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.

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February Gold is down $5.50 per ounce at $1092.60 this morning as I write.  The included chart shows that February gold is still correcting off of its price highs made three weeks ago in early December.  The directional movement indicators are still bearish and the ADX line continues to fall.  I believe that this is a large correction in gold that is part of a major long term secular bull market.  The best thing to do right now is to be patient and wait for the charts to give us clues as to when it is time to put on more bullish positions again.  Until then, gold prices could fall further in the near term.  The lows in February Gold a week ago in the $1075 area may turn out to be important lows considering that those lows were very near the 90 day moving average, and near the area where gold broke out to the upside in early November following India’s purchase of 200 tonnes of gold from the IMF in October.  I would think that if the $1075 area doesn’t hold, then a test back toward the $1045 area where India actually bought the gold would be the next potential low.  Again, let’s be patient and wait for evidence of a low in this correction before getting aggressive again.

 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 27 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 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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February Gold is down $1.70 per ounce at 1106.30 this morning as I write.  The included charts shows that near term on this bounce, February Gold is beginning to have some trouble with prices very near the brown 40 day exponential moving average in the $1115.00 area.  So, near term, February gold seems to have near term support right along the 90 day exponential moving average, in the $1075.00 area growing resistance along the 40 day average in the $1115.00 area.  The directional movement indicators are still bearish but narrowing and the ADX line continues to fall.  The longer term trend for gold is up, and we need to stay focused on this correction to get ready to add to our long positions.  If and when the gold market gives me some clear signal of another bull move, then I will look to be more aggressive to add new positions.

 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 28 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 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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February Gold is up $6.10 per ounce at $1110.90 this morning as I write.  The included chart shows that gold is bouncing off of the recent price lows.  So, is this the beginning of the next bull market leg to the upside?  The directional movement indicators are bearish but narrowing, and the ADX line is edging lower.  This all suggests to me that it is possible that the low is in, but that there will probably be some more back and forth trading before the next bull leg is ready to take off.  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 29 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 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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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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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).

__________________________________________________________________________________________________________

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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February Gold is down $1.60 per ounce at $1094.40 this morning as I write.  The included chart shows that February gold closed below the $1100 level yesterday, and looks as if prices may still have $20 to $50 lower to go potentially before a low is put in and the next rally leg can begin.  That of course remains to be seen, but the directional movement indicators still show a near term bearish market and an ADX line that is still edging lower.  I won’t get excited about adding new bullish gold trades until prices begin some sort of basing action first.  In the mean time, I will continue to try to cover some of our short April call options.  Yesterday, we did fill on one of those April call options.  We bought back one of our two short April Gold $1400 call options at $4.00 that we originally sold for $9.90 per ounce resulting in a gross gain of $590.  As we cover those short April Call options, our upside profitability will be enhanced on the next major gold rally, assuming it comes before expiration in late March.  There are two important support levels to keep an eye on going forward.  Those support levels are the $1045 area made back in October where the government of India purchased 200 tonnes of gold from the IMF.  The other is the $1008.00 area of the bullish weekly inverted head and shoulders pattern that I have mentioned many times before.  February gold prices should hold down in those areas on a pull back like the one happening now.  Remember that secular bull markets can return to its bullish ways at a moment’s notice, so price may not reach those downside targets.

 I recommend attempting to buy only one April Gold ($1300 strike) call option to liquidate at $7.50 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 five 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 three of the five 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 35 days).

__________________________________________________________________________________________________________

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 1 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 93 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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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).

__________________________________________________________________________________________________________

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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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).

__________________________________________________________________________________________________________

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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February Gold is down $$19.50 per ounce at $1116.70 this morning as I write.  The included chart shows that yesterday’s rally was just a one day bounce in this downward correction.  I am sure that the very strong dollar is putting the pressure on gold and other commodities today.  The directional movement indicator is bearish and the ADX line continues to fall.  We currently have a few ratio call spreads out to April.  My goal is to eventually buy back the short calls that are involved in those spreads.  The strike prices involved are the April $1300’s, $1400’s and $1500’s.  Those strike prices are still too expensive to buy back yet, and the gold chart still suggests that gold is going to trade lower first, so we will be patient and wait.  I still expect to see gold trade below the $1100 area, and possibly fall back to the $1050 area.  We shall see.

 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 40 days).

__________________________________________________________________________________________________________

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 98 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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