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According to reliable sources, the S&P futures have only closed positive 9 sessions in a row twice since 1987 prior to today. However, the March contract closing in the green on Wednesday makes it three times. The others occurred in 2003 and 2009.
The index has only posted gains in 10 consecutive sessions once and has never closed higher 11 in a row. Another startling stat, S&P futures have closed positive in 16 of the last 18 sessions and has moved over 100 handles from the early Feb low.
The market is clearly overbought and due for, at minimum, some back and filling but there is no telling how high the squeeze could see before stocks turn over. Our resistance in the March S&P at 1148 held but we are hearing that there are a substantial number of stop orders accumulating above 1148 which run through 1153ish....so there could be one more run left in the move. The question is, will there be any bears left to benefit from a potential correction?
It feels like this market wants to go up forever, but that is usually when it doesn't. near term resistance in the three major indices is 1148 (March S&P), 1921 (March NASDAQ) and 678 (March Russell). However, it seems like a blow off top could bring us to the next levels...1153ish, 1940 and 683.
According to our trusty sources on the CME floor, the last 11 times that the S&P has closed positive for 8 consecutive sessions the next trading day has seen a red close 81% of the time. This ignores magnitude but seems to be evidence that the market might be a little overheated up here.
Based on conversations that I have had with other analysts/traders, it is clear that the current rally has pummeled the bears into submission. It appears as though, many have run out of capital and conviction and have therefore, moved to the sidelines. Unfortunately, this can often be a precursor to a market reversal. Remember, markets tend to cause as much pain as suffering to speculators as possible and a reversal from here would catch the complacent bulls sleeping and act as the thorn in the side of the bears that have thrown in the towel.
Also, the headlines have gone from bearish to bullish and S&P 1300 seems to be back into conversations. However, it is the exact bullish sentiment that is luring sidelined cash into the market that makes me doubt the ability of recent gains to hold.
We don't know where the exact highs of this move will be, and if you have been following this newsletter you have likely realized that we turned bearish far too early into this rally. Nonetheless, we can't "buy" into this move.
We are sticking to yesterday's technical numbers...Resistance in the S&P near 1148 (but our floor brokers think 1153ish). The NASDAQ should struggle near 1921 with the next technical level being 1940 (ouch!). The Russell faces resistance at 673 and then again at 682.
* 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 -
March 9 - Sell 1 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
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.
Friday's sharp sell-off seemed to knock the bulls off of their high horse but the pullback might work in their favor as higher yields could attract buyers to the upcoming Treasury auctions. On the slate for tomorrow is $40 billion in 3-year notes and $26 billion in 1-year securities.
Volume, and trade, was anemic but this can all change in the blink of an eye. There seems to be a considerable amount of call buying activity in the VIX as well as put buying in the equity indices. Also, commentators on business news stations "felt" a bit too bullish this morning...and this could signal an intermediate-term top in the equity indices. If this is the case, bonds and notes will be a direct beneficiary.
There is very little economic data until Thursday and Friday and this could keep trading interest at a minimum. On Friday, we stated that we were waiting to see what Monday brings but today's trade brought little clarity. Let's see what Tuesday brings...
Sorry to be so brief and indecisive, but we don't have much to go on and I would rather be lacking an opinion that force a foolish one.
* 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.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
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
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.
SUMMARY OF UPCOMING DATA 03/04/10
8:30 AM US WEEKLY JOBLESS CLAIMS (475 K)
8:30 AM NON FARM PRODUCT (6.3%), ULC (-4.5%)
10:00 AM US FACTORY ORDERS 2.0%
10:00 AM US PEND HME SALES
10:30 AM EIA NAT GAS INVENTORY
11:00 AM US 3, 10, 30 YR BOND ANNOUCEMENTS
DATA RESULTS 03/03/10
ADP EMPLOYMENT REPORT (-20 K)
ISM NON MANUFACTURING SURVEY (53.0/51.0)
EIA INVENTORY (CRUDE OIL) 4.1 M
US DEBT REVIEW AND OUTLOOK
US Treasuries meandered through another session without any firm commitment of direction. A retest of support after the release of data showing the US service sector grew to the highest level in nearly three years failed to maintain downward momentum as underlying concerns regarding the US employment situation remain in place. The ADP report showed a loss of 20000 jobs in the private sector, with losses contained in small and large companies. Mid sized firms actually created jobs.
