The Consumer continues to slide and take stocks with it. Friday's Commerce Department's report on the consumer had a negative impact on the Street. The weakening consumer just added fuel to the bears that are anticipating continued troubles in the economy.

Friday's government report on personal consumption barely moved up in February. The increase of 0.1% for spending on goods and services was the weakest performance since 2006. However, personal income grew better than expected with a 0.5% increase. This suggests that consumers are worried about a faltering economy and are tightening their own spending.

One bright spot on Friday was the Core PCE index, which came in as expected. The Fed's preferred measure of inflation, which excludes food and energy costs, rose 0.1%. The index is sitting up 2% compared to last year, which is at the upper end of the Fed's comfort zone of 1% to 2%.

Another problem for the Street on Friday was the Reuters-University of Michigan consumer confidence index. It dropped 1.3 points in March to a 16-year low of 69.5. A preliminary reading in early March put the confidence index at 70.5. All while the index of consumer expectations hit its lowest point since 1992 with its drop of 2.3 points to 60.1.

The struggling consumer also showed up in the retail sector on Friday. J.C. Penney cut its first-quarter outlook after Easter sales came in below expectations. This hurt most of the retailers on Friday.

Some of the inflation pressures eased on Friday with oil falling $1.96, but at $105.62 a barrel it remains at an elevated level. Gold also took an $18.20 hit, taking the futures down to $930.60 an ounce. The dollar fell against the yen and the euro.

After starting last week higher, the Dow Jones Industrial Average suffered four straight days of selling. On Friday, it fell through its 50-day moving average when it lost 86 points on the session. However, its closing price of 12,216 puts it just above a support level on the chart. The index lost 1.2% for the week and is sitting down almost 8% on the year.

The S&P 500 also struggled late in the week. The index lost 10 points on Friday and finished the week below its 50-day moving average (red line) at 1,315. If we don't see a quick reversal in the index, it's likely headed to 1,300.

The Nasdaq Composite lost 0.9% on Friday and finished the session off 19 points at 2,261. This puts the index down 14.7% on the year. Although it broke above its 50-day moving average (red line) at the beginning of last week, it finished the week back below it.

It took all week, but we were finally able to get filled in all of our new spreads. The problem is that the weakness in the indexes took away a good portion of our breathing room in the spreads. Despite this, we feel very confident in our new positions heading into the final three weeks of the April cycle.

On tomorrow's open, we are adding a new spread to the mix. It's probably not a surprise that we're moving back into an old favorite Apple. The stock took a beating at the beginning of the year and is now starting to recover. As many of you know, we're very bullish on the fundamentals on Apple and we feel like there is a big upside potential in this stock. On the chart, the stock has a little resistance above its high of last week and then another level at its 200-day moving average (black line). The chart appears to be giving us a cup pattern. With this, we start to expect the pattern to turn into a cup-and-handle pattern. In this formation, the stock will pull back slightly before making a very big leg up. The stock also appears to be filling in its gap from January. Last week's move has potentially done this. It's not uncommon for a stock to take a breather after filling the gap. Despite the resistance above the stock that we mentioned, a stock that's ready for take-off can bust right through these levels. A good example of this is how fast the stock moved through its 50-day moving average (red line) last week.

Please note: This is a Day Order. If we do not get filled, we'll make an adjustment in the future through a trade alert.

NEW TRADE ALERT (1)

Apple Inc. (AAPL)

OPENING APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 125 strike price

Buy 15 April Puts at 120 strike price

Total Credit 0.35 per contract

Potential Profit $525.00

AAPL DAILY CHART

CURRENT APRIL SPREADS

MNX 165-160 APRIL BULL PUT SPREAD (15 contracts entered on 03/26/08)

$50.00 per contract profit potential

MNX started the session higher on Friday, but then turned south. It fell below its 50-day moving average (red line) on the chart and finished the day down $1.03. MNX finished the week at $176.76. This puts the index $11.76 above our position with three weeks left to go in the April options cycle.

