If you like this newsletter, you will love “Commodity Options”.  Look for great deals on Carley’s book through Amazon!

Weakness in Crude weights on stocks

Earnings jitters, a weaker than expected Michigan Sentiment index, and a lack of reasoning to be bullish allowed equities to creep lower for much of the day.  This marks the fourth consecutive week of losses for the major indices.  However, there is a bright side; the selling has been orderly.  That doesn’t mean that stocks won’t continue to decline.  In fact, we still think that the mid to low 800’s are likely in the September S&P at some point in the next few weeks.  However, it does suggest that investors are no longer in the same panicked state experienced in the fall of 2008.

While we have heard earnings reports from a few firms, the season will pick up pace next week.  We will hear from Johnson & Johnson, JPMorgan, Google and others.  Some fear that even numbers that beat expectations will fail to give stocks a lift.  Nonetheless, I believe that the fact that equities spent the four weeks prior to earnings grinding lower the “buy the rumor sell the fact” disappointment may already be accounted for.

On a side note, General Motors Corporation rose from the dead today.  Well…they have emerged from bankruptcy protection but many would likely argue that they still aren’t showing many signs of life.  CEO Fritz Henderson claims that the new GM will focus more on customers.  He also mentioned a partnership with eBay in which visitors to the site will be able to purchase vehicles online via their auctioning platform.  As a consumer, this doesn’t strike me as being a good idea…

While we can’t rule out a retest of the lows, or slightly new lows next week, our comments from yesterday are still valid:

We made a rather bold call yesterday, and today’s lack of follow through was a bit disappointing.  However, we are going to stick with our idea of a higher market…even if it means a retest of the recent lows before a longer lasting rally can ensue.  We could be wrong, but we are looking for just under 900 in the September S&P, 500 in the Russell and 1450 in the NASDAQ.

* 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

—————-

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.

If you like this newsletter, you will love “Commodity Options”.  Look for great deals on Carley’s book through Amazon!

Again…What a difference a day makes for Treasury trade

Treasuries erased yesterday’s losses; however, some analysts are questioning the fact that the rally happened on light volume and likely with end of the week position squaring as a contributing factor.

Bond and notes were moving higher in technical action ahead of the day’s major news event, the Michigan Sentiment and the rally continued in post-announcement trade.  The University of Michigan’s sample of the population only accounts for about 300 individuals in prominent financial standing.  Therefore the miss in expectations wasn’t taken lightly by bond traders.  The headline number was reported at 64.6 despite consensus estimates of a little over 70.  Keep in mind that the prior reading was 70.8.

Despite today’s sharp rally, we are wondering whether Treasuries can continue higher from these levels.  We still feel like there is plenty of room for this rally to move but also feel like things have progressed too far, too fast.  We will continue to look for weakness in the coming days.  However, the fate of Treasuries is heavily reliant upon the direction of crude oil.  Yes, I said it…crude oil.

The sharp decline in the energy markets has been made on the premise that speculators have lost faith in the economic recovery.  The unsettling pessimism in crude has, by osmosis, made its way into equities and in turn has been a major contributing factor to the Treasury rally.

I am not an energy expert, but my gut tells me that crude prices are dramatically oversold and should be approaching significant support areas.  A reversal, albeit temporary, will take the selling pressure off of equities and should trigger a Treasury correction.  We haven’t completely given up on our downside targets of about 117′14 in the long bond, 116 in the 10-year note and 114′25 in the 5-year note.

* 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.

Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.

June 26th – We recommended that our clients sell the August Bond 124 calls for 20

• We recommend buying this back for 6 or less.

• July 8 – We recommended re-selling or adding on to this position near 27 to 30 ticks.

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

July 2 – Clients were recommended to sell the 5-year note near 115′15 and purchase either a 116 call or a 115.50 call for insurance.  The trade offers limited risk with unlimited profit potential.

Eurodollar Futures Trading Recommendations

**There is unlimited risk in trading futures.

June 29 – Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance.  The calls were getting filled near 7 ticks, and the futures near 9933.  This makes the total risk on the trade at expiration $287.50 before commissions and fees.

———————

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.

There was a very interesting article in the Wall Street Journal this morning stating that Asset allocation has failed.