Again the long end of the yield curve was the worst performer in Wednesday's session, while 2 through 10 year debt remained stable or posted small gains. In addition to awaiting data on employment, the Treasury complex will also have to contend with renewed focus on supply. On Thursday, the Treasury will announce the amount of US 3, 10, and 30 year debt coming to auction markets next week. The last round was relatively well received despite the record amount coming to auction, though foreign buyers remained sidelined. With the pullback in the US Dollar and a strategy to contend with the fiscal crisis in Greece, it will be a telling sign if foreign debt buyers return to purchasing mode or if the aftermath will extend concerns to sovereign debt backed by "questionable" balance sheets.
Technically, June 30 years remain range bound, though a possible formation of lower lows could result in the markets trending lower in line with the possible head & shoulders forming in the daily charts. Support for the contract remains at 116-24, while resistance sets up at 117-28.
US EQUITY REVIEW AND OUTLOOK
S&P Futures tested a key resistance level on Thursday, spurred on by a jump in the ISM Service Index. The reading of 53.0 (expected 51.0) posted the best reading since 2007 and managed to over shadow the ADP employment figures ( or at least relegate them to a glass half full/half empty scenario). Stocks fell by the latest session, as a broad based pullback led by health care prompted most traders to square up long positions ahead of uncertain reactions to the employment figures due on Friday. Additional uncertainty regarding the success and the longer term implications of the fiscal crisis in Greece and its influence on government influence in the economy and deficit spending may also help technical resistance levels in equities hold.
Technically, March S&P futures held below resistance at 1126.00. Possible volatility at these levels may allow for brief push through to 1128.00 as positive market sentiment may have some remaining influence before long position correction. Support sets up at 1110.50.
Prepared by Rich Roscelli & Paul Brittain.
Please voice your market opinions, thoughts and questions to rich@binvstgrp.com
Additional Information can be found at www.whitehallvegas.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. Whitehall Investment Management, 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.
Bonds and notes enjoyed another day of healthy gains despite relatively stable equities. This suggests that there are factors at work other than simple portfolio allocation.
The day's news was overall bullish to neutral for Treasuries and bearish to neutral for stocks, but only one market chose to react. Fixed income products moved higher on weaker than expected existing home sales and a slightly disappointing University of Michigan consumer sentiment reading. On the contrary, the GDP revision was positive and Chicago PMI was strong.
Some analysts are noting that lingering buy stops seem to have been cleared out on the move and that much of the buying can be attributed to month/week end data. That said, we feel like the buying will continue in the near-term but will be growing bearish at moderately higher levels.
Today was first notice day for the March Treasuries. You should be trading June...especially if you are buying futures. Anyone holding longs into today is subject to being assigned delivery of the underlying asset. If you are short, you aren't at risk of delivery but you are at risk of being caught in a thinning market.
Our upside targets remain the same, but we are now using June figures. Therefore, we are looking for the rally to continue to about 118'18ish in the June T-bond. The note, on the other hand, has reached our target but it seems like the long bond could drag it a bit higher. We are growing short-term bearish the T-note but think that the mid-to-high 117's could be seen in the June contract.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
February 18 - Our clients were recommended to sell April bond 111 puts for 23/24 today.
ยท February 23 - Our clients were advised to buy these back today at 8 or better. Assuming a fill at 23 getting in and exiting at 8, this is a profit of about $234 per contract before commissions and fees.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
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.