WYNN 95-90 APRIL BULL PUT SPREAD (15 contracts entered on 03/27/08)

$55.00 per contract profit potential

Wynn Resorts was holding up well until we got filled in our put spread. Then the stock fell through support at $105 and continued heading lower. It shed $3.55 on Friday and finished the week at $100.23. The two-day losing streak has eaten into our large cushion in this spread. We will now be watching to see if WYNN holds at the $100 support. Despite its recent drop, we still feel good about our put spread. However, we'll be keeping a close eye on its price action this week.

AZO 105-100 APRIL BULL PUT SPREAD (15 contracts entered on 03/27/08)

$40.00 per contract profit potential

Similar to WYNN, this stock struggled late last week. It gave back $1.91 on Friday and closed at $113.25. This still leaves us with a good sized cushion in our put spread and several areas of support on the chart. On Thursday, AZO received positive news from RBC Capital Markets when it raised its price target on AutoZone to $127.

RUT 610-600 APRIL BULL PUT SPREAD (10 contracts entered on 03/28/08)

$45.00 per contract profit potential

It took us all week to get filled in our Russell 2000 spread, but we finally got it on Friday afternoon. Even though the index moved lower previously, the premium in the option pricing prevented us from getting into this spread. Due to this, we lowered our credit and raised our strike prices. We still feel very confident in this spread and feel that we have very good odds of this position expiring worthless. The RUT declined $9.21 on Friday and finished the session at $683.18. This gives us 73 points of breathing room heading into the final three weeks.

As always, Trade Happy and Trade Smart

ARE YOU NOT RECEIVNG NEWSLETTERS CONSISTENTLY?

We publish our weekly newsletters on Sunday and Wednesday evenings. They are then sent out via email and posted on our website. We also send out trade alerts and supplemental newsletters as needed. If you are not receiving these newsletters or trade alerts consistently, we suggest you take the following steps.

1. Check your spam folder for our emails.

2. Add info@incomespreadtrader.com to your email address book.

By adding our email address to your address book, this usually will allow our emails to get around your spam filter. If you take these steps and continue to not receive our emails, please contact our technical support department at info@incomespreadtrader.com.

We've tried all week to get filled in our RUT trade, but haven't been able to get our limit. We decided to attempt an intraday alert with the hope of getting filled. We are sending the following order to the brokers with the new limit listed below.

Please note: These are Day Orders. If we do not get filled, we'll make adjustments for the next trading day.

NEW TRADE ALERT (1)

Russell 2000 Index (RUT)

OPENING APRIL BULL PUT SPREAD (10 contracts)

Sell 10 April Puts at 610 strike price

Buy 10 April Puts at 600 strike price

Total Credit 0.45 per contract

Potential Profit $450.00

As always, Trade Happy and Trade Smart

Troubling data on the economy sends stocks lower. After starting the week off with a big move up, the major indices took a breather today. Stocks were lower at the open and finished there at the close.

A disappointing report on durable goods (orders) set a negative tone pre-market on Wednesday. The Commerce Department data showed a decreasing demand for expensive goods (such as cars and airplanes) in February. Heading into the release, analysts were expecting an increase in orders. The troubling part is the slowdown in business and consumer spending. The chart below shows that this number was not as severe as January's decline.

When we look inside the report, the numbers have improved across the board from January's report. The transports had the best reversal from the previous month. It actually turned in a positive number for February. On the flip side, Defense spending weighed down the report.

Shortly after the open today, the Government reported on new home sales. Although the Commerce Department showed new homes falling by 1.8% in February, this was slightly better then the Street was expecting. However, the 590,000 was the lowest level in 13 years. The data also showed that the median price of a new home fell by 2.7% to $244,100 when compared to last year's price.

Oil prices jumped again after the Energy Information Department (EIA) reported a surprising drop in oil and gas inventories. The troubling part of the report was that refinery usage fell to the lowest rate since 2005. Today's news catapulted the price of crude higher. It jumped $4.68 on the session and finished the day at $105.90 a barrel. This report also caused gasoline futures to gain 2% on Wednesday.

Also on the day, the dollar fell against the euro. This helped gold climb $15.60 on the session to $950.60 per ounce.

