The March Mini S&P Index is unchanged at 1113.50 this morning as I write.  The included chart shows that the March S&P Index traded to new recent highs yesterday but only could close near the recent highs from a week ago.  Today, the S&P has, once again, attempt to trade to a new high for the move since last March but prices are having a hard time holding the gains.  One may get the feeling that this stock market wants to go higher, but what concerns me and what also keeps me from adding a bullish trade is the structure of the ADX compared to the directional movement indicators.  The directional movement indicators are bullish, but the ADX line continues to edge lower or sideways at a very low level.  This ADX line tells me that there may not be a lot of strength behind this bull move at this time.  I recommend holding current positions 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.

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 86 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.

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March Crude Oil is up 87 cents per barrel at $75.93 this morning as I write.  The included chart shows that March Crude Oil is attempting to challenge the near term resistance overhead in the vicinity of the 90 and 40 day moving averages along with the underside of the previous consolidation range that formed during October and November.  This near term resistance runs from $76.00 to $77.00.  My expectation is that crude oil will run out of steam on this rally attempt and roll over once again and test for lower price levels again.  The directional movement indicators bearish and the ADX line is meandering sideways.  I recommend holding our current positions.

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90

Short 2 March Crude Oil ($64.00 strike) put options from $1.65 each.

Long one March Crude Oil ($62.00 strike) put option from $1.51.

Short 2 March Crude Oil ($57.00 strike) put options from 83 cents each.

 March Crude Oil options expire in 56 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.

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March Natural Gas is down 6.6 cents at $5.668 this morning as I write.  The included chart shows that March Natural Gas has been struggling with the downward sloping 200 day exponential moving average (the green line).  The directional movement indicators are bullish but beginning to narrow, and the ADX line is now meandering sideways.  I believe that natural gas has discounted in all the current cold weather and the forecasts for the next week or so.  If weather forecasters can show that January will be a colder than normal month, then natural gas may have more rally ahead soon.  The rumor is that weather forecasters may forecast a warmer than normal January because of El Nino.  If that actually happens, then look for natural gas to completely give back the entire recent gains.  The technical indicators are beginning to show that the natural gas market is not quite sure of itself at this time.  I recommend standing aside in natural gas for now.  The risk/reward for any new trades are too high.

 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.

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February Gold is down 70 cents at $1086.00 this morning as I write.  The included chart shows that gold is still involved in a steep intermediate down trend which I term a major correction in the secular bull market.  The directional movement indicators are bearish and the ADX line is now beginning to meander sideway after falling steadily for the past two weeks.  The downside correction in gold is now beginning to reach levels where I previously thought this price fall might reach, in the $1080 area.  The lower end of my expectations would be between $1008, the original weekly break out point, and $1045, the level at which the government of India bought 200 tonnes back in October.  My strategy all along was to cover some of our short April call options during this correction.  I don’t want to add to long oriented positions until gold bottoms and convinces me that the next uptrend is underway.  We yesterday, we bought back the rest of the short April Gold call options that we had orders in for.  Here are the results from yesterday.

We covered one of our two short April Gold $1300 strike call options at $7.50.  We originally sold the two April Gold $1300 call options at $17.50 each.  So by buying back one at $7.50, we realized a $10 gain or $1000 gross profit on the one option.  We also covered both short April Gold $1500 call options at $1.00.  We originally sold those two April Gold $1500 calls at $6.90 each.  So the gain on the two short April Gold $1500 calls was $5.90 per ounce each or a total gross gain of $1180.  Therefore, combined with the covering of one of the short April Gold $1400 calls the other day, we are left with a very powerful bullish position, if prices return to the bull side that I expect.  See our open positions below.

Followers of this newsletter should have the following positions:

Long 2 February Gold ($960 strike) put options at $10.40 each. (The cost basis is zero if you consider the profit made on the short $935 puts that were associated with this trade originally).

Long 2 February Gold ($970 strike) put options at $10.60 each.  (the cost basis is zero if you consider the profit made on the short $950 puts that were associated with this trade originally).               

Long 1 February gold ($1270 strike) call option at an average cost basis of $5.00 per ounce.

(February Gold options expire in 34 days).

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Long 1 April Gold ($1210 strike) call option at $33.00.  (The cost basis is now $23.00 if you consider the covering of the one short April Gold $1300 call option on December 22^nd).

Short 1 April Gold ($1300 strike) call option at $17.50 each.

Long 1 April Gold ($1275 strike) call option at $17.80 per ounce.   (The cost basis is now $11.90 if you consider the covering of the one short April Gold $1400 call option on December 21^st).              

Short 1 April Gold ($1400 strike) call options at $9.90 per ounce each

Long 1 April Gold ($1375 strike) call option at $11.80.  (The cost basis is now zero if you consider the covering of the two short April Gold $1500 call options on December 22^nd).

 (April Gold options expire in 92 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.