The article states ” The financial crisis has sent many financial advisers, academics and investors back to the drawing board”. What I do not understand is how can financial professionals still overlook commodity trading and trend following. In commodity trading virtually every type of product used in human existence is considered to be traded. When I mean traded.. I mean if there is a trend to be followed. It does not matter if it is soymeal or feeder cattle or gold or oil, these commodities trend. When there is a trend, trend following commodity traders put themselves in the position to profit. More so the correlation to stocks and bonds is small.

The article continues to state the statistics such as the S&P 500 lost 37%, the MSCI index of major markets in Europe, Asia and Australia lost 45%. The MSCI emerging-markets index fell 55%. Real-estate investment trusts declined 37%, high-yield bonds lost 26% and commodities fell 37%..

However there is a major issue with this fact! So what commodities fell 37%. Commodity traders go long and go short. This means very simply,no buy and hold, being flexible and no opinions. In commodity trading, commodity trading advisors can make money trading both sides of the market ( the long side…if prices go up..and the short side ..if prices go down). Using any common sense do prices only go one direction? Nope…just look at crude oil up to $147 and crashing down to $30 something and then back up again to $73. All along the way commodity trading advisors that adhere to trend following took out pieces of this trend and made money.They did not catch the bottom nor the top, but pieces of the trend. Maybe I have been doing this too long, but is so complicated to understand this. Why didn’t the so called experts predict the market crash in 2008? Trend following commodity trading advisors did not predict anything but rode the down trend in the stock market indicies and made HUGE PROFITS…fact..not fiction..

Again ..it is funny all the experts are calling for green shoots…the market crash is over.. world is wonderful. Yesterday..we took a trade shorting the SP 500. I have no idea if it will work or not…nor care… Not predicting anything but the trend as our model sees it has changed and might continue. We are risking less than 1% of our account. No opinion..no emotion.. time will tell if it works or not..

What surprised me even more was that the Wall Street Journal did not mention how well commodity trading advisors did last year in one of the worst situations since the Great Depression. It would have be prudent to inform asset allocators the merits of commodity trading and managed futures. Last year is not a rare example. Trend following commodity trading advisors that understand risk and trade with strong risk management & money management have been around for decades grinding out positive returns. Can you say that about your buy and hold mutual fund?

Read more of myinvestorsplace.com and learn the truth about commodity trading. It is not easy.. most people don’t get it as in all the allocators mentioned in the wall street journal. Profits are made over long periods of time with strong volatility at times.

Andrew Abraham
www.myinvestorsplace.com

Futures and commodity trading involve substantial risk.People can and do lose money trading.

EUR/US$

The dollar was unable to hold stronger than the 1.39 level against the Euro on Thursday and had a generally weaker tone as markets found it difficult to challenge resistance levels as currencies struggled to gain any momentum.

The German trade surplus was slightly higher than expected at  EUR10.3bn for May which provided some degree of relief over trends in exports with a marginal 0.3% increase for the month, although the impact was limited.

US initial jobless claims fell to 565,000 in the latest week from a revised 617,000 the previous week and this was the first week below the 600,000 level sine January. The data will tend to revive hopes that the economy is stabilising, although there will still be a high degree of uncertainty given the seasonal considerations.  The number of continuing claim also rose sharply which suggest that conditions are still very tough which will limit positive sentiment towards the economy.

Nevertheless, there was some degree of relief which helped improve risk conditions and this helped lessen underlying defensive dollar demand.

There were further cautious remarks on the dollar and potential for alternative reserve currencies from Chinese monetary officials and these pressures helped allow the Euro to challenge the 1.40 resistance area. Later in the US session, the Euro pushed to highs around technical resistance in the 1.4070 region before consolidating around 1.4035.

Yen

There were warnings over excessive yen moves from government and Finance Ministry officials during the Asian trading session on Thursday. There will also be an increasing threat of intervention to restrain the yen if there are further rapid gains with markets watching official comments very closely.

These fears will tend to limit yen buying and there was also an increase in importer yen selling as the Japanese currency strengthened.  As Asian markets looked to stabilise, the yen retreated towards the 93 level on Thursday.

The dollar pushed to a high around 93.60, but was unable to regain the key technical support levels broken on Wednesday and the US currency weakened back to below 93 and consolidated just below this level.

Sterling

Sterling found solid buying support above the 1.60 level against the US currency during Thursday and was able to secure a consistently stronger tone during the day.

The UK trade deficit narrowed to a three-year low in may with a goods deficit of GBP6.3bn which will provide some underlying Sterling support, although the impact was limited.

