March Natural Gas is down 12.1 cents this morning at $5.684 as I write.  Despite the winter storms over the Northeast the last few days, natural gas is struggling to hold on to rallies.  The included chart shows that the rally in natural gas may be running out of steam suggesting that the price has discounted the winter weather so far.  As a matter of fact, the way the futures markets work, I wouldn’t be surprised if natural gas futures haven’t already discounted a lot more winter weather.  All I know is that, the below normal temperatures in the northern states will have to remain and stay consistent for the next several weeks to maintain rallies in natural gas, considering the overhang of huge supplies.  March natural gas is running into resistance at the 200 day moving average and below the October highs.  I still recommend standing aside in natural gas for now.

 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 $6.50 per ounce at $1118.00 this morning as I write.  The included chart shows that February Gold has managed to bounce about $20 since testing the $1100 area last weeks.  The directional movement indicators are still bearish and the ADX lines is still declining.  There is now evidence yet that the secular bull market has resumed in gold yet.  I still expect February Gold to test lower below the $1100 level before this correction is over.  That being said, we are in a longer term secular bull market and the bull move could resume at any time.  I just do not expect that to happen until after the end of the year.  For now, I am not ready to begin adding new bullish positions in the gold market yet, but I am interested in attempting to set prices out there to try to buy back some of our short April call option positions.  I will let those continue to work GTC.  I will update you on if and when those trades ever get filled.

 I recommend attempting to buy only one April Gold ($1300 strike) call option to liquidate at $7.50 GTC.

I recommend attempting to buy only one April Gold ($1400 strike) call option to liquidate at $4.00 GTC.

I recommend attempting to buy both April Gold ($1500 strike ) call options to liquidate at $1.00 each GTC.

 We are currently long three April gold calls and short six other strike priced April gold calls.  On the anticipation that a large bull move in gold is yet to come in the first quarter of 2010, my near term goal is to cover four of the six short April Gold call options for profits to make our remaining positions more potent on the upside.  Once gold begins to form a bottoming pattern, I will want to add to long gold positions as well.  Stay tuned.

 Long 2 February Gold ($960 strike) put options at $10.40 each.

Long 2 February Gold ($970 strike) put options at $10.60 each.                 

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

(February Gold options expire in 36 days).

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Long 1 April Gold ($1210 strike) call option at $33.00.

Short 2 April Gold ($1300 strike) call option at $17.50 each.

Long 1 April Gold ($1275 strike) call option at $17.80 per ounce.                 

Short 2 April Gold ($1400 strike) call options at $9.90 per ounce each

Long 1 April Gold ($1375 strike) call option at $11.80.

Short 2 April Gold ($1500 strike) call option at $6.90 each.

(April Gold options expire in 94 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 34 ticks at 1.4353 this morning as I write.  The included chart shows that the March Euro is bouncing today after prices tested the 200 day exponential moving average last Friday.  The directional movement indicators are bearish and the ADX line is rising but being contained within the downward sloping 5 day exponential moving average, so far.  I recommend keeping our current positions for now.  I am not getting any signs that the ADX line is ready to rollover, so the current downtrend in the Euro seems to have more to go.

 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 74 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 19 ticks at 78.005 this morning as I write.  The included chart shows that the near to intermediate trend of the dollar is upwards.  The directional movement indicators are bullish and the ADX line is rising.  The March dollar index continues to trade above the 5, 40, and 90 day exponential moving averages as it approaches the 200 day moving average  that is located in the 80.00 area.  The low of the day, last Thursday, before the strong secondary break out that occurred on that day, was 77.29 and the 90 day exponential moving average comes in today at 77.25.  I believe that those two areas need to hold in the near term for this dollar rally to last.  Therefore, I recommend raising our protective stop up from 76.93 to 77.15 GTC.  This protective stop will probably stay in place for a while until more evidence arises that we need to move the stop again.  We have to be careful about where to place the protective stop now, and the fact that we have written a call option gives us the leeway to keep the stop a distance away.

 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 74 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 16/32 at 117:24 this morning as I write.  The included chart shows that following the one day rally last Thursday, the March T-Bond market has largely given back that rally Friday and today so far.  Still looming overhead is the double top at 123:00 and below is a double bottom in the 117:00 area.  The directional movement indicators are bearish but the ADX line is meandering sideways.  A close below the 117:00 area would be bearish and the downside target of the confirmed double top would be in the 110:00 to 111:00 area.  We shall see.  For now, I recommend holding our 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 60 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 Corn is 2 3/4 cents at $3.94 ¼ this morning as I write.  The included chart shows that March corn continues to trade inside of the $3.70 to $4.25 range that has been in place over the past two months.  Eventually, a break out of that range will bring on a sharp move in that particular direction.  Until then, we have to be patient and look for patterns within this trading range that may give us clues for what will happen next.  For now, it seems as if corn is reacting to a stronger dollar rather than its own fundamentals.  We will hold current positions for now.