US DEBT REVIEW AND OUTLOOK
A quiet session was had by all within the bond & equity futures markets on Wednesday. Treasuries returned some of their gains from the previous session after testimony from Federal Reserve Chairman Bernanke settled market concerns about the FOMC implementing interest rate hikes beyond last week's hike in the discount rate. The Fed Chairman stated that inflation pressures were likely to be "subdued"-(I wonder if any of these government officials would state this fact if they had to pay for their own health care?) and that the foundation of the economic recovery will need the support of the near zero interest rate policy for a significant period of time.
Market participants apparently breathed a collective sigh of relief, allowing risk tolerance to increase for the session. Even a report on new home sales hitting a record low failed to boost demand for Treasuries. The increase in risk tolerance also had a negative effect on today's record auction of US 5 year notes ($42 B). Bid to cover was average, but the yield awarded was nearly 1.5 basis points higher than the market had been expecting. The expectation of low yields on the Treasury curve continuing left participants for the auctions mostly indifferent. Both US debt and equity markets will likely be turning focus to the employment picture next. The second phase of the Chairman's testimony will likely have some material devoted to that question. In addition, the markets will likely be gearing up to place bets on market price action ahead of next week's US payroll data. The picture painted by the Fed Chairman leaves an economic path that is uncertain. The fact that some in power are not trying to paint too rosy a picture may be the reason that the markets are able to find some bright spots and ability to support risk.
Technically, March 30 year futures should maintain a pattern of forming lower highs, though the market may have some potential for upside breakouts through the middle of next week. The contract seems to have a growing potential to break up to the 118-15 to 118-18 level. Still see this as good level to initiate short positions, as upside above this level appears limited. Support for the contract sets up at 117-04.
US EQUITY REVIEW AND OUTLOOK
S&P Futures rebounded as the saga of near zero rates in the US is destined to continue; according to US Federal Reserve Chairman Bernanke. The Fed Chairman eased worries about monetary tightening which were fueled by last week's discount rate hike. Financials felt the weight of uncertainty lifted from them and led the major market indices higher. Citigroup was one of the biggest gainers, grabbing additional momentum from plans to sell off its funds of funds business. Tech and biotech M&A activity helped to support the NASDAQ, while a rebound in energy prices offered some support to the sector.
Technically, March S&P futures continued to meet resistance between the 1103.50 to 1108.00 levels. A breakout of this range could result in a test of the 1118.00 level. Significant support remains at the 1088.50. Continued narrowing of the range appears likely to precede a test to the downside.
Prepared by Rich Roscelli & Paul Brittain. Please voice your market opinions, thoughts and questions. Email to rich@binvstgrp.com
Additional Information can be found at www.whitehallvegas.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. Whitehall Investment Management, 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.
Ready, set, start shopping! Yes, we are entering the spring housing season when buyers appear to shop and find homes. Why the sudden rush, well, it is clear that interest rates are not going to go any lower and it is just as clear that interest rates on home mortgages likely will increase in the future. The Federal Reserve has signaled to the markets that the free lunch is over so, those who have been sitting on the sidelines waiting for further declines in home prices will be encouraged to purchase the sought after home and lock in the rates now. Naturally, this will appear as an encouraging sign for the economy. Look for the housing numbers to increase in the next few months. Remember too that some of these purchases will steal from future purchases and that we likely will see an upward blip now, and a slow down later. This the same type of behavior that we saw in car sales during the cash for clunkers promotions. A further government encouragement is the tax breaks for first time purchases and purchases that will expire in April.
The market, as measured by the S&P 500 has been in rally mode for the past six trading session, although the trading session on Friday left a doji like candle on the chart. We would not fault the market if, it decided to take a break from the current rally to allow for some backing and filling. Friday's action left an outside day on the chart. When the bears had the ball they failed when the bulls had it they also failed this leads us to believe that Friday's action was a transition day which could lead to a reversal of direction. It appears that the market took the Fed's hike in the rate as a positive, acknowledging that the economy seems to be expanding. It further appears that the Fed is on watch and trying to extricate itself from the stimulus game, although they have said, at their meeting, that they stand at the ready to do whatever is necessary to prevent an economic implosion. We wonder how they will handle the bankruptcy of the various states here in the USA. Are they going to rescue New York or California, after all, both states are larger and more populated than is Greece.....hum?