The Dow Jones Industrial Average shed 109 points in Wednesday's session and closed at 12,422. Today's pullback was not surprising considering the run that the index has been on lately. On the chart, the index has broken through its 50-day moving average (red line) and an old resistance line in Monday's trading. If the index can hold above this area, the line will then turn to support. This also would signify a trend change. If not to a bullish sentiment, it would at least be more of a neutral bias. 

The S&P 500 also struggled in today's trading. It lost 11 points and finished the day lower at 1,341. On the chart, the index moved above its 50-day moving average (red line) earlier this week, but then pulled back to it today. Where it goes from here will tell us a lot about sentiment on the Street.

The Nasdaq Composite slipped 16 points on Wednesday. This took the index down to 2,324. However, its chart looks similar to the Dow. It broke through its 50-day moving average and downward sloping trend-line earlier this week. Today it pulled back to the moving average, but finished well off its low of the session. This gives us a slightly bullish stance heading forward.

We were finally able to get filled in one of our spreads (MNX) today. Unfortunately, the premium in the RUT spread has dried up. We still feel very good about the prospect of a RUT bull put spread. Because of this, we are going to raise our strike prices, adjust the credit, and then send the order back to the brokers tomorrow morning.

We are also going to be placing a new bull put spread on Wynn Resorts Ltd. (WYNN). The stock was hurt today when a Goldman Sachs analyst lowered his price target to $117 on WYNN. Even with this, the stock lost only $0.55 on the session. When you add in that the indices were deep in the red across the board, today's performance by WYNN was quite remarkable. Many of you know that we've been trading the gaming stocks for years. We've been very bullish on the fundamentals behind WYNN and now believe that the chart has caught up with it. Once we get both things working in our favor, we think it's an excellent opportunity for a bull put spread.

Our third new trade tomorrow is on an old favorite AutoZone (AZO). This is another company that we've like for a long time that has an operational edge with its solid balance sheet and cash flow. It's shown a slow steady growth and likes to buyback shares to help keep its stock price strong. We've noticed big money flowing into the stock recently and believe that it's another good bull put spread. The stock just hit its 200-day moving average (black line) on the chart, which is why we're seeing a slight pullback. This should give us an excellent entry point.

Please note: These are Day Orders. If we do not get filled, we'll make adjustments for the next trading day.

NEW TRADE ALERT (3)

Russell 2000 Index (RUT)

OPENING APRIL BULL PUT SPREAD (10 contracts)

Sell 10 April Puts at 610 strike price

Buy 10 April Puts at 600 strike price

Total Credit 0.60 per contract

Potential Profit $600.00

WYNN RESORTS LTD (WYNN)

OPENING APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 95 strike price

Buy 15 April Puts at 90 strike price

Total Credit 0.55 per contract

Potential Profit $825.00

AUTOZONE INC (AZO)

OPENING APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 105 strike price

Buy 15 April Puts at 100 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

RUT DAILY CHART

WYNN DAILY CHART

AZO DAILY CHART

CURRENT APRIL SPREADS

MNX 165-160 APRIL BULL PUT SPREAD (15 contracts entered on 03/26/08)

$50.00 per contract profit potential

The MNX pulled back just long enough for us to get filled in our bull put spread. After falling back to an old resistance level on the chart at $180, the index reversed nicely in today's session. If it can hold above this level, it will become good support for the index. On the session, the MNX finished $0.72 lower at $181.73. We currently have a $16.73 cushion in this spread and solid support levels between the index's closing price and our spread.

As always, Trade Happy and Trade Smart

ARE YOU NOT RECEIVNG NEWSLETTERS CONSISTENTLY?

We publish our weekly newsletters on Sunday and Wednesday evenings. They are then sent out via email and posted on our website. We also send out trade alerts and supplemental newsletters as needed. If you are not receiving these newsletters or trade alerts consistently, we suggest you take the following steps.

