Security Traders

After the bell on Tuesday, traders digested another round of positive earnings; even more importantly, impressive revenues. However, the excitement quickly faded and by the time the cash market opened the bias was to the downside in broad market indices.

iPhone sales helped Apple to blow by analysts' earnings estimates and Yahoo reported an EPS of about double expectations. Likewise, Morgan Stanley announced that the company earned $1.03 per share in the first quarter.

As good as the earnings news has been, it wasn't enough to keep the unrelenting rally moving higher. Some analysts warned that investors are growing to expect gangbuster numbers and this alone could be an antagonist against future gains.

Banking stocks tumbled on news of strengthening momentum of a proposed tax on banks intended to raise $90 billion over the next decade. President Obama introduced the idea in January but it appears as though the odds favor it being added to a bill overhauling financial regulation.

From a technical standpoint, today's failure of the S&P to make new highs is relatively bearish. On the other hand, I don't trust this market. We side with the bear camp, be sure to get good entry prices or it could be a painful venture.

Resistance in the S&P lies at 1216ish, in the NASDAQ it will be 2048, and 730 in the Russell.

Don't forget about our webinar with SFO Magazine on April 29th, you can sign up for free on our website (below).

* 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 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

S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading

Position Trade -

February 19 - Our clients were advised to sell the April 1165 calls for about $7.50, fills were coming in near $7.25 and a handful at $7.50.

March 5 - Clients with ample margin and guts, were recommended to add to this position by selling the 1165 calls for $9.50.

March16 - Clients were advised to roll half of their short call position into the April 1185/1100 strangle.

March 17 - Clients were advised to roll the remaining 1165 calls into the May 1190 calls to give the market some breathing room.

March 31 - Clients were advised to buy back the short 1100 puts for $1.75 in premium

April 1 - Clients were recommended to roll any existing April 1185 calls into the May 1215 calls for a small credit (about .50). This moves the risk away from the market and lowers the delta considerably.

April 13 - Clients were recommended to sell the May 1135 puts for $8. This move lowers the overall delta of the trade while keeping the position in the May options in hopes of favorable time value erosion. It is only a Band-Aid, but will temporarily stop the bleeding.

April 15 - Clients were recommended to buy back the May 1190 calls, and in some cases the 1200 calls and sell the May 1220/1150 call spread.

Russell Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

March 9 - Sell 1 June mini Russell @ 682 OB

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 -

March 3 - Sell 1 e-mini NASDAQ at 1878 or better

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.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.

The drawback of writing a newsletter with relatively strong opinions in market direction is the substantial risk of being wrong...or in this case just early (we think). Unfortunately, our crystal ball was a bit cloudy earlier this week. We were right about the rally, but didn't anticipate it moving quite this far.

Our 1125 objective in the S&P has come and gone and while we still feel like the market will see a reversal sooner rather than later, we cannot overlook the possibility of a retest of the January highs. This would put the S&P just under 1150...or even moderately higher. The Russell on the other hand, has already surpassed its recent highs and is now trading in territory not seen since late 2008.

There are very valid arguments for the bear camp that are being overlooked (or over run) by this rally, but sometimes fundamentals simply don't matter. The market is panicked...shorts are panicking and being squeezed out and the last of the sidelined cash is panicking to get in.

The employment numbers weren't positive, but their implications were. They jobs picture is bad enough to prevent Fed rate hikes but it isn't bad enough for investors to recall the possibility of a double dip recession. Nonetheless, some analysts are vocalizing the opposite. "Eight months into the much-touted recovery, the economy should be adding jobs not just losing jobs at a slower pace," noted Peter Morici, an economist for the University of Maryland.

There is some resistance in the S&P near 1138 but 1148 seems very possible target before a reversal can occur. The NASDAQ is facing resistance near 1900, and in the Russell this equates to about 669.

* 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 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.

S&P 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

February 19 - Our clients were advised to sell the April 1165 calls for about $7.50, fills were coming in near $7.25 and a handful at $7.50.

March 5 - Clients with ample margin and guts, were recommended to add to this position by selling the 1165 calls for $9.50.

