The March Dollar Index is down 22.5 ticks at 77.95 this morning as I write.  The included chart shows that the March dollar index is still in some sort of correction of the recent uptrend.  I would expect support to hold in the 77.34 area where the 90 day exponential moving average comes in.  We shall see.  The directional movement indicators are bullish and the ADX line continues to rise, suggesting that there is more dollar rally to come soon.  Until that picture changes, I will continue to fine tune our long dollar covered call write trade.

As the dollar corrects downward here, our short dollar call option loses value which is good for us.  On the anticipation of this downward correction coming to an end soon, I want to cover our short call option at a lower price, while maintaining our protective stop on the futures contract just in case.  Therefore, I recommend attempting to buy back our short March Dollar 79.00 strike call option, previously sold for 130 ticks, at a price of 80 ticks, and make that a Good Until Cancelled (GTC) order.  It is going to take more selloff in the dollar index for this order to be filled.  I may adjust the price of the order in the next several days.

 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 67 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 down 12/32 at 114:27 this morning as I write.  The included chart shows that March T-Bonds are in a near term steep decline coming off of the break of the neckline to the double top last week.  The double top measures an initial downside price objective of 111:00.  The directional movement indicators are bearish and the ADX line is rising.  I am very happy with the current positions that we already have in place.  The US Treasury Department will be busy raising more money to finance our national debt by having treasury auctions for 2 year notes today, 5 year notes tomorrow and 7 year notes on Wednesday.  These shorter maturity auctions usually go well.  It is the longer term maturities like the 10 year and the 30 year  auctions that don’t go so well.  The common theme amongst all the auctions is that every time they have an auction, the amount to be borrowed gets bigger since our national debt grows by leaps and bounds.  Just how much appetite will foreigners or anyone else have over time for this paper, as our government needs to borrow more and more?

 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 53 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 up ¾ cent at $4.05 ½ per bushel.  The included chart shows that the $3.75 to $4.25 trading range continues and all the trading inside that range is just noise.  As I have said before, we need to be patient and watch for either a break out of the range, or a tightening of the range into what I call a coil for the build up for a large move.  For now, we will just hold our current ratio call spread position and enjoy the holidays.  Most commodities close at noon today.

 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 57 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 2.50 points at 1118.00 this morning as I write.  The included chart shows that the stock market continues to trudge higher at a very slow pace.  The directional movement indicators are bullish and the ADX line is now meandering sideways at a very low level suggesting no momentum behind this rally.  That lack of confirmation from the ADX line tells me to stand aside for now.  I recommend holding our current positions.  The stock market index futures close at 12:15 PM today and will be closed for the Christmas holiday.

 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 85 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 41 cents at $76.84 this morning as I write.  The included chart shows that yesterday, March Crude Oil had a very strong rally on a larger than expected draw down in crude oil inventories for the past week, though many believe that this was artificial because of all the fog in the Houston ship channel last week, that prevented many oil tankers from reaching port to offload their inventory.  If this is true, we should see supply adjustments in the next couple of weekly reports.  Technically, March Crude Oil rallied right up to the back side of the previous market breakdown below the two month consolidation and right to the 40 day moving average.  If I am right, prices should begin to stall up here, like they are today, and then erode back towards the $70.00 area.  I will be watching that pull back for clues and patterns that develop suggesting when the next trend will occur.  Until then, hold on to current positions.  HAPPY HOLIDAYS!!

 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 55 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 up 4.4 cents this morning at $5.896 as I write.  The heavy winter storm coming across the Midwest today and tomorrow is helping to hold near term contracts of natural gas up for now.  It is interesting to note that the two year and further out contracts were testing back towards their contract lows yesterday.  What does this tell us?  I think that the current price action in natural gas is telling us that the below normal temperatures are giving natural gas a near term boost, but the market knows that the is and probably will be a very very large inventory overhand.  For now, stand aside in natural gas.

 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 up $6.40 per ounce at $1100.40 this morning as I write.  Gold closes for trading today at around 11:30 AM, so this is a very short day ahead of the Christmas holiday.  The included chart shows that gold is in the second day of a bounce off the recent lows.  This does not mean that gold is beginning its next big rally yet.  Gold did almost this exact same thing six and seven trading days ago before dropping another $70 per ounce.  For the bulls, we need to see gold bounce sharply in here right now, then you want to see gold come back and retest and hold before rallying again.  Stay tuned.  For now, I am happy with the positions that we already have in place.  When the bull trend in gold appears to really be starting again, then I want to add to our bullish positions.  Stay tuned for that as well.

 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 33 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 91 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 60 ticks at 1.4394 this morning as I write.  The included chart shows that the March Euro is bouncing firmly off of the green 200 day moving average.  The directional movement indicators are still bearish and the ADX line is still rising, suggesting to me that another down leg in the Euro is probable after this short bounce.  The currency markets close at noon today, so I recommend holding our current positions as is for now and enjoy the holiday weekend.

 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 71 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 27 ticks at 77.96 this morning as I write.  The included chart shows that the dollar is now having its first pull back from the sharp rally over the past month.  So, does the dollar have another rally leg coming or is this all there is for the dollar correction inside the secular bear market?  The directional movement indicators are bullish and the ADX line is still edging higher.  Until proven otherwise, I would have to say that this is a pullback inside of an intermediate term rally in the dollar, meaning that there is probably another rally leg to come.  Notice that the green 200 day exponential moving average is beginning to show up on the chart, today at 79.933.  I recommend holding our protective stop right where it is for now.

 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 71 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 3/32 at 116:01 this morning as I write.  By noon today most commodity markets will be closed including treasury bonds.  Trading volume should be very light.  The included chart shows that March Treasury Bonds broke the double bottom support a few days ago.  The double top at 123:00 and the neckline of the double top at 117:00, project a downside target of 111:00.  Based on the speed at which it took the previous rally to run from 111:00 to 123:00, it should take at least three months for March T-Bonds to fall to 111:00.  The caveat to that idea is the fact that more times than not, when it takes a long time for a rally to rally and peak out, the following selloff is usually quick as most longs will want out of the exit fast.  So, let’s say that the target of 111:00, if hit, should happen within three months from now.  Hold current positions.

 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 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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