Trade Recommendations for Fri. Jan. 29th

Hello All,
 
Along with additonal earnings, the big question of the day was whether Bernanke would serve a new term.  I don't believe anyone thought otherwise, the last thing we needed was a substitute chairman to get us through this mess.  We have GDP due out tomorrow and unless we get any positive surprise, the pressure should remain to the downside. 
 
It felt good to have my trades spot on after a week of observation.  The notable move was the breakdown on the S&P and our chances of exiting 1062 into late Fri or early Sunday looks pretty good.
 
1)  Hold Mar. Emini S&P shorts from 1102, with a 1096.00 stop.  Exit 1062.75.  If the market reacts favorably to the GDP # tomorrow, I would add shorts at 1088, using the same stop loss.  We may only get to the 1071 region prior to lunch.
 
2) Hold Mar. Crude Oil shorts and add another short if the market gets to 74.65, with a 75.40 stop.  Exit 72.20.  There wasn't enough pressure to really breakdown this market, nor to start a rally.  I suspect we will see slightly higher prices to create a small bull trap for the earlybirds.  The pattern needs to complete near 72 before I will consider buying.
 
3)  Take profits on Short Mar. Euro's from 1.4048.  The market seems to be holding up well at the 24% extension at 1.3906 and end of the month and end of the week profit taking should set in.  It is still possible for us to hit the 1.3850 region, but no reason to be greedy when we're up 1300 per contract.  I may even be comfortable buying the market around 1.3886, but we'll play it by ear in the morning.
 
Overall, I think some market correlations will be off with respect to timing tomorrow, but it will be necessary to complete patterns to end the first month of 2010.
 
Best,

 
Arman Vahdatinia
Futures & Options Strategist
1-877-338-EXPO [3976] ext. 25
www.ExpoFutures.com
 
*There is a risk of loss trading futures.  Past performance is not indicative of future results.

Obama vs. BIG Banks vs. Too Big To Fail

Hello All,
 
We haven't seen action like the last 2 days for at least 6 months.  Uncertainty at its prime.  Volatility has picked up with fear creeping back into the equation.  Obama's one-two punch by presenting the Volcker rule today was definitely unforeseen, yet welcomed by many.  Setting restrictions on the size and scope of institutions to restrict excessive risk taking startled the financials and the markets tumbled.  Precautions to help 'too big to fail' namesakes prevented investors from buying bank stocks now that their profit potential can be limited when final legislation is passed.  The credit crisis was due primarily to faulty loans (home, car, credit cards) labeled as excessively risky paper, and now that the big banks have repayed their TARP loans we would assume they are financially stable enough to begin loaning to the consumer.  But that just isn't the case, the average American is still waiting for their bailout let alone possibility for employment.  The last thing we all want is another crisis and any precaution should be welcomed.  Obama wants to restrict bank holding companies from owning, investing in or sponsoring hedge funds.  So basically, stop using customer funds for your own benefit.  The debate remains that this particular feat was not what got us here in the first place, but with the given volatility and uncertainty in the markets any restrictions should eventually stabilize the markets rather than giving full control to BIG banks.  If you throw enough money towards a trade, I'm sure you can make it move in the direction you like, as the banks do everyday.
 
Needless to say, I won't be making any trades tomorrow as their are too many unknowns.  I would suspect some positions to unwind going into the weekend, which could lead to a corrective rally lasting into Tuesday.  Ultimately, the Fed announcement will be batting clean-up, so let's wait and see what the score is next week.
 
Best, 

Arman Vahdatinia
Futures & Options Strategist

Trade Recommendations for Tues. Jan. 12th

Hello All,
 
Most markets broke out on schedule, now it is a matter of holding support levels to shift into a new phase pattern.  It seems as though we have seen temporary lows for many markets and we should begin a gradual climb in commodity prices through the next 4-5 weeks.  I suspect the S&P should stairstep up to 1180 over the next few weeks, barring a break below 1130.  The Euro has confirmed a low now that it crossed above 1.45, but we may get a retest of the 1.43-1.44 region over the next week before heading higher towards 1.50.  The wild card of the bunch is crude oil faltering just under $84, and Tuesdays are typically dull days prior to inventory data.  But I believe the main factor at play with respect to Crude is the fact that we have a crop report tomorrow.  Lower crude pushes grain prices lower, and that may just throw everyone for a loop in anticipation of the report.  Ideally I would like oil to rise the next couple of days along with the S&P and Euro, but we'll see how much tomorrows crop report has an effect on oil prices.
 
1)  Buy Mar. Emini S&P at 1136.50, with a 1127.75 stop.  Exit 1160.  Lets see if we can get a position trade on.  For Nov. and much of Dec. the 1115 region proved to be somewhat of a resistance level, and the previous low of 1020 at the beginning of Nov, gives me a 95 pt region to base extensions off.  Todays 1148 high is a 38% extension of the 95 pt range, and a 50% extension would coincide with 1160.  We'll place our stop just below the 24% retracement off the range from the Thanksgivings low.
 
2)  Buy Mar. Euro at 1.4428, with a 1.4377 stop.  Exit 1.4635.  We've finally confirmed a low by closing above 1.45, but I have a feeling they'll try to do a semi-washout for the early longs.  A 38% retracement off the low drops us down to 1.4425, and the 200 hour moving average crosses just below 1.44 along with the 50% retracement level at 1.4385.  And a 24% extension off the true range would bring us to 1.4638.
 
3)  Buy Feb. Crude Oil at the market (81.93), with a 80.78 stop.  Exit 85.50.  I think the institutions first round of profit taking began today.  No other market had such a correction, and if I had accumulated longs from the low 70's and was nearing the Feb contracts expiration, this would be as great a place as any to start taking some off the board.  Ultimately, my target of 84.50 was never reached, but if we begin to trend back up we have a chance of 85.50.  What this new high will do is attract new buyers to offset the rest of the institution longs which will then allow us to correct to $78-80 before trending back up.  If I'm wrong, we may already be starting the correction for 78 and then eventually head higher, but it just seems too soon.
 
Best,

Arman Vahdatinia
Futures & Options Strategist

Trade Recommendations for Tues. Jan. 5th

Hello All,
 
What a way to start the year.  Almost all markets were higher across the board, great enthusiasm and a precursor of what is to come for 2010.  Many markets should be completing wave patterns over the next session or so.  The ES bounced off the 1110 region and finally got to my 1130 target.  Crude has crossed above $80 and is hovering just below the previous top around 82.50.  The Euro is close to completing upside patterns towards 1.4994. And Gold has reached my 1120 target.  We must note that even though the ES and Gold have reached their targets, the pattern completion for Crude and the Euro should allow for additional upside.  Crude may take until the API or DOE data to break up towards 84.50 or 85.00.  The Euro should be able to kiss the 1.45 region and hold support just below 1.4400 overnight.  Relatively, ES could reach up to 1140, and Gold can reach 1145.
 
Even though the markets are moving favorably and in the directions I'd like with respect to my option writing program, I do not feel these particular levels provide a proper risk/reward for trading futures.  Scalpers feel free to pick off as much as you can, but there are too many support/resistance levels that can come into play given new year conditions.  A lot of new money came into play today, and the trend is evident, lets hope it stays in tact for another session to confirm pattern completions.
 
Best,

Arman Vahdatinia
Futures & Options Strategist