1. Check your spam folder for our emails.

2. Add info@incomespreadtrader.com to your email address book.

By adding our email address to your address book, this usually will allow our emails to get around your spam filter. If you take these steps and continue to not receive our emails, please contact our technical support department at info@incomespreadtrader.com.

We came close, but weren't able to get any fills today. Because of this, we are going to leave the orders the same and send them back to the brokers on Wednesday as day orders. Remember, the key is patience when entering a new position.

Please note: These are Day Orders. If we do not get filled, we'll make adjustments for the next trading day.

NEW TRADE ALERT (2)

Russell 2000 Index (RUT)

OPENING APRIL BULL PUT SPREAD (10 contracts)

Sell 10 April Puts at 590 strike price

Buy 10 April Puts at 580 strike price

Total Credit 0.75 per contract

Potential Profit $750.00

Mini-Nasdaq100 Index (MNX)

OPENING APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 165 strike price

Buy 15 April Puts at 160 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

As always, Trade Happy and Trade Smart

Due to the big move up on yesterday's open, we weren't able to get any fills. For today, we are going to raise the strike prices and send them back to the brokers and let them work as day orders. Please find the adjustments listed below.

Please note: These are Day Orders. If we do not get filled, we'll make adjustments for the next trading day.

NEW TRADE ALERT (2)

Russell 2000 Index (RUT)

OPENING APRIL BULL PUT SPREAD (10 contracts)

Sell 10 April Puts at 590 strike price

Buy 10 April Puts at 580 strike price

Total Credit 0.75 per contract

Potential Profit $750.00

Mini-Nasdaq100 Index (MNX)

OPENING APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 165 strike price

Buy 15 April Puts at 160 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

As always, Trade Happy and Trade Smart

ARE YOU NOT RECEIVNG NEWSLETTERS CONSISTENTLY?

We publish our weekly newsletters on Sunday and Wednesday evenings. They are then sent out via email and posted on our website. We also send out trade alerts and supplemental newsletters as needed. If you are not receiving these newsletters or trade alerts consistently, we suggest you take the following steps.

1. Check your spam folder for our emails.

2. Add info@incomespreadtrader.com to your email address book.

By adding our email address to your address book, this usually will allow our emails to get around your spam filter. If you take these steps and continue to not receive our emails, please contact our technical support department at info@incomespreadtrader.com.

Stocks finished the holiday-shortened week on a high note, helping us to lock in a 100% profit this month. Although we started last week with large cushions in all of our spreads, the volatile trading took us down to the wire on a few of them. But Friday's move up in the indexes allowed us to get back on track with all of our spreads expiring worthless.

Traders were encouraged on Thursday by a two-pronged attack. The down-trodden financial sector finally showed some strength while commodities continued to sell-off from near record levels.

Financials got a boost from a pair of upgrades and word that the Fed is expanding its plan to increase liquidity. The financial sector moved up 6.9% on the session and was the driving force behind Thursday's gains. The two big upgrades were in Fannie Mae and Freddie Mac. Both mortgage-related stocks were upgraded to Outperform at Keefe, Bruyette & Woods.

Then the Market responded positively when the New York Fed announced modifications to its new Term Securities Lending Facility (TSFL). The Fed will be lending banks highly liquid Treasury securities in exchange for less liquid assets. In addition, banks will now be able to use a wider range of collateral than previously announced. This should help to alleviate the liquidity issue with those parties that are sitting with difficult to trade securities.

Despite all of the positive news in the financials, there was a worrisome report on Friday when Standard & Poor's put Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. on negative outlook. Standard & Poor's decision to lower the rating was due to the loss of confidence in the investment banks' profitability.

On Thursday, the indices enjoyed the continued deterioration in commodities. These have certainly been strong lately and when traders start seeing some profit taking, everyone heads to the exit at the same time. After all, the steeper the climb on the way up, the harder the fall on the way down. Gold futures sold hard on the session, down $25.10 to $919.60 an ounce. Meanwhile, crude closed slightly lower when it dropped $0.70 cents on the session to $101.84 a barrel.

Besides the speculation by institutional money driving commodities, many traders were using these as a hedge against the weakening dollar and declining stock market. With stocks recovering and the dollar stabilizing, commodities aren't quite as attractive as before.