 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 63 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 .75 at 1095.00 this morning as I write.  The included chart shows that the S&P has generally maintained up upward channel of trading over the past four months.  Lately, prices have had a lot of trouble with the 1114.00 to 1115.00 area.  As you can see from the chart, prices have formed a flat top in that area over the past month.  Prices seem to be rolling over somewhat right now.  Also, notice that all of the selloff’s from the 1115.00 highs, only fell to progressively higher lows each time.  That shows that the stock market is showing a lot of resilience when a lot of other markets are currently in large corrections.  We will hold current positions for now and watch for a breakout of the trading range.

 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 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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March Crude Oil is up 99 cents at $75.88 per barrel on unconfirmed news that Iran may have invade an oilfield in the southeastern corner of Iraq along the Iraq/Iran border.  The included chart shows that there is a huge area of resistance overhead, in all of that congestion, between $77.00 and $83.00.  It is going to take a long time to be able to work through all of that overhead supply unless there is some market changing world event that takes place.  In the mean time, prices have lately been able to rally back to the downward sloping 90 day exponential moving average and rally to the back side of the congestion area.  The directional movement indicators are still bearish and the ADX line has begun to move sideways after moving upward recently.  Until resistance overhead is broken, I expect that this rally in crude oil is just a short term bounce before prices run out of steam and resume their intermediate term down move.  Support comes in at the uptrend line around $71.00.  We will stay with current positions for now.

 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 61 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 7.7 cents at $5.864 this morning following a very sharp rally yesterday.  Natural gas rallied sharply yesterday on news that the weekly supplies dropped by 207 billion cubic feet, which was a lot more than the 167 billion cubic foot draw that was expected.  The five year average for this week of the year is a draw of 127 billion cubic feet.  This was good news for the would be bulls.  So, instead of 800 billion cubic feet in excess supplies, we now have about 720 billion cubic feet in excess supplies.  If this cold weather, that includes well below temperatures, can last for the next two months then a large bull market in natural gas will be warranted.  Some weather forecasters are looking for January to be a much milder month in temperatures because of the El Nino effect.  If that comes true, then look for natural gas prices to fall way back towards the lows again.  That is always the difficulty in playing natural gas in the winter season; prices move at the whim of the latest weather forecasts.  For now, the weather is supposed to be very cold through year end.  Prices have probably already discounted much of that anticipated weather.

Technically, the directional movement indicators are bullish and the ADX line is rising.  The weekly charts are looking more bullish as well.  I would suspect that there is also an anticipation of a pickup in industrial demand.  That remains to be seen.  Prices have now rallied right into the 200 day exponential moving average, and the October weekly highs are just above here in the $6.20 area.  If natural gas prices can manage to close above the $6.20 area, then the market would, once again, be making its first higher high since making new contract lows a couple weeks ago.  All of this that I have mentioned in the last few sentences tells me to be watching the next correction selloff in natural gas for potential places to consider going long again.  For now, I don’t think that it is wise to chase this market right now.  The risk/reward on a long trade would be much higher than I would want to take on right now.  If the weather forecasters are correct for January, we will easily get chances to take a look at the long side of natural gas at that time.

 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 $6.50 per ounce at $1100.90 this morning as I write.  The included chart shows that yesterday, February Gold fell sharply and briefly broke the $1100 area.  I would not be surprised to see gold continue to fall back towards the $1050 area, which is also near the level where India bought their 200 tonnes from the IMF back in late October.  The longer term secular trend is still up, so we need to be focused on attempting to liquidate some of our short April call options soon and possibly add new positions once the correction ends.  The directional movement indicators are bearish and the ADX line continues to fall.  With this all in mind, I recommend the following actions:

I recommend attempting to buy only one April Gold ($1300 strike) call option to liquidate at $7.50 GTC.  The current price is near $12.00, but if gold drops like it did yesterday, our price would be close.

I recommend attempting to buy only one April Gold ($1400 strike) call option to liquidate at $4.00 GTC.  The current price is near $6.00, but if gold drop like it did yesterday, our price would be close.

I recommend attempting to buy both April Gold ($1500 strike ) call options to liquidate at $1.00 each GTC.  The current price is a little over $3.00, but if gold drops down another $30 or so, we should be close.

We are currently long three April gold calls and short six other strike priced April gold calls.  On the anticipation that a large bull move in gold is yet to come in the first quarter of 2010, my near term goal is to cover four of the six short April Gold call options for profits to make our remaining positions more potent on the upside.  Once gold begins to form a bottoming pattern, I will want to add to long gold positions as well.  Stay tuned.

 Long 2 February Gold ($960 strike) put options at $10.40 each.

Long 2 February Gold ($970 strike) put options at $10.60 each.                 

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

(February Gold options expire in 39 days).

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Long 1 April Gold ($1210 strike) call option at $33.00.

Short 2 April Gold ($1300 strike) call option at $17.50 each.

Long 1 April Gold ($1275 strike) call option at $17.80 per ounce.                 

Short 2 April Gold ($1400 strike) call options at $9.90 per ounce each

Long 1 April Gold ($1375 strike) call option at $11.80.

Short 2 April Gold ($1500 strike) call option at $6.90 each.

(April Gold options expire in 97 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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