As expected, the Bank of England left interest rates on hold at 0.50% following the latest MPC policy meeting. The central bank also announced that the quantitative easing programme would be maintained at GBP125bn, contrary to some expectations that the amount of bond buying would be increased and this provided an immediate boost to Sterling.

The bank announced that there would be a review at the August meeting when the latest inflation report will be available. There will continue to be some expectations that the bank will increase the bond buying next month and this will tend to curb any significant improvement in sentiment.

Sterling was still able to maintain a firmer tone and pushed to a high near 1.6350 against the US dollar while there was also support beyond 0.86 against the Euro.

Swiss franc

The dollar was unable to make any headway on Thursday and weakened sharply in US trading with lows below the 1.08 level. There was significant volatility in the Euro/Swiss cross during the day. There was a jump to the 1.5170 level which triggered some speculation over fresh intervention by the Swiss National Bank, although there was no actual sign of the bank or the BIS in the market.

There will still be strong speculation of bank action if the franc continues to strengthen against the Euro and there will be the risk of additional market volatility.

Australian dollar

There was a significant Australian dollar recovery back to 0.7830 against the US currency on Thursday as risk appetite looked to stabilise. The labour-market data was close to expectations with the unemployment rate rising to 5.8% from 5.7% while employment fell around 21,000. Trends in risk appetite will still tend to dominate in the short term and the Australian dollar will gain further relief if there is a rebound in confidence and recovery in commodity prices.

The Australian currency resisted renewed losses during Thursday, but was unable to make much headway with significant selling pressure above the 0.7850 level.

Both the September Japanese Yen and September Euro are in the spotlight today. Both are being affected by the same news but both are moving in opposite directions versus the Dollar.

The central theme driving investors out of the Euro is risk aversion. Speculation that the global economic recovery is stalling is leading investors to shun higher priced assets and move to lower-yielding currencies. This speculation is encouraging the selling of the September Euro while triggering buying interest in the U.S. Dollar and the September Japanese Yen.

Heavy selling pressure in the global equity markets is leading investors to believe that an economic recovery in 2009 and early 2010 is highly unlikely. This is encouraging longer-term traders to reallocate money into the U.S. Dollar and eventually into the U.S. Treasury markets. Furthermore, Japanese Yen investors are pulling their money out of global equity markets and bringing their money back home despite receiving literally no return on capital. This move by the Japanese investor is a clear sign that return of capital is more important than return on capital at this time.

Declining economic data led by the news that China’s economy may not be as rosy as investors thought earlier in the year is leading to speculation that the global economic recovery is stalling and that investors will be more defensive in their investment strategy going forward.

Earlier in the week the International Monetary Fund said the global economy will shrink 1.4 percent this year before expanding 2.5 percent next year. While next year’s forecast seems a little too optimistic, traders are focusing on the current economic environment and reacting as if the 1.4 percent contraction this year may be difficult to obtain. The surge to the upside in the September Japanese Yen this week is a strong indication that a defensive strategy is the best strategy.

Besides the faltering global economic picture, Euro traders are feeling pressure from reports that the International Monetary Fund is actively discussing aid programs with distressed Eastern European nations. The problem with toxic assets in the Eastern European banks has been swept aside since February but has now risen to the spotlight again. With these problems lingering investors have become more risk averse toward the Euro. This is leading to selling pressure on the Euro as traders are seeking safety in the U.S. Dollar and the Japanese Yen.

The issue developing in Europe is whether the IMF will ask the European Central Bank to help provide aid to the distressed Eastern European banks and governments. This is helping to put pressure on the Euro. This news should not come as a surprise to the ECB which can be accused of dodging the toxic asset problem for months. Its general feeling is that these Eastern European countries created their own problems by trying to expand too aggressively and taking on more debt than they could handle.

The Japanese government is also becoming concerned about the rapid rise in the Japanese Yen. Despite being the beneficiary of this risk-averse driven environment, the Japanese do not want to see the Yen appreciate too rapidly. Concerns are being raised that a higher priced Yen will hurt both exports and corporate profits. This may lead to speculation that the Bank of Japan may once again begin talking about an intervention.

In summary, the global currency markets are currently in the midst of a risk-averse environment. As long as the global economy continues to show signs of faltering and equity markets continue to retreat, look for investors to shun the possible appreciation in higher yielding currencies like the Euro for the safety of the lower-yielding currencies like the U.S. Dollar and the Japanese Yen.
Shifting gears ……..

