Equities rallied sharply in yesterday's session and managed to add to the gains on Tuesday...much to the dismay of the shorts. It was clear to see that there were several bears caught on the wrong side of yesterday's move as each dip was met with buying (likely short covering). As you can imagine, those will losing trades on the books would rather lose less and consider pullbacks as an opportunity to cut their losses and get repositioned for the next trade.

Tech stocks led the rally ahead of HP's earnings and on news of IBM's expectations for better profit margins in 2009. Today's up move in techs, and the broad-market, moved the CBOE's VIX index (AKA the fear barometer) below 30 for the first time in 8 months. To put this into perspective, the index has been valued as high as 89.53 and as low as 15.82 in the previous 52 weeks. I can remember when the VIX began its climb, most were of the belief that 30 was high and a reading above 40 was out of the question. We now live in a very different world.

It was another slow data day, and with the Memorial Day weekend approaching it is highly likely that many traders will take Thursday and Friday off. This could make for highly erratic trade, so caution is warranted.

We will hear about the Fed's last interest rate decision via the FOMC minutes tomorrow afternoon. Regretfully, this is the only event to speak of and with the Fed chatter as of late, will probably be taken in stride. Thursday's events perk up a bit, with leading indicators and the Philly Fed due to be released but there may not be many market participants paying attention.

We continue to prefer a buy on dips mentality and are looking for a rally to the 940 area in the S&P, with 950 being a possibility. Likewise, assuming that 1380 holds, we could see 1440 in the NASDAQ in the coming sessions.

We are prepping to sell calls against what we believe to be an upcoming rally, for those of you that are more comfortable with limited risk...there may be an opportunity to buy puts. Stay tuned...

* 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.

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 - Flat

Russell 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