Next Monday, May 31^st, it is Memorial Day Holiday.  All US futures market pits will be closed including the stock market.  There will be some limited computer trading until 10:30am Monday morning in equity indexes, and until noon Monday in currencies, interest rates.  The volume should be very small.  Today, the pits for trading in currencies and interest rates will close at noon.  All these times listed are Central Standard time.  I will be leaving town at 11:00 AM TODAY just for the weekend, and will be back in the office Tuesday morning, June 1^st.  So, if you have orders that you just have to have done after I leave today, please enter you orders straight to the Chicago trading desk.  I would imagine that volume will be very light today as many traders among others will be traveling.

 August Crude Oil is down 27 cents at $75.35 per barrel after reaching $76.79 overnight.  The included chart shows that crude oil is in a sharp short covering rally.  So far, we have seen a $21 per barrel drop and a 6 ½ barrel short covering rally. That is about a 31% correction of the down trend, which is very close to a normal Fibonacci correction.  The directional movement indicators are still bearish but narrowing and the ADX line has rolled over.  This ADX rollover could be suggesting that the lows are in and that we are going to see an extended period of back and forth choppy sideways volatile trade for the next few weeks.  We won’t know until crude oil comes back down and tries to retest back towards the lows again, which should be soon.  Volatility should remain high and make it very difficult to trade.  I recommend standing aside.  Those who dare to trade better be very nimble and be ready to take a lot of overnight price risk.

 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.

Continue Reading

Overnight, March Corn was up 2 ¾ cents at $4.16 ½ per bushel.  The include chart shows that March Corn is beginning to show more and more strength and resilience while trading near the upper end of the trading range.  The only thing remaining is for March corn to break out over the $4.25 area on good volume.  That would be breaking out over the upper end of the trading range and the price target measured by the height of the range would be about $4.75.  Coincidentally, the $4.75 area is near the June price highs last summer.  It is interesting on how markets eventually return back to important price areas in the past.  They are like magnets.  The directional movement indicators are holding a bullish posture, just barely, and the ADX line is meandering sideways.  We need that break out!

 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 50 days left until March corn options expire.

 Short one May Corn ($3.70 strike) put option from 9 cents or $450 gross credit.

Long one May Corn ($4.30 strike) call option from 29 ¼ cents and short one May Corn ($4.60 strike) call option from 18 ¾ cents for an overall cost of 10 ½ cents or $525 gross.

There are 113 days until May corn 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.

Continue Reading

The March Mini S&P Index is up 1.50 points at 1123.50 this morning as I write.  The included chart shows that the S&P index continues to edge higher, seemingly every day, relentlessly as many analysts continue to look for corrections, every day, relentlessly.  I will begin to worry when the analysts quit expecting corrections every day.  The other way to look at this is that as long as the Fed has a zero interest rate policy and short term rates are less than 1%, there really aren’t any other good alternatives to get a return on your money outside of the stock market.  Stock market values can go up for a long time under this scenario.  The directional movement indicators are bullish and the ADX line is edging higher.  I recommend holding current positions.

 Followers of this letter should be:

 Long one March Mini S&P (1190.00 strike) call option from 17.00 points and short 2 March Mini S&P (1220.00 strike) call options from 9.50 points each for a total credit of 2.00 points or $100 gross.

Long one March Mini S&P (1000.00 strike) put option from 23.00 points and short 2 March Mini S&P (935.00 strike) put options from 12.75 points each for a total credit of 2.50 points or $125 gross.

Long one March Mini S&P futures contract from 1125.50 and short one March Mini S&P (1080.00 strike) call option from 70.75 points. (This is a deep in-the-money covered write trade.)

March Mini S&P options expire in 78 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.

Continue Reading

March Crude Oil is up 45 cents at $80.48 per barrel this morning as I write.  The included chart shows that March Crude Oil continues to stay well supported and is testing the light blue down trend line coming down from the October/November consolidation pattern.  The directional movement indicators are bullish and the ADX line is still edging lower to sideways.  With no other news to go on, I would suspect that the near term support for crude oil is because of the citizen protests going on in Iran as some think that a revolution is near for that country.   Reality versus what we hope for may be two different things.  So far, not one barrel of crude oil has been affected by the riots in Iran.  I recommend holding our current positions and not doing anything new today ahead of the holiday.

 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 48 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.

Continue Reading

March Natural Gas is up 5.6 cents at $5.741 this morning as I write, following yesterday’s 13 cent drop.  The included chart shows that March Natural Gas is showing that $6.00 is becoming a strong resistance point for price rallies.  The natural gas market has probably discounted all the cold weather news and near term cold weather forecasts already into its price.  The directional movement indicators are still bullish but beginning to narrow and the ADX line is beginning to rollover to the downside.  This is not good news for the would be bulls.  I believe that the only thing in the near term that will save natural gas prices from falling is if weather forecasters come in over the weekend and forecast colder than normal temperatures well beyond January 10^th.  So far, this rally in natural gas from contract lows has stalled in the $6.00 area, about 24 cent shy of the highs made in late October.  This should be very disappointing to the bulls considering the extra cold temperatures that have been experienced over the last couple of weeks.  Remember, that the definition of a classic bull market is one that is making higher highs and higher lows.  So far, the current rally hasn’t even reached the first important weekly high, which is in the $6.25 area.  Bear markets are markets where prices are making lower highs and lower lows in price which is still the case here.  This is only a rally in a bear market until proven otherwise.  The other negative is the fact that all the further out delivery months starting in 2012 are trading within penny’s of their contract lows.  Those far out delivery months have not participated in this near term rally whatsoever.  I recommend standing aside for now in natural gas.  As bearish as I sound, I still believe that natural gas is in the beginning process of building a long term secular bottom in prices.  So, on the next selloff, I will be looking, once again, to attempt to position longer term positions in natural gas.  I just need to get the right set up on the technical picture first.