All eyes are on the U.S. Treasury markets at this time. Despite a two day setback following the completion of a 50% retracement of the entire March to June decline, money is still leaving the equity markets and looking for a place to go. This is leading to speculation that there will be another flight-to-safety rally in the September Treasury Bonds and Treasury Notes. Start to watch for new support to be established in the Treasuries especially if equity markets get high hard today.

The equity markets seemed poised to move lower. Each rally we have seen this week have been met with selling pressure. Better than expected earnings from Alcoa earlier in the week could not jump start the Dow which is the weakest of the three major indices. Talk that there will be less spending on technology is beginning to take its toll on the stronger NASDAQ market. In between is the September E-mini S&P 500 market which is in a position to take out a key bottom at 872.00. The bigger picture is beginning to indicate that this market is well on its way to correcting down to at least 810.00.

Please do not hesitate to contact us at 1-800-971-2440, with any questions.

DISCLAIMER: Futures and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication by or from Brewer Futures Group, LLC, Brewer Investment Group, LLC, or their subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

The main number of the day will be consumer confidence.

The trade deficit narrowed as a drop in consumer demand results in a drop in imports.

Overnight, it’s back to Monday’s theme of rising unemployment counterbalances inflationary pressures and risk is averted at all costs. So, the dollar is strong, oil lower, stocks lower and the Yen looks at the 109 level again.

Current views, speculations and suggestions
(good till close of business today)

Sept Yen: pos with support at 106.80 and res at 109
Sept Swiss: pos with support at 91.15
Sept EC: neg with res at 141
Sept Canadian: neg with res at 86.60
Sept BP:  neg with res at 164.80
Sept ES: pos with support at 868.50
Sept NQ: neg with res at 1421
Sept Mini Dow: neg with res at 8185
Aug Gold: positive with daily support of 901
Sept Silver: neg with res at 13.02
Sept Copper: neg with res at 226
Aug crude: neg with res at 61.50
Nov Soybeans: neg with res at 9.24
Sept Wheat: potential reversal day
Sept Ten Year: pos with support at 117.17

**************

International Markets

Sept Bund:  pos with support at 121.70
Sept Dax: neg with res at 4666
NKD: neg and below daily support

***********

N.B.: if you initiate a trade using ANY of these numbers use a STOP at least equivalent to 2 ½%. Repeat: use Stops.  Don’t think about using Stops. Use Stops. Some find it appropriate to look at the margin requirement and use that as a stop or if it’s a steep initial requirement, use half.

********************************************

Futures trading entails considerable risk and is not for everyone. An account can lose more than its initial investment. Stops are not necessarily filled at the stop level. Past performance is not a guarantee of future results.

If you like this newsletter, you will love “Commodity Options”.  Look for great deals on Carley’s book through Amazon!

What a difference a day makes for Treasury trade

After spending the majority of yesterday’s trade running but stops to squeeze the shorts, the drying quickly became non-existent.  The bearish pressure began in overnight trade and continued throughout the session.  Not even a decent 30-year bond auction and Fed Treasury buying was enough to deter the price massacre.

The Fed bought bonds with maturities in 2010 and 2011 in the amount of $2.999 billion.  However, this was a small percentage of the $17.094 billion that dealers were trying to unload.  Meanwhile, the Treasury auctioned  $11 billion in 30-year bonds which drew a yield of 4.303% and a bid-to-cover of 2.36.  Once again, foreign investors continue to show strong interest in U.S. backed securities, the indirect take was about 50%.

Our expectations for a market reversal turned out to be accurate, in yesterday’s newsletter we mentioned that we were looking for a pullback in bonds and notes and today wasn’t a disappointment.  Whether we see some follow through from here will depend on the direction of equities.

Bonds and notes are a bit oversold, but it seems as though the next logical target in the 30-year bond will be 117′14, but it may be a buy at such levels…we will have to wait and see what things look like.  We think that the note will trade lower to the 116 area before buying interest comes back in.  Our downside target in the 5-year note is 114′25 but we will need stocks to continue higher for this to be the case.

Sorry so short!

* 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.

Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.

June 26th – We recommended that our clients sell the August Bond 124 calls for 20

• We recommend buying this back for 6 or less.

• July 8 – We recommended re-selling or adding on to this position near 27 to 30 ticks.

