Dan is recording two CBOE TV Option Safari shows today:

GE Calendar

VIX vertical spread repair

The VIX trade was from an Options Safari show recorded on April 4th. Six weeks later, VIX is about where it was with 30 days still to go in the trade. Dan rolls down the spread which increases the debit in the trade, but lowers the breakeven nearly 3 points to near the current price of the VIX.

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Good Morning SOM traders. The bull market remains intact as last week’s sell-off was bought up on Friday and based on the pre-market futures that looks to continue today. Looking forward…we have a busy week of economic news that could move the markets (all announcements are pre-market, 8:30am, unless indicated and all times are EST) – Today: Personal Income, Pending Home Sales (10:00am), Tuesday: ISM Manufacturing, Bernanke speaks (10:00am), Wednesday: ADP Employment, Bernanke speaks again (10:00am), Thursday: Weekly Jobless Claims, Friday: Monthly Employment Report. Overnight the Asian markets were slightly higher and at the time of this writing Europe is up higher just under 1% and the U.S. index futures are higher.

Technicals…All of the indexes closed below their respective 20EMAs by last Wednesday but did not cross below the 50EMAs. On Friday all of the indexes regained and closed above their 20EMAs except the DJI which closed 1 point below. This was very bullish action and allowed the overbought oscillators to unwind a bit during the week allowing for a technical move higher. Here is what I see for support/resistance (all MAs are 6 month Exponential):
DJI: support: $12,132 (20 EMA), resistance: $13,150 (2008 swing high)
SPX: support: $1,315 (20 EMA), resistance: $1,433 (2008 swing high)
NDX: support: $2,341 (20 EMA), resistance: $2,594 (2001 swing high)
RUT: support: $810 (20 EMA), resistance: $847 (2007 swing high)

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Good Morning SOM traders. The bull market continues to grind higher! You can’t fight the trend but the longer it goes in one direction the more severe the correction will be when it finally arrives so downside insurance is as important as ever. Looking forward…we have a busy week of economic news that could move the markets (all announcements are pre-market, 8:30am, unless indicated and all times are EST) – Tuesday: Retail Sales, Wednesday: Housing Starts, PPI, FOMC Minutes (2:00pm), Thursday: CPI, Weekly Jobless Claims, Philly Fed (10:00am), Uncle Ben (10:00am). Overnight the Asian markets were over 1% higher. At the time of this writing Europe is mixed and U.S. index futures are basically flat.

Technicals…The Technicals remain at extreme over bought but remember that they can continue to do so for a long time as the market grinds up. If the pace slows there will be some unwinding from overbought due to time as opposed to from a pullback. Last week the NDX closed above its 5 year high of $2,195 set on 10.29.2007 and the RUT is approaching its all-time high of $855 set on 07.09.2007. Here is what I see for technical support/resistance (all MAs are 6 month Exponential):
DJI: support: $12,024 (20 EMA), resistance: $13,150 (2008 swing high)
SPX: support: $1,303 (20 EMA), resistance: $1,433 (2008 swing high)
NDX: support: $2,330 (20 EMA), resistance: $2,594 (2001 swing high)
RUT: support: $799 (20 EMA), resistance: $847 (2007 swing high)

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Good Morning SOM traders…The bull market continues! It shrugs off any bad economic news and each pull back continues to be viewed as a buying opportunity, especially by those who missed out on last year’s run and fund managers whose performance is measured against the S&P. Further, the bears who get short on a pullback, thinking it’s the beginning of a correction (like a week ago Friday on Egypt), are quickly forced to cover as buyers come in. The difference between rising markets and falling markets is that rising markets need a continual supply of fuel either from inflows or sector rotation. Last month there were large cash inflows, including ETFs ($19B) and mutual funds ($12B). Any time a market sector sold off, the funds were moved to a different sector rather than being withdrawn. So this market has been getting fuel from both and until that changes the long term bull trend will remain in place. Looking forward…we have a mercifully quiet week of economic news with only Thursday and Friday having announcements that could move the markets (all announcements are pre-market, 8:30am, unless indicated and all times are EST) – Thursday: Weekly Jobless Claims and Friday: International trade, Consumer Sentiment (9:55). Overnight the Asian markets were mixed/basically flat, and at the time of this writing Europe is up slightly (1/2%) and U.S. index futures are also slightly higher.

Technicals…By Tuesday of last week the prior Friday’s sell-off had been filled and then surpassed with new highs being made post 2008. The NDX and RUT that broke below their 20EMAs broke right back above. The NDX is now in uncharted waters with the prior swing high being in the pre-2001 crash so all we have for the NDX are Fibonacci retracements from the 2000 swing high of $4,000 to the 2008 swing low of $1,000 for potential resistance. Based on the size of the candles over the last few weeks and with the VIX closing below $16 on Friday it appears that the speed of bull run has slowed. Here is what I see for technical support/resistance (all MAs are 6 month Exponential):
DJI: support: $11,888 (20 EMA), resistance: $13,150 (2008 swing high)
SPX: support: $1,289 (20 EMA), resistance: $1,433 (2008 swing high)
NDX: support: $2,195 (20 EMA), resistance: $2,537 (50% Fibo.)
RUT: support: $790 (20 EMA), resistance: $800 (swing high)

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Good Morning SOM traders. Last Friday the U.S. markets had a news jolt from overseas. While the direct correlation between political unrest in Egypt (and potentially other Arab nations) and the U.S. markets isn’t obvious it is yet another example of the interconnected global economy. Personally I would think that the US markets are now viewed by overseas investors as an even more attractive and safer which could easily add additional fuel to the longer term bull run we still have in place. Many believe that because the U.S. markets have been in such a long and extreme bull run that this would be a catalyst for a true correction. Others believe it would be a short term “one-off” with a move back up this week, unless the political contagion spreads or develops into something more sinister, and that the long term bull, supported by the flood of cash from “Uncle Ben”, could not be stopped. Based on the futures this morning it appears that the later may be the case although vigilance this week is required! Looking forward…here are this week’s economic announcements, ending on Friday with the “biggie”, that could move the markets (all announcements are pre-market, 8:30am, unless indicated and all times are EST) – Today: Personal Income, Tuesday: ISM Manufacturing (10:00), Thursday: Weekly Jobless Claims and Friday: Monthly Employment Report. Overnight the Asian markets were over 1% lower, and at the time of this writing Europe is mixed and the U.S. index futures are up off their over-night lows.