Tuesday: February consumer confidence is released at 10:00 and December Case-Shiller home price index for December is released at 9:00. Wednesday: January new single-family home sales are released at 10:00 and January equipment leasing and finance index is released at 10:00. Thursday: January durable goods are released at 8:30, mutual fund sales and redemptions and December house price index is released at 10:00. Friday: 4th quarter GDP is released at 8:30, January existing home sales are released at 10:00, and Chicago purchasing managers' report for February is released at 9:45.
The US Dollar index traveled above the upper Bollinger band, intraday in the Friday session, a moved back inside the band. Actually, the US Dollar index opened on a bullish spike looking a lot like a short-covering rally, and then, when the buyers retreated, the sellers took the lead and leaned on the market bringing it back to the previous day's range. This action illustrates the power of a short-covering rally. It would not surprise us to see the US Dollar index trade down to 79.64 and perhaps 79.085 before starting another rally. The uptrend line is at79.93 for the Monday session and 79.97 for this coming Friday. We are overbought as measured by all the indicators that we follow for the weekly time-frame. The daily time-frame is near overbought levels and pointing higher. The 5-day moving average is at 80.277. The top of the Bollinger band is at 81.179 and the lower edge is seen at 78.253. We are above the Ichimoku clouds for the daily time-frame but remain below the clouds for both the weekly and the monthly time-frame. If we could see the US Dollar index close above 81.53, we will see more shorts scared out of their positions.
The action on Friday in the S&P 500 was a clear rejection of the high and a rejection of the low. It would not surprise us to see the S&P 500 retreat to 1084.16 and even 1075.87. The stochastic indicator, the Thomas DeMark Expert indicator and our own indicator are all overbought. Both our own indicator and the stochastic indicator have just issued a sell-signal. The RSI is going sideways slightly below overbought levels and the Thomas DeMark Expert indicator is doing the same but at overbought levels. The 5-day moving average is at 1085. The top of the Bollinger band is at 1113.07 and the lower edge is seen at 1051.57. Friday was the sixth day up, and the probability of a retreat is likely. We are inside the Ichimoku Clouds on the daily time-frame, above the clouds for the weekly time-frame and below the clouds for the monthly time-frame. We would be very cautious moving forward, so stay nimble.
The NASDAQ 100 also enjoyed a sixth day of a higher close than open in the Friday session. We see signs of exhaustion. The NASDAQ 100 lost 1.50 in the Friday session. The stochastic indicator is issuing a fresh sell-signal as is our own indicator and the Thomas DeMark Expert indicator. The RSI is going sideways near overbought levels. We are inside the Ichimoku clouds for the daily and monthly time-frames but are above the clouds for the weekly time-frame. The 5-day moving average is at 1818.16. The top of the Bollinger band is at 1893.15 and the lower edge is seen at 1673.11. The market looks heavy and could use some time to back and fill or retreat. The Market Profile chart tells us that should the NASDAQ 100 close above 1819.75; it likely will quickly rally to 1841.50.
The Russell 2000 was the best performer in the Friday session. This index close up 2.50 for the day while the S&P 500 closed up 0.70 and the NASDAQ 100 lost 1.50 on the day. The stochastic indicator and the Thomas DeMark Expert indicator are both issuing a sell-signal. Our own indicator looks as though it might issue a sell-signal in the next session. The RSI is sitting at the overbought line going sideways. We do have signs of exhaustion, on this, the sixth day up. The Russell 2000 closed above the Ichimoku Clouds for the daily time-frame and remains above the clouds for the weekly time-frame as well. The 5-day moving average is at 612.62. The top of the Bollinger band is at 633.05 and the lower edge is seen at 583.13. We could see some follow-through buying early in the Monday session but we believe that a rest is warranted now and that we likely will see some backing and filling or a decline in the coming days.