There was some positive economic data on Thursday. The March Philadelphia Fed, a regional manufacturing survey, came in at -17.4, which is higher than the previous reading of -24.0. It was also better than the -18.0 that economists had expected. Although it was just slightly above expectations, the Market did move up on its release. However, the reading is still below zero, which shows a contraction in manufacturing in the Philadelphia region.

In other economic data, things were not quite as promising. Jobless claims for the week ended rose to 378,000. This was up from the 356,000 a week prior and was above the expectations of 360,000 claims. Also on the day, February leading indicators fell 0.3%, which was in line with expectations.

On the day, the Dow Jones Industrial Average gained 261 points. The 2.2% move higher put the index at 12,361 at the close. Thursday's move put the index up 2.2% for the week. On the chart, the index appears poised to break through its downward sloping trend-line and its 50-day moving average (red line). If it does not, it will likely move back down towards its support line.

The S&P 500 was helped by the strength in financials. It rose 2.4% on Thursday. The 31-point increase left the index at 1,329 at the closing bell. On the week, the index was up 3.2%. Similar to the Dow, this index also appears ready to break through its resistance on the chart.

The Nasdaq Composite shot up 2.2% on Thursday. It finished the session higher by 48 points at 2258. For the week, the index gained 2.1%. Its chart also looks similar to the other two indexes. However, it remains the weakest for 2008.

Although we were sitting comfortably at times in this cycle, it turned out to be another one that went down to the wire on a couple spreads. But with the odds on our side, this time we ended up on the profitable side. After struggling through a few tumultuous cycles the last few months, it would have been easy to give up. But as professional traders, we know that the odds are on our side and that soon it will be back to business as usual. While it wasn't easy this month, it was a step in the right direction. The key now is to start that string again of consecutive profitable months. Let's go ahead and add up the month of March.

EXPIRED MARCH SPREADS

POT 125-120 MARCH BULL PUT SPREAD (20 contracts entered on 02/05/08)

$83.00 per contract profit

AAPL 115-110 MARCH BULL PUT SPREAD (10 contracts entered on 02/05/08)

$96.00 per contract profit

MNX 165-160 MARCH BULL PUT SPREAD (15 contracts entered on 02/19/08)

$65.00 per contract profit

RUT 620-610 MARCH BULL PUT SPREAD (10 contracts entered on 02/21/08)

$55.00 per contract profit

PCU 95-90 MARCH BULL PUT SPREAD (15 contracts entered on 02/22/08)

$50.00 per contract profit

PCLN 110-105 MARCH BULL PUT SPREAD (15 contracts entered on 02/25/08)

$70.00 per contract profit

The other valuable thing about last month is that we got back to trading without any adjustments. This is another string that we would like to get started again. With that said, we're ready to add a couple new spreads for the April cycle.

The first spread is going to be on the Russell 2000 Index (RUT). We were successful last month in this index and feel good about another Bull Put Spread for April. It has traded in a range so far in 2008 and is now sitting near the middle of that range. On the second chart below, we have the RUT on a weekly time frame. This shows the conservative levels that we are placing our strike prices. As we've said in the past, the longer the time period the stronger the support is. This chart goes back two years and the index was well above our strike prices with solid support levels that should work to our advantage.

Our second spread is also a repeat from last month. We are placing a Bull Put Spread on Mini-Nasdaq100 Index (MNX). This is another one that we are able to come in at conservative strike prices for a decent credit. Although the index drifted lower during last cycle, we feel that it has recovered nicely and is poised to move higher.

Please note: These are Day Orders. If we do not get filled, we'll make adjustments for the next trading day.

NEW TRADE ALERT (2)

Russell 2000 Index (RUT)

OPENING APRIL BULL PUT SPREAD (10 contracts)

Sell 10 April Puts at 580 strike price

Buy 10 April Puts at 570 strike price

Total Credit 0.75 per contract

Potential Profit $750.00

Mini-Nasdaq100 Index (MNX)

OPENING APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 160 strike price

Buy 15 April Puts at 155 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

RUT DAILY CHART BELOW

RUT WEEKLY CHART BELOW

MNX DAILY CHART BELOW

As always, Trade Happy and Trade Smart

ARE YOU NOT RECEIVNG NEWSLETTERS CONSISTENTLY?