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

July 2 – Clients were recommended to sell the 5-year note near 115′15 and purchase either a 116 call or a 115.50 call for insurance.  The trade offers limited risk with unlimited profit potential.

Eurodollar Futures Trading Recommendations

**There is unlimited risk in trading futures.

June 29 – Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance.  The calls were getting filled near 7 ticks, and the futures near 9933.  This makes the total risk on the trade at expiration $287.50 before commissions and fees.

—————-

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.

If you like this newsletter, you will love “Commodity Options”.  Look for great deals on Carley’s book through Amazon!

End of week rally?

Stock index futures opened up Thursday’s session (on Wednesday night) slightly bid as the market began to anticipate the possibility of a “not so bad” earnings season.  So far, the trend seems to be pointing toward better than expected earnings numbers but it makes one wonder if it is simply because expectations are so low.

Adding a positive tone to the session was an early morning report on jobless claims.  According to the Labor Department, the number of initial claims for unemployment fell to 565,000.  Although still horrid, this was the lowest reading since January and been most analyst expectations.  On the other hand, continuing claims is not at a record high.  In addition, it is said that the holiday weekend impacted the data making it a little less credible than it would otherwise be.

Some of our contacts on the trading floor are pointing out the correlation between stocks and commodities.  In fact mid-day the feeling was “as goes crude, so goes the S&P”.  I am not an expert in energy market fundamentals, but I do keep up with the market.  Also, it is obvious on the chart that crude oil is severely oversold.   If I am right about my assumption that crude oil will find a bounce going into late week, it seems likely to look for similar action in equities.

We made a rather bold call yesterday, and today’s lack of follow through was a bit disappointing.  However, we are going to stick with our idea of a higher market…even if it means a retest of the recent lows before a longer lasting rally can ensue.  We could be wrong, but we are looking for just under 900 in the September S&P, 500 in the Russell and 1450 in the NASDAQ.

* 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 -

Flat

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

—————-

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.

7 / 9 / 2009

(Published Since 1996)

We were shorting early strength, then taking cover and getting long on the first decent pullback. The ES popped up on the open and reversed from 882.25, just under the 882.75-883.50 resistance zone. The ES dropped 6.50 points to 875.75 before a stall/ reversal came from. After that, the market chopped its way higher until there were 90 minutes left in stock trading. Then off of the 884.50 high the ES made a little 1-2-3 top and fell to 876.75 before bouncing. The bounce didn’t stick and the ES fell from 880.75 to retest 876.75 and then firmed into the close.

The market is still short term oversold, and it did try to base out for another bounce at Thursday’s close. However, it doesn’t look like there is a whole lot of upside potential from here just yet. If the market slips under the initial support areas and cannot quickly reverse back to the upside, then a drop back to the 872 area would be the next support area that would need to hold to avoid a bad end to the week.

On the other side of the coin, if the late Thursday lows were little double bottoms that are setting up a rally, they will not be broken and a rally will start early. If that occurs, then beware that a rally will likely fail and reverse as soon as the upside fizzles out. A turn from a resistance area would set up a good short if that stall/reversal occurs. If the market has a good day, the ES could revisit the 888.25-889.00 area and possibly make it to the 892.50-893.00 area before the move is reversed.

So it looks like the market will be “okay” as long as the initial support holds, or is quickly reversed if broken. If the market opens lower, but turns up from initial support, it should set up a trade on the long side. If the market rallies early, beware that there are plenty of “trapped” longs that would welcome good strength to sell into.

Good Trading,

Mike Reed

Copyright (c) 2009 by TradeStalker.com, Ft Wayne, IN.
TradeStalker Updates may not be redistributed without permission.

www.TradeStalker.com
PO Box 9783, Ft Wayne, IN, 46899

Disclaimer

The financial markets are risky. Investing is risky.
Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational purposes and is not a solicitation, or an offer to buy or sell any security. Opinions are based on historical research and data believed reliable, but there is no guarantee that future results will be profitable.

We are not advocating trading futures. The prices and contracts in the TradeStalker Updates specify a manner in which you could trade. We occasionally mention the SP500 and Nasdaq futures markets because it is extremely liquid and tends to lead the other markets. This is not an endorsement or recommendation of the SP500 and Nasdaq futures markets. The risk of loss in futures is substantial. You can lose more than your original investment. We are not Registered Investment Advisors or Commodity Trading Advisors.