Crude Oil rallied in the Friday session taking it above the upper edge of the Bollinger band and above the Ichimoku Clouds. The stochastic indicator is overbought and continues to point higher. The RSI is pointing higher with plenty of room to the upside. The 5-day moving average is at 76.09. The top of the Bollinger band is at 79.41 and the lower edge is seen at 70.57. We suppose that the Feds recent action inspired the crude oil bulls into believing that the economy is expanding and thus will need more crude oil. We are not entirely sure that the expansion will be as robust as crude oil is forecasting. So far so good, the market looks as though it has further to run to the upside.
Gold is going sideways and is below the Ichimoku Clouds for the daily time-frame. The stochastic indicator is overbought but continues to point higher. The RSI is not overbought and has plenty of room to the upside. The 5-day moving average is at 1101.58. The top of the Bollinger band is at 1133.98 and the lower edge is seen at 1053.29. The chart looks as though the market is consolidating at these levels. The weekly chart looks like there is plenty of room to the upside and that gold is breaking above the downtrend line. We find gold above the Ichimoku clouds for the weekly time-frame. We will remain on the sidelines until gold trades above 1140.30 at which point, we will go long.
US DEBT REVIEW AND OUTLOOK
US Treasuries fell on Thursday after data suggesting an uptick in inflation and renewed support for the sustainability of the economic recovery placed additional pressure on the long end of the yield curve. In the age old tradition of kicking a man when down, US Treasuries also had to contend with the aftermarket announcement by the Federal Reserve that they would be increasing the US discount rate-the rate that financial institutions can borrow funds from the Federal Reserve. While the quarter point increase was relatively small, it did send some initial shock waves which pressured the short end of the yield curve in particular. This could be an example of sell the rumor- buy the fact though, as the notion that the proposed exit strategy is real and under implementation may boost some confidence in the perceived fiscal responsibility of sovereign institutions. The confidence may be slow in coming though as additional pressure from another $100 billion of Treasury debt coming to market next week is likely to forestall a rally of "In Fed We Trust."
Treasuries may suffer from some additional volatility on Friday as March options on future are set to expire as well. (Perhaps the announcement today had an addition motive-as traders would likely put up some fight to defend support on levels in Treasuries instead of pummeling the markets in the wake of the news.)
Technically, March 30 year futures are likely to continue with a longer term downward bias. Look for setup on the downside at 115-14. Expect a near term upward move to fill in recent gap that should find resistance at 116-25. A break to 117-14 could setup a new lower trading range.
US EQUITY REVIEW AND OUTLOOK
S&P Futures struggled to close near the highs of the session, shrugging of disappointing data regarding inflation pressures and employment. The market took its lead from indications of ongoing recovery in the US economy, particularly in the manufacturing sector, as leading indicators on the second Fed reserve survey of the week suggest steady, potentially sustainable recovery.
Energy and material stocks were among the best performers support by the uptick in recovery sentiment. The technology sector was also a strong performer today, led by expectations of strong earnings from Dell computers and CBS entertainment. Neither of the companies disappointed. Both companies beat expectations.
Equities were thrown for a loop in the aftermarket after the Federal Reserve announced it was increasing the discount rate- removing some of the doubt that the US government is planning to implement an exit strategy from the emergency liquidity provisions implemented to secure credit and mortgage markets.
Technically, March S&P futures broke through a key level of resistance today at 1103.00. This does set up the potential for the market to test the 1108.00 and 1118.00 levels. If there is follow through of downside pressure due to the Fed's action, look for support to set up at 1090.70, with a break of this level setting up a move to retest 1086.00 and 1082.50.
Prepared by Rich Roscelli & Paul Brittain.
Please voice your market opinions, thoughts and questions by email to: rich@binvstgrp.com
Additional Information can be found at www.whitehallvegas.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. Whitehall Investment Management, 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.
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