The March Mini S&P Index is up 13.50 points at 1111.25 this morning as I write. Is this a case of “here we go again?” The included chart shows that, once again, the S&P index is challenging the rally highs of the past two months in the 1114.00 to 1115.00 area. My expectation is that eventually prices will break out to the upside because every time prices have pulled back over the past two months, it has been holding at a progressively higher level. The directional movement indicators are beginning to cross, yet again, back to the bull side and the ADX lines is still dropping. As a matter of fact, this is the lowest level the ADX line has been in about a year suggesting that there really is no trend strength at all right now but a breakout of the trading range will probably get the ADX line moving upward again quickly. We currently own both ratio call and ratio put spread at this time, and I would like to continue to hold those positions at this time. If prices break out of the trading range and seem to be holding the breakout by the close, I may decide to add a position. Stay tuned.
Followers of this letter should be long one March Mini S&P (1190 strike) call from 17.00 and short 2 March Mini S&P (1220) call options from 9.50.
You should also be long one March Mini S&P (1000.00 strike) put option from 23.00 points and short 2 March Mini S&P (935 strike) put options from 12.75 points each for a total credit of 2.50 points or $125 gross.
March Mini S&P options expire in 88 days.
David Hall
The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.
This newsletter is not intended for dissemination to the public without prior approval from David Hall.