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The March Euro is up 27 ticks at 1.4279 this morning as I write.  The included chart shows that the Euro is involved in a steep intermediate selloff that has already reached down to the 200 day exponential moving average.  The directional movement indicators are bearish and the ADX line continues to rise confirming the strength of this down trend.  I recommend holding our current covered put write trade on as is for now.  Once the lion’s share of the potential gain is realized, I may then recommend taking profits.  The maximum possible gain on this euro trade is $2550 gross.  Currently, we are ahead about $1700 on the trade.  I may be interested in taking early profits if we get ahead around $2000 or more.  Until then, it would take an important change in the look of the chart for me to exit early.  For now, stay with the trade.

 Followers should be long one March Euro (1.3850 strike) put from 121 ticks and short 2 March Euro (1.3400 strike) put options from 67 ticks each for an overall credit of 13 ticks or $162.50 gross.

You should also be long one March Euro (1.5750 strike) call option at 134 ticks and short 2 March Euro (1.6100 strike) calls at 75 ticks each or $937.50 each. 

You should also be short one March Euro futures contract form 1.4769, and short one March Euro (1.5100 strike) put at 535 ticks, or $6687.50.

 March Euro options expire in 72 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.

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The March Dollar Index is down 8.5 ticks at 78.525 this morning as I write.  The included chart shows that the March Dollar Index is involved in a strong intermediate rally.  The directional movement indicators are bullish and the ADX line is rising confirming the strength of the trend.  We currently have a covered call write trade in place, and I recommend leaving everything the same for today.  I would expect that trading volume will slow significantly between now and tomorrows noon close prior to the Christmas holiday on Friday.

 Followers of this letter should be long one March Dollar Index futures contract from 76.585, and be using a protective stop at 77.15 GTC. 

You should also be short one March Dollar Index (79.00 strike) call option from 130 ticks or $1300 gross.

There are 72 days left until the March Dollar index options expire.

 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.

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March Treasury Bonds are up 4/32 at 116:07 this morning as I write.  Most markets today are very quiet as investors are more focused on the holiday’s now than the markets.  By 12:15 PM tomorrow afternoon, all US commodity markets will be closed until after Christmas which is on Friday.  Trading will most likely be very quiet today and tomorrow.

The included chart shows that March Treasury Bonds broke below the support level in the 117:00 area a couple days ago.  The downside target for this move initially should be 111:00.  The directional movement indicators are bearish and the ADX line is rising which all confirm the strength of this down move.  We are currently positioned well to take advantage of this potential down move.

 Followers should be:

 Long one March Bond (114:00 strike) put option from 2 12/64. (Cost basis of 28/64, or $437.50, if you include the buy back of the two short 110:00 put options on December 8th).

Long one March Bond (108:00 strike) put option from 52/64.  (Cost basis of 2/64, or $31.25, if you include the buy back of the two short 105:00 put options on December 8th).

Long one March Bond (117:00 strike) put option from 128/64.

Short one March Bond (113:00 strike) put option from 51/64.

March options expire in 58 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.

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Overnight, March Corn was down ¼ cent at $3.99 ¾ per bushel.  The included chart shows that corn continues to meander in the middle of the trading range between $3.75 and $4.25.  As long as prices trade inside of this range, the action to me is just noise.  It is when corn prices break out of that range that I want to watch for.  Continue to hold the current ratio call spread until then.

 Followers of this letter should be long one March Corn ($4.30 strike) call option from 17 ¼ cents and short 2 March Corn ($4.90 strike) call options at 7 3/8 cents each.  (As a result of the profit made on the short $3.20 puts, our cost basis of this ratio spread is now a 1 cent credit!)

There are 59 days left until March options expire.

 With all the price tests above $4.00 recently,  I would hope that the producers have already liquidated most if not all of their corn that needs to be sold.

 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.

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The March Mini S&P Index is up 3.75 points at 1112.00 this morning as I write.  The included chart shows that the S&P is continuing to challenge the 1114.00 to 1115.00 area of the recent highs but with no follow through so far.  The directional movement indicators are now back to the bull side but the thing that continues to concern me is the fact that the ADX line continues to fall lower.  The ADX line falling to lower levels tells me that this current  up move does not have a lot of momentum behind it.  I would call this the reluctant rally.  Otherwise I would be considering adding more bullish positions to our current positions.  I recommend holding on to our ratio call and put spreads.

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 87 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.

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March Crude Oil is down 28n cents per barrel at $74.27 this morning as I write.  The included chart continues to show the large dome of price resistance overhead in the $76.00 to $83.00 area that looms over the crude oil market.  It will take a major news event or a lot of time for crude oil prices to get through that dome of resistance anytime soon.  That being said, the longer term secular trend is still bullish, so I term this selloff in crude oil a large correction in a longer term bull market.  The next big support level in March Crude Oil will be the $71.00 area where the major uptrend line is located, shown in red on the chart.  If prices don’t hold the $71.00 area, then you could say that crude oil may be entering an intermediate term bear market.  We will hold our current positions and watch what happens.

 Followers of this letter should have the following positions:

 Long one March Crude Oil ($69.00 strike) put option from $2.90 and short 2 March Crude Oil ($64.00 strike) put options from $1.65 each for an overall credit of 40 cents or $400 gross.

Followers should also be long one March Crude Oil ($62.00 strike) put option from $1.51.

Short 2 March Crude Oil ($57.00 strike) put options from 83 cents each.

 March Crude Oil options expire in 57 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.

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