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 -

March 3 - Sell 1 e-mini NASDAQ at 1878 or better

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.DeCarleyTrading.com
www.ATradersFirstBookonCommodities.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.

After melting through 10,000 with ease, the Dow clawed back on the close to settle slightly above. The March Dow futures contract failed to reach the milestone but it is clear that there will be no free lunches for the bears.

There are no shortages of hedge fund blowups and many believe that it was the liquidation of leveraged commodity and stock positions that enabled such a dramatic fall from grace. At one point today, the S&P was approximately 60 points off of yesterday's highs. We haven't gotten to the capitulation seen in 2008 fueled by fund and small speculator margin calls and the subsequent liquidation but this has certainly been a reminder that complacency has no place in these markets.

Market psychology has changed, most traders have adopted a "sell rally" policy but that doesn't mean that the market will go straight down. In fact, there were rumors of a large and well known bank buying a total of 600 S&P futures late on Friday. Assuming a value of 1050 in the March contract, that is about $262,500 per contract...I'll let you do the math.

In the January issue of Futures Magazine, we were quoted several times in reference to our opinion of "Hot Markets of 2010". In the article we predicted a large upside breakout in the U.S. dollar early in the year and later noted that such a move would put pressure on the metals and grains. In this newsletter, we have mentioned several times that a stronger dollar would be trouble for domestic stock indices. Unfortunately, we don't always follow our own advice...If you are following our short put option recommendation, we are growing slightly anxious but are not yet uncomfortable. Despite spikes in volatility and put premium, we feel as though a relatively large bounce is looming and this will be just what we need to exit the position favorably. Luckily, as an option seller your timing and price speculation doesn't have to be perfect!

Our weekly chart is pointing to 1020 in the S&P, but we think higher before lower. The last time around, the rally fell short of our targets...we will see how things pan out this time. We are looking for a rebound in the S&P to 1085 and possibly even a bit over 1100 if the news is supportive. If you are trading the Russell, similar levels are 604 and 615 and in the NASDAQ at 1773 and 1810.

On a lighter note... http://www.cnbc.com/id/15840232/?video=1405435640&play=1

*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 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.

S&P 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

January 21 - Our clients were advised to sell the March S&P 1000 puts today following the drop in an attempt to capture the market volatility in the put premium. Fills were coming in from $8 to $9.

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 -

January 27 - Buy 1 e-mini NASDAQ near 1781
· February 3 - Place an order to exit this trade at 1830 OB

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.

The major indices flat-lined in the midst of lousy housing data and ahead of a calendar chock full of risk. Traders are focused on the jobs numbers because that, along with housing, has been the anchor on the recovery. We will get a glimpse of the employment picture with tomorrow's ADP numbers but the real deal will be Friday morning. I can't help but feel as though even good numbers will have a hard time keeping the market afloat. It has been a nice run, but a correction seems to be in the cards.

Pending home sales numbers were horrible (down 16%) and the carmakers reported sales declines in 2009. It was the worst year for the auto industry (and taxpayers) in nearly 30 years. Ironically, each of the three U.S. auto leaders claim that they have momentum going into 2010...cash for clunkers 2?

The dollar was essentially unchanged, but our charts are telling us that the greenback could hold support near 77.40. If this turns out to be accurate, we feel as though the buck will make a move toward 80 and this will put pressure on the equity rally.

Seasonals and technicals are all "calling" for a top. We think that the S&P will run out of steam near 1140ish (maybe as high as 1150) but are becoming bearish. Similarly, the NASDAQ could see 1900 or a little above, but we like the short side of the market. Be a wise bear...don't go all in! A little something is better than all of nothing.

Please note: A mini S&P chart is used because it is 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.

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 -

December 28 - Sell 1 mini NASDAQ near 1879

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.

A narrowing trade deficit helped stocks forge gains in light volume trading. According to the Commerce Department, a large surge in exports (likely due to a cheap dollar) helped narrow the trade deficit in October to $32.9 billion. However, isn't this why the stock market has been rallying anyway?