 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.

Continue Reading

February Gold is up $11.00 per ounce this morning at $1103.50 as I write.  The included chart shows that February Gold is starting to show some support in the $1075 area on the bottom side and resistance in the area of the downward sloping 40 day exponential moving average at about $1115.00.  The directional movement indicators are bearish but narrowing and the ADX line continues to edge lower.  We will need to pay close attention to the trading action in gold over the next few trading days to see whether the $1075 support will wind up being the lows for this major correction.  We will alos have to keep an eye open for technical signals that a new bull move is beginning.  There no confirmation of that yet.  This could just be a resting point before gold tests down towards the $1045 Indian gold purchase levels.  Stay tuned. 

 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 26 days).

__________________________________________________________________________________________________________

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 84 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.

Continue Reading

The March Euro is up 44 ticks at 1.4377 this morning as I write.  The included chart shows that the Euro is still in an intermediate term down trend but is beginning to show support just above the 200 day moving average.  The directional movement indicators are still bearish but narrowing and the ADX line is beginning to turn down suggesting that the down swing in prices may be coming to an end.  Yesterday, as I began seeing this unfold, I recommend to liquidate our deep in-the-money covered put write trade.  Here are the results from that trade.  We covered our short Euro futures contract at 1.4338 for a gross profit of $5387.50 and we liquidated the short March Euro 1.5100 put option at 820 ticks for a gross loss of $3562.50, so the overall gross gain on this trade was $1825.00!

We will continue to hold the ratio call and put spreads.  Happy New Year!

 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 for an overall credit of 16 ticks or $200 gross.

 March Euro options expire in 64 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.

Continue Reading

The March Dollar Index is down 37.5 ticks at 77.895 this morning as I write.  The included chart shows that the March Dollar is beginning to struggle within its current rally.  So, is this the end of the dollar correction before the next bear leg begins or is this just light volume trading ahead of the New Year’s holiday.  The directional movement indicators are still bullish but narrowing rapidly and the ADX line is beginning to slope back downward.  This is not a good sign for the would be bulls in the near term.  I think that it is time to tighten up our trade now.  Today, I recommend raising our protective stop on our long March Dollar Index futures contract from 77.15 up to 77.65 which is just below the lows for this week.  I also recommend raising our price to buy back the short March Dollar 79.00 call from 80 ticks up to 90 ticks.  As the day goes on today, I may change some of these prices, so stay tuned.  I am looking for the sidelines today!!

 Followers of this letter should be long one March Dollar Index futures contract from 76.585, and be using a protective stop at 77.65 GTC. 

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

There are 64 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.

Continue Reading

March Treasury Bonds are down 6/32 this morning at 115:22 as I write.  The included chart shows that March T-Bonds are still involved in a fairly steep decline in price ever since the neckline of the double top was broken a week ago in the 117:00 area.  That 117:00 area is now resistance on any rallies.  Traders should be looking to sell short more March Bonds on rallies back towards the 117:00 area.  The directional movement indicators are bearish that the ADX line continues to rise.  The measured initial downside target for March Bonds is 111:00 as mentioned in previous letters.  On this expected light trading day prior to New Years, I recommend holding our current positions and enjoy the holiday.

 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 50 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.

Continue Reading

Overnight, March Corn was down 1 ¾ cents at $4.15 ¼.  The included chart shows that March Corn continues to trade within the $3.75 to $4.25 trading range.  The latest rally over the last few days has shown some promise that something new is occurring.  The evidence for something new occurring in corn prices comes because the rally high of a couple days ago took out the previous rally high from a week ago and the with the rally, the purple ADX line has begun to rise, which hasn’t occurred throughout this whole consolidation range.  Today, the directional movement indicators continue to be bullish and the ADX line continues to rise.  Yesterday, we added to our bullish posture by adding the following May corn positions.  Yesterday, we sold one May Corn $3.70 put option for 9 cents, or $450 gross credit.  We also bought one May Corn $4.30 call option for 29 ¼ cents and sold one March Corn $4.60 call option for 18 ¾ cents.  So the call spread cost 10 ½ cents.  Combined with the short put option and the total overall cost of this combination trade was 1 ½ cents or $75.  A few hundred dollars of margin collateral was also required because we are naked short one put option at the $3.70 level.

May corn option expiration is in 114 days.  So what are the possibilities for this trade?  Well, at expiration, if May corn finishes above $3.70 and below $4.30, then the loss will be $75 gross.  The maximum gain at expiration would be if prices close over $4.60, and then the profit would be 28 ½ cents or $1425 gross.  The risk is unlimited if prices begin to fall below $3.70 because of the short naked put.  Between here and expiration, if May corn prices begin falling below the recent trading range in the $3.75 to $3.80 area, then I would be wanting to liquidate the trade.  Also, if May corn prices rally sharply in the near term, I may just take early profits on the whole trade.  If May corn prices rally steadily over the next month, the short put will drop in value and we may have an opportunity to liquidate that part of the trade early.  So, there are a lot of possibilities with this trade as prices move and time goes on.

 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 51 days left until March corn options expire.

 Short one May Corn ($3.70 strike) put option from 9 cents or $450 gross credit.

Long one May Corn ($4.30 strike) call option from 29 ¼ cents and short one May Corn ($4.60 strike) call option from 18 ¾ cents for an overall cost of 10 ½ cents or $525 gross.

There are 114 days until May corn 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.

Continue Reading