We publish our weekly newsletters on Sunday and Wednesday evenings. They are then sent out via email and posted on our website. We also send out trade alerts and supplemental newsletters as needed. If you are not receiving these newsletters or trade alerts consistently, we suggest you take the following steps.

1. Check your spam folder for our emails.

2. Add info@incomespreadtrader.com to your email address book.

By adding our email address to your address book, this usually will allow our emails to get around your spam filter. If you take these steps and continue to not receive our emails, please contact our technical support department at info@incomespreadtrader.com.

Easy come....easy go. The trend of selling the rallies continued on Wednesday when traders pounced on the opportunity of selling yesterday's gains. We've seen this pattern for most of 2008 and nothing changed today. Until this reverses, the choppy trading is likely to continue.

Today's plummet was a stark contrast from Tuesday when stocks were screaming towards the moon. Yesterday's momentum started after better than expected earnings in the financial sector. Thus, easing fears over more catastrophes in the banking industry. This news got the stocks moving up sharply at the opening bell and carried through until the Fed announcement.

Then the FOMC cut its short-term interest-rate target by three-quarters of a point to 2.25%. Although the cut was not the full point that the Street was expecting, traders took stocks sharply higher into the close.

As usual, there was a lot of interest in the committee's statement. With mention of the elevated concerns about inflation, this might be suggestion that the Fed is getting close to the end of interest rate cuts. It probably depends on whether there is stabilization in the markets. After all, the Fed has been using alternative methods to inject liquidity in ways that attempt to keep inflation in check.

The rate-cut on Tuesday has put a halt to the momentum in commodity stocks. These have benefited from falling equities over the past few months with investors attempting to seek safety and a hedge against inflation pressures. The other issue facing commodities is the fear that a slowing economy will reduce the need for raw materials. A downturn in commodities would be welcome news for consumers who have suffered from high prices at the pump at the grocery store. If these stocks roll over hard, traders will be looking for other sectors for leadership. Until other industries step up, stocks will struggle to break out of the current downward spiral.

The administration did its part to alleviate the housing problems today when the Office of Federal Housing Enterprise Oversight made a move to spur additional lending. The regulator reduced the capital that Fannie Mae and Freddie Mac must hold from 30% to 20%. This move should free up billions in an effort to help homeowners.

The price of crude had its largest one-day drop since 1991. It shed $4.94 and settled lower at $104.48 a barrel on the New York Mercantile Exchange. The decline was in response to the government release of data that suggested that the high prices of oil and gasoline are reducing the demand for petroleum products.

Wednesday was the highly anticipated debut for Visa. After months of speculation, the credit-card giant finally had its IPO, which was the largest in U.S. history.

On the day, the Dow Jones Industrial Average lost 2.4% with the selling taking it down 293 points to 12,099. The index struggled to break through a resistance level, downward sloping trend-line, and 50-day moving average.

The S&P 500 also ran into a similar area of resistance on the chart. By the closing bell, it shed 32 points and finished the session at 1,298.

The Nasdaq Composite took the worst beating today when it gave up 2.5%. It lost 58 points today and finished the session at 2,209.

It turned out to be quite a day for our spreads. After yesterday's huge gains, our spreads were sitting in great shape heading into Wednesday's session. But after an afternoon of brutal selling, we saw some of our cushions disappear right before our eyes. However, with just one day of trading remaining on our stock spreads, we're still sitting in very good shape. Keep in mind that our index spreads settle on tomorrow's opening print. Considering this week's dramatic moves, the short trading week has come at a perfect time. Let's take a look at where we're sitting heading into the final session of the March cycle..........

