**See my monthly column, Futures for You, in Stocks and Commodities Magazine

Stock index futures experienced slow trade, light volume but most importantly a lack of follow through selling.  After several bouts of shorting, the Dow and NASDAQ managed to keep losses relatively meager.  The news that contributed to the market’s ability to hold much of the recent gains was better than expected profits reported by Bank of America. 

Gains made in the Dow have outpaced those in the broad market, but that isn’t necessarily surprising given the pace at which the Dow fell relative to the overall market.  The S&P 500 futures have found resistance near the 20 day moving average and that could be signaling a pullback from current levels for the broad market.  The Dow on the other hand, has surpassed the 20 day moving average (11,350) and will now need to hold above this level in order to avoid a significant pullback and a possible retest of the lows.   Should a pullback to 11,350 hold I will be searching for an opportunity to sell calls against a sharp rally toward 11,834.  Should the recent up move prove to be a head-fake the downside target is 10,866. 

The NASDAQ has displayed weaker price action relative to broader based indices and continued to struggle in today’s session.    The September futures contract is approaching what has been a seasonally rough time of year for the tech index and my technical models look to be pointing toward 1780.  I wouldn’t want to be long this index until much later in the year.  However, a large dip could easily become a buying opportunity.  I prefer to be patient with this one. 

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 Recommendations...

**There is unlimited risk in naked option selling and futures trading

Position Trade -

·        June 18th - I recommended selling the July Dow (big or mini) 11,000 puts for 50 ob

·        Place an order to buy this option back for 10 ticks or better

·        July 14^th – Clients were instructed to roll out the position by buying back the July 11,000 near 100 points and selling the August 10,500 put for a credit of about 130.  If you haven’t done this, it is likely a good idea to do so.  Contact me if you have questions.

·        June 27th - Buy 1 September 109 put and sell 2 103 puts, this can be done near even money.  The trade makes something with the market anywhere between 10,900 and 9,700 at expiration with the max benefit being at 10,300 ($3000 in the mini and twice that much for the big).  The risk is unlimited below 9,700! 

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 Recommendation

**There is unlimited risk in naked option selling and futures trading

Position Trade - Flat