The March Mini S&P Index is down 3.25 points at 1082.00 this morning as I write. The included chart shows that the S&P is attempting to correct to the downside. So far it appears to be very similar to the previous two or three minor corrections of 4 to 6%. The recent highs were 1114.25, so a 6% correction would bring the S&P down to the 1047.00 area. A 4% correction would only bring prices down to the 1070.00 area. The past two or three corrections only lasted an average of 8 trading days. So far, this correction is in its 3rd day. Again, as I have said before, the risk here is that once you think that you have figured a cycle out on rallies and corrections, things coincidentally change. So, the best thing to do if you a bullish and waiting for the next time to buy, is to wait for the chart to give you clues on when to buy. Let the market fall where It may over whatever time period. Many analysts have been looking for more of a 10% type of correction for the past few months, which now would put the S&P back down to the 1000.00 area. The trend since March has been up. The directional movement indicators are bearish and the ADX line is beginning to go sideways at a low level after a continual fall recently. I have too many technical indicators that are conflicting here to take any new positions in the S&P so stand aside from putting anything new on for now.
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.
March Mini S&P options expire in 100 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.