CURRENT MARCH SPREADS

POT 125-120 MARCH BULL PUT SPREAD (20 contracts entered on 02/05/08)

$83.00 per contract profit potential

With money flowing out of commodities, the fertilizers took a big hit. Potash gave back nearly two weeks of gains in today's session alone. It tumbled $16.27 on Wednesday and finished the day just below its 50-day moving average (red line) at $144.47. Days like this make you appreciate the huge cushion we had heading into the session. After all, even after the bloodshed today, we still have close to 20 points of breathing room in this spread. With only one day left in the cycle, these options should expire worthless tomorrow.

AAPL 115-110 MARCH BULL PUT SPREAD (10 contracts entered on 02/05/08)

$96.00 per contract profit potential

Apple made a run up to its 50-day moving average this morning before retreating. By the closing bell, the stock was down $3.15 to $129.67. This leaves us in a comfortable position heading into the final day of the cycle with nearly 15 points to spare.

The company received some positive news from an analyst today regarding its iPhone. Analyst Ken Dulaney said that Apple's improvements to the iPhone's security will make the device safe for mobile email and as a personal information manager. "This will open up a huge market for the iPhone, which previously had been stymied by a lack of basic business security and application functionality," Dulaney said. The interesting facet of the announcement was that this was a direct contradiction from what the analyst said previously.

MNX 165-160 MARCH BULL PUT SPREAD (15 contracts entered on 02/19/08)

$65.00 per contract profit potential

MNX gave back most of its gains from Tuesday with its $4.55 decline today. The index was hit late in the day with heavy selling, which took it down $171.56. While it wasn't a welcomed sight, the good news is that as long as it doesn't sell-off by more then this amount on the open tomorrow, it should expire worthless. Keep in mind that indexes settle on the opening prices tomorrow. One thing to note is that this is not the same as the opening price of the index because not all stocks open at the same time. Instead, the settlement price will be reported later in the day, but is based on the opening prices of each individual stock in the index. We feel good about this spread expiring worthless tomorrow morning.

RUT 620-610 MARCH BULL PUT SPREAD (10 contracts entered on 02/21/08)

$55.00 per contract profit potential

The Russell 2000 is our second index spread this month. It was also hit with a barrage of selling today when it gave up $17.80 and finished the session at $664.13. This leaves us with plenty of cushion on Thursday's open. With the index sitting almost 45 points above our put spread, we should be in good shape.

PCU 95-90 MARCH BULL PUT SPREAD (15 contracts entered on 02/22/08)

$50.00 per contract profit potential

The commodity sell-off took its toll on Southern Peru on Wednesday. It shed $7.55 and closed below its 50-day moving average at $99.46. This chopped our cushion in this spread by more than half. We have just under a 5-point cushion in this spread with one full day of trading to go. Our plan is to make sure we make a profit in this spread by keeping this spread on a short leash.

PCLN 110-105 MARCH BULL PUT SPREAD (15 contracts entered on 02/25/08)

$70.00 per contract profit potential

Priceline was hit with a downgrade this morning but its stock battled for most of the day. Nevertheless, the downward pressure this afternoon was too much for the stock. It finished the day $8.12 lower at $114.94. Similar to our PCU spread, we have less than 5 points of breathing room in this spread. We'll keep a close eye on this spread tomorrow to make sure that we avoid any causality this month.

As always, Trade Happy and Trade Smart

ARE YOU NOT RECEIVNG NEWSLETTERS CONSISTENTLY?

We publish our weekly newsletters on Sunday and Wednesday evenings. They are then sent out via email and posted on our website. We also send out trade alerts and supplemental newsletters as needed. If you are not receiving these newsletters or trade alerts consistently, we suggest you take the following steps.

1. Check your spam folder for our emails.

2. Add info@incomespreadtrader.com to your email address book.

By adding our email address to your address book, this usually will allow our emails to get around your spam filter. If you take these steps and continue to not receive our emails, please contact our technical support department at info@incomespreadtrader.com.

Fallout from Bear Stearns sends shockwaves throughout the Market. It was a little ironic on Friday when the same company that started the credit fears back in August was now under pressure to stay afloat. Last summer, it was two Bear Stearns hedge