THE SHORT-TERM CONSENSUS HOTLINE (SAMPLE)
Futures Update – Monday, September
25, 2006, after the close
PLEASE NOTE: The time that these reports go out is
at the bottom of the report as "released." The "produced"
time at the top of the report is when we begin production.
Dow 11,576 (+68)
December S&P 1335.70 (+9.80)
December Nasdaq 100 1665.25 (+24.75)
Nasdaq Composite 2249 (+30)
Russell 2000 727 (+8)
December Bonds 113^04 (+^17)
November Crude Oil $61.41 (+$.86)
VIX 12.12 (-.47)
Now it’s a triple top.
As of last Friday’s close we had a short term double top in the S&P Futures at the 1339.50 level. Certainly this morning it didn’t seem very likely that the S&P would be able to pop back up and take out the highs. But in the final hour that’s what happened, so now it’s a short-term triple top.
What was most remarkable however was how it did it. The S&P first popped up just shy of the 1330 level, almost filling Friday’s gap (at 1330.30) but stalled ½ point shy and then collapsed to within a fraction of a point of last week’s (Friday’s) lows at the 1321.60 level. Then from there shot up to new multi-year highs (by a fraction of a point) before pulling back into the close. It’s exhausting just thinking about it.
Though on an official basis we didn’t accomplish anything, unofficially (on the phone service) we hit the nail on the head at least twice and maybe 3 times. In my opening comment I suggested selling short at the 1330 level looking for a pullback into the opening gap. In the S&P the early high was just shy of that level, at 1329.80, and from there a quick pullback to 1321.60 followed. Then after the bounce off the lows I said I would not sell it short again at that level as the futures had made a successful test of Friday’s lows. But later in the afternoon, I suggested (again unofficially) selling short at the 1339-1340 area with a tight stop, looking for another pullback from there.
As you know, that’s what it did, made a new high by a fraction of a point and sold off 5 points from the highs.
December S&P
Now a Triple Top??
In that early comment on the phone service I added that in the NDX the 1633-1634 level was probably a good spot to sell short, as we were looking for the opening gaps to be approached. The early high in the NDX was just above 1634 prior to a 19-point drop to the 1615 level and it was straight back up from there.
Officially we did nothing.
Now we are keeping an eye on last week’s highs at the 1654.40 level.
Today’s high just shy of 1654 was close. As you know, we are still
allowing for the filling of the gap at 1657.48, no longer very far away.
A move above today’s high is likely headed to that gap. We will
then see if it dies there or continues still higher.
NDX
Turning the 1633 pivot back into support again
S&P Options
The Dec. 1400 call traded at 3.40 but no closer to our cover price.
Then settled at 5.20. We remain short (1) December S&P 1400 call
from 3.80. We still want to cover the call at 3.00 GTC. As noted, this
is “a very speculative trade and is high risk. If you make this
trade you are advised to buy some protection above the 1400 strike (or
buy a November call) to reduce your risk. You may also wish to consider
writing the E-Mini calls instead.”
NOTE: Our recommendations are always based and "tracked" on prices of the primary contract, for example, the S&P Futures and not the E-Mini. Likewise, in trading the Mini-Nasdaq, our recommendations will be based on Nasdaq 100 Futures prices rather than the Mini-Nasdaq. And similarly, when we make recommendations in the Dow Futures, we will always track the trade based on the big ($10) contract, though we are trading the smaller ($5) contract.
Recommendation Ratings: Our new rating
system is now in effect with all recommendations given ratings from 1-3.
The (1) rating suggests buying (or selling) just 1 contract at our specified
price. The (2) rating suggests buying 2 contracts. And the (3) rating
suggests buying 3 contracts, though we may suggest scaling into these
positions. In general, when trading multiple contracts, we will plan to
take a quick trading profit in one contract upon the attainment of an
initial target to be specified (but typically a 3 point profit in the
E-Mini). Then the remaining contracts will generally be held with tightened
stops.
H. Schiller
Released Monday, September 25, after the close