As the financial sector rescue plan remains in limbo, investors are growing increasingly uneasy with equities. Bank of America shares weighed heavily on the Dow pushing the index well below the coveted 8,000 mark and causing it to under perform relative to the other indices.
There wasn’t a lot of economic data for the market to mull over, but the intraday headlines offered significant guidance. The market’s attention was focused on Obama’s new cap on executive pay to firms tied to bailout money and the Madoff probe in Washington.
President Obama stated, “We’re taking the air out of golden parachutes” in regards to the announced government intervention into corporate America. The compensation cap is said to be the beginning of a dramatic restructuring of the $700 billion bailout that Congress created last year. The new leaves some proponents wondering whether bank employees will be provided with enough incentive to bring the industry back to life, and talk of many institutions paying the money back in order to avoid the caps is concerning in that they may be incentivized to gamble on the solvency of their firm. It is clear that high compensations for running financial institutions into the ground is unethical but unfortunately the solutions to solving this issue could have substantial unintended consequences.
We were right to suspect some moderate buying to come in before the selling resumed. However, the reversal from this morning’s highs (near our major resistance targets) suggests that the slide will continue to our targets of 790, 7700 and 1135 in the S&P, Dow and NASDAQ respectively.
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 –
January 28 – Buy the Feb S&P 760 puts for about $350. **This recommendations was made in the text of the 28th newsletter but was accidentally referred to as March.
ยท January 30 – Clients were recommended to exit this trade in late trade on Friday for about double their money (some may have gotten a little more, some a little less).
Please note: A mini-sized Dow chart is used because it is better for charting purposes, but trade recommendations are based the full sized Dow unless otherwise noted.
Dow Jones 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.
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