The Beginning of a Squeeze?

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.