The March Dollar Index is down 48.5 ticks at 74.97 making new contract lows this morning as I write.  This weakness in the dollar is helping most commodities bounce higher today.  The included chart shows that the dollar down trend is strong.  The directional movement indicators are bearish but the ADX line is still edging lower which is bothersome for a trend that looks this solid.  You would think that the ADX line would be rising by now.  I would term this as a reluctant nervous down trend which means that at the first sign of trouble, short traders would probably cover short positions quickly.  I expect that eventually the dollar will test its all time lows in the 70.69 area made last year.  I don’t see any good short trades to place on the dollar at this time that wouldn’t involve a high degree of risk.  So I recommend standing aside in the dollar 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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The March Euro is up 11 ticks at 1.4972 this morning as I write.  The included chart shows that the euro is attempting to challenge the recent contract highs in the 1.5050 area.  A close above that level could bring on a swift follow through rally.  Until then, a failure to break out soon could bring on a lot of profit taking.  Of course, the fundamentals still favor a weakening US dollar.  The directional movement indicators are slightly bullish but really just right on top of each other along with a falling ADX line.  This all suggests that, in the near term, there doesn’t seem to be any powerful trend to the euro which sounds to me like this rally attempt will fail or at the very least, continue to stall.

 Followers of this letter should also be long one December Euro (158.00 strike) call option from 32 ticks and short 2 December Euro (160.00 strike) call options from 20 ticks each for a combined credit of 8 ticks or $100 gross.  Option expiration is in 10 days.

 Followers should also 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.

 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.

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The March Dollar Index is down 3.5 ticks at 75.465 this morning as I write.  The included chart shows that the down trend in the dollar continues, although for the past month, prices have been wavering back and forth.  Prices seem to be attempting to challenge in the direction of the recent contract lows of 74.89 reached two weeks ago.  The historical low for the dollar index is 70.695 made in March 2008.  Barring any changes in the attitude at the Fed, I would expect the dollar to eventually challenge those historical lows in the months to come.  Given the trading activity as of late, I recommend standing aside in the dollar index for now.  I don’t see any good trades to do from a risk reward standpoint.  The directional movement indicators, all seem to be falling along with the ADX line suggesting that there is no solid trending market in the short run.  The longer term charts still show the solid down trending dollar market, just not the short term.

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.

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I am back to covering the December contract until the December Options expire, considering that if the euro breaks out to the upside now, it could wake up our ratio call spread.

The December Euro is up 137 ticks at 1.4992 this morning as I write.  The enclosed chart shows that the euro, once again, challenged its 40 day moving average that has been support for this market over the past several months.  The test held and now is reversing prices back up towards the recent contract highs in the 1.5050 area.  I still expect those highs to eventually come out and see prices challenge the all time highs at 1.6000.  We still own our December 1.58/1.60 ratio call spread that we will continue to hold on to.  On Friday we put on a March 1.385/1.340 ratio put spread for an overall credit of 13 ticks or a gross credit of $162.50. 

The directional movement indicators, which have been wavering back and forth from bullish to bearish and back again, are poised to cross back to the bullish side.  The ADX line continues to drop suggesting that there is no strong trending market, yet.  My longer term trend indicators are all bullish on the euro.

Followers of this letter should also be long one December Euro (158.00 strike) call option from 32 ticks and short 2 December Euro (160.00 strike) call options from 20 ticks each for a combined credit of 8 ticks or $100 gross.  Option expiration is in 11 days.

Followers should also 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.

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.

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The March Dollar Index is down 61 ticks at 75.475 this morning as I write.  The enclosed chart shows that the dollar really hasn’t gone anywhere over the past four weeks accept trade in a 200 tick range despite all the talk on TV and in newsprint about its affect on commodity prices.  The volatility in commodity prices has been on worries about what the dollar might do rather than what it has actually done.  It is amazing how talk and chatter can move markets over periods of time.  The three day rally last week just put the dollar back to its 40 day moving average which has held the dollar back over the last several months.  Now prices are heading back to their recent contract lows.  The longer term trend is still for a lower dollar.  We will stand aside in the dollar 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.

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