade – Flat
No representation is being made that any
account will or is likely to achieve profits
or losses similar to those shown. In fact,
there are frequently sharp differences
between hypothetical performance results and
actual results subsequently achieved by any
particular trading program. One of the
limitations of hypothetical performance
results is that they are generally prepared
with the benefit of hindsight. In addition,
hypothetical trading does not involve risk
and no hypothetical trading record can
completely account for the impact of
financial risk in actual trading. For
example, the ability to withstand losses or
to adhere to a particular trading program in
spite of trading losses are material points
which can also adversely affect actual
trading results. There are numerous other
factors relating to the markets in general
or to the implementation of any specific
trading program, which cannot be fully
accounted for in the preparation of
hypothetical performance, results and all of
which can adversely affect actual trading
results.
There is a substantial risk of loss in
trading futures and options.
PLACING CONTINGENT ORDERS SUCH AS "STOP
LOSS" OR "STOP LIMIT" ORDERS WILL NOT
NECESSARILY LIMIT YOUR LOSSES TO THE
INTENDED AMOUNTS. SINCE MARKET CONDITIONS
MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH
ORDERS.
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.
Alaron Trading Corp. its officers and
directors may in the normal course of
business have positions, which may or may
not agree with the opinions expressed in
this report. 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.
|
|
|
|
|