Technicals…Let me say, yet again, that news events ALWAYS trump techincals and makes them irrelevant in the short term! Last Friday’s sell-off had some technical divergence with the support of the 20EMAs. The DJI bounced off almost to the penny and closed above, the SPX closed just below, the NDX closed well below and the RUT broke strongly lower closing just 6 points above its 50 EMA. Here is what I see for technical support/resistance (all MAs are 6 month Exponential):
DJI: support $11,794 (20 EMA) resistance $11,905 (prior swing high)
SPX: support: $1,252 (50 EMA) resistance $1,310 (2008 swing high)
NDX: support $2,232 (50 EMA), resistance $2,284 (20 EMA)
RUT: support $770 (50 EMA), resistance $786 (20 EMA)

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Good Morning SOM traders. Last week the market finally had a much needed sell off. Looking forward…here are this week’s economic announcements that could move the markets (all announcements are pre-market, 8:30am, unless indicated and all times are EST) – Tuesday: Consumer Confidence (10:00), Wednesday: New Home Sales (10:00), Thursday: Durable Goods, Pending Home Sales (10:00) and Friday: GDP. Overnight the Asian markets were mixed and at the time of this writing Europe is slightly lower and US index futures are flat to slightly higher.

Technicals…Last week the oscillators have finally unwound from extreme overbought. There was some divergence in the indexes with the RUT leading the way lower closing below its 20 EMA followed closely by the NDX which went below its 20EMA intra-day on Friday but closed above. The large caps (DJI) showed the most strength. Here is what I see for technical support/resistance (all MAs are 6 month Exponential):
DJI: support $11,696 (20 EMA) resistance $11,905 (prior swing high)
SPX: support: $1,272 (20 EMA) resistance $1,310 (2008 swing high)
NDX: support $2,272 (20 EMA), resistance $2,234 (pre-crash swing high)
RUT: support $766 (50 EMA), resistance $782 (20 EMA)

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Good Morning SOM traders. Last week the market tried to sell off on 3 out of 5 trading days only to be bought on the dips. It will be interesting to see how long that can continue without a serious correction taking place but we should all be looking over our shoulders at this point! Looking forward…here are this week’s economic announcements that could move the markets (all announcements are pre-market, 8:30am, unless indicated and all times are EST) – Thursday: International Trade and PPI, Friday: CPI, Retail Sales, Industrial Production and Consumer Sentiment. Overnight the Asian markets were mixed and at the time of this writing Europe is 1-2% lower and US index futures are lower indicating a lower opening today.

Technicals…All oscillators are still overbought, and while the markets can continue to move higher while remaining overbought it is becoming more and more likely that we are due for a technical correction. Here is what I see for technical support/resistance (all MAs are 6 month Exponential):
DJI: support $11,560 (20 EMA) resistance $11,905 (prior swing high)
SPX: support: $1,255 (20 EMA) resistance $1,310 (2008 swing high)
NDX: support $2,233 (20 EMA), resistance $2,234 (pre-crash swing high)
RUT: support $764 (prior swing), resistance $801 (2008 swing high)

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Good Morning SOM trade and Happy New Year! After 2 weeks of grinding slightly higher on very low volume and low vols. over the holidays, the markets are poised to gap higher on the open of this first trading day of the 2011. With help from the liquidity provided by the Fed. in 2010, the Dow finished up 11%, the S&P up 12.8%, the NDX up 17% and the RUT up 21% all with long term bullish trends. During the month of December, the S&P closed lower only five trading days out of 22. Looking forward…here are this week’s economic announcements that could move the markets (all announcements are pre-market, 8:30am, unless indicated and all times are EST) – Tuesday: FOMC minutes (2:00pm), Friday Monthly Jobs Report and for a little added Friday fun Uncle Ben Bernanke will also be speaking at 10:00am. Overnight the Asian markets were higher and at the time of this writing Europe is higher and US index futures are significantly higher indicating a gap higher opening today.

Technicals…While all oscillators are at extreme overbought, remember that the markets can continue to move higher while remaining overbought. The NDX touched the pre-crash 2007 high of $2,234 but closed below on Friday at $2,017. However, if it closes above today, as seems likely, that will be very significant and will add fuel for the other indexes to continue higher to do the same. Here is what I see for technical support/resistance (all MAs are 6 month Exponential):
DJI: support $11,104 (20 EMA) resistance $11,905 (prior swing high)
SPX: support: $1,243 (20 EMA) resistance $1,310 (2008 swing high)
NDX: support $2,097 (20 EMA), resistance $2,234 (pre-crash swing high)
RUT: support $764 (prior swing), resistance $801 (2008 swing high)

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Hi SoM Traders! There have been a number e-mails asking about the Monday Morning Commentary (MMC). The MMC author is on vacation and the MMC will be posted weekly again beginning on Monday 1/3/2011. I want to wish all of the SoM community Happy Holidays and all the best for the New Year…

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