Like it or not, the market is probably going higher from here. I doubt that the buying pressure will come from fresh bulls, but the shorts caught on the wrong side (again) might start to feel the squeeze. That said...I wouldn't be the farm on any trade or speculation. From my conversations with others in the industry, many have already opted to take the rest of the year off. December markets can be dangerous and for those that have had a good year, it doesn't make sense to take on unnecessary risk.
If you like a lottery ticket play, we still like our idea from yesterday:

I am normally not one to recommend option buying, but if you are the type that can't stand being on the sidelines...this might be an opportune time to be long options. The sideways action has eroded premium on both sides but we like the idea of buying the December 1115 calls for about $5 in premium. It is a lottery ticket, but if the shorts are squeezed hard enough it could pay off well.

The lack of news and market action has left us with little to talk about. We are sticking with the same calls:

We see near-term support in the S&P near 1082 then again at 1076, as long as these levels hold there is a chance for a Santa Claus rally. That said, the markets seem vulnerable to a large correction but we think that will come in early 2010. NASDAQ support lies at 1755 then again at 1725.

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.

U.S. Debt Review and Outlook

US TREASURIES regain some ground from last week's plummet, as dovish comments from Fed Chairman Bernanke prompted some short covering ahead of the first of three Treasury auctions this week.

A lack of fresh data to begin the trading week turned additional focus to comments from Federal Reserve Chairman Bernanke. Speaking at the Economic Club in Washington D.C, the chairman stated that the economy continues to face "formidable headwinds" in the form of sustained job losses and continued tightness of credit to borrowers at the consumer level. Based on this outlook, the chairman proposed that the pressure of higher interest rates and inflation going into 2010 would be moderate at best. Additional monetary support for US debt recovery stemmed from Chinese comments that the country would continue to support a strong pro growth policy.

Proportionally, the short end of the yield curve gained the most as traders expected a reasonable "out of the box" reception for the US 3 year note auction ($40 Billion)

Technically, March 30 year futures rebounded off support level hit in early November. Monday's rate of correction appears in line with expectation. Resistance based on short term rebound looks to find strong resistance at 119-24. Downside sentiment remains in place, with next downside target setting up at 118-04

U.S. Equity Review and Outlook

US EQUITIES traded mixed to slightly lower on Monday, as a lack of follow through from Friday's optimistic payroll number kept a subdued sentiment on equity trading. Initial support for stocks came from news that China would maintain a "pro-active" fiscal policy throughout 2010, while keeping its monetary policy accommodative. The outlook also put some pressure on the US dollar, giving back some of its gains from late last week. The Dollar then reverses back toward positive territory after traders digested Fed Chairman Bernanke's comments on likely ongoing and future headwinds for the economy going into 2010.

Telecom stocks were the best performing sector, led by strong outlook for Sprint Nextel and RIM. Early gains in credit card issuers eroded, after Bank of America posted a buy recommendation on the sector, citing improvement for earnings as the economy improves and fees/interest rate increases contribute to revenue growth. Obviously, the Fed Chairman's comments failed to inspire those stocks any further.

Technically, little has changed for December S&P futures have hit a double top in the 1113.00 range. Market appears ready to test downside of range at 1093.00, with 1084.50 setting up as a support. A break of this level could lead market further down the Fibonacci path to 1073.00. Resistance remains near 1113.00, as there has been no significant hold above this level. Should this level give way, upside targets for the contract set up at 1118.50 and 1122.50. A pattern of slightly higher highs could spur technicians to consider a strong push to try and hit high target for year of 1125.00.

Prepared by Rich Roscelli & Paul Brittain.

PLEASE EMAIL QUESTIONS OR COMMENTS TO RICH@BINVSTGRP.COM

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. Commodity Trading School, 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.

According to the Fed's Beige Book, "economic conditions have generally improved". Unfortunately for traders, the stock market's reaction was nearly as bland as the news. It is hard to determine whether the equity markets failure to move higher is bearish or failure to move lower is bullish. One thing is for sure, the major indices are stuck in a rut.

As expected, the Fed's take on the economy showed a struggling job market but they did point out a few diamonds in the rough. In the Boston region, firms were beginning to hire and reverse pay cuts and in St. Louis the service sector expanded. Nonetheless, just last week the Fed claimed that it could take as much as five or six years for the employment picture to be back to "normal".

All eyes are on Friday's employment report but this morning the market got a glimpse of what might be on the horizon. Payroll firm, ADP, released their predictions of the government numbers. They believe that the U.S. economy lost about 169k jobs in November. If they are right, the number will be a slight disappointment but based on the fact that it is an improvement from last month and the market has already been warned (thanks to ADP), such a reading might be seen as temporarily supportive for equities.

We are sticking to yesterdays forecast:

"based on our chart work a continuation of the short squeeze could put the December S&P near 1130 in the coming sessions. This equates to 1840 in the December NASDAQ futures and about 625 in the Russell. However, we will be bearish at these levels!"

After years of over promising and under delivering, the solar Industry is finally starting to show some interesting developments which have the potential to make solar power as cheap as fossil fuel on a cost-per-watt basis within five years. Getting us to that state, called grid parity, would require solar companies to produce power for around $1 a watt. Is it possible anytime soon?

Many analysts think so and the target date being touted around is 2015. The reason for this fresh optimism is a mixture of technological development and simple economics. Traditional conductive materials make up 40% to 50% of the cost of a finished module. Newer conductive materials (including, amorphous silicon, cadmium telluride and copper indium diselenide) only need to be about one micron thick, so material costs are significantly reduced.
But thin film solar cells are just the beginning. Here are a few more examples of the most cutting-edge and interesting advances in solar energy and the companies behind them.

Solar Energy - from salt. Rice Solar Energy, a spin-off of United Technologies, is planning a solar energy installation in Riverside County, California. Salt - 4.4 million gallons' worth will be stored in a 538-foot tower surrounded by 18,000 mirrors called heliostats. The heliostats will aim light at the tower, subjecting the salt inside to such great temperatures that it melts, which in turn creates steam which then spins the turbine thus creating electricity.

Internet access - from sunlight. Late last year, Meraki, a provider of wireless networking solutions, developed a solar self-powered WiFi device. The Meraki "Solar" uses a solar panel and a solar-charged battery to provide Internet access in hard-to-wire areas. The units can be mounted on roofs or poles or anywhere else that receives sun exposure.

Stocks started the week off with a bang; it seems as though Friday's option expiration was holding stocks down, rather than propping them up. With that out of the way, an economic calendar chock full of data and thinly traded markets we can't help but looking higher from here. Thanksgiving has always seen investors give thanks by buying up shares of stock, so we are expecting the December S&P to see 1130ish at some point this week.

Coming into this week, we were looking for weakness in early Monday trade with the premise that weakness could be an opportunity to "get long" with either options or futures. However, that weakness never arrived. Instead, the stock index futures opened up firm on Sunday evening remained overall positive throughout the entire session.

Equity index futures were outperforming before the day's news, but better than expected home sales and a weaker dollar were the icing on the cake for stock market bulls. According to the National Association of Realtors, October home sales rose more than 10%.

The trend is higher and the volume is light but the data is thick. Despite the shortened trading week, we will hear about the latest GDP reading, consumer confidence, the FOMC minutes, new home sales and Michigan sentiment as the week progresses. Barring any large surprises in the data, and aside from potential back and fill trade in the overnight session the market "feels" higher from here. Our first resistance in the S&P is near 1024 but we think that 1030 is in the cards. If you are trading the NASDAQ, we see resistance near 1820 but feel like 1840 is possible, at which time we would be bearish. Look for resistance in the Russell near 606 then again near 625.

It is not rare to come across definitions of trading as gambling. Although this is intended to show trading as a kind of fool's errand with little benefit to a reasonable person, in fact, gambling does resemble trading in some respects, with hardly the scandalous results claimed by the loud critics of the practice. Both gambling and trading are about risk controls, and both of them are not for all kinds of people. If you're an impulsive person who doesn't like analysis, and if you don't appreciate the value of patience and self-control, it's unlikely that you'll perform well in either gambling or trading. On the other hand, many great traders and investors are also great card players (in bridge or poker, for example), and there's every indication that the same qualities lead to success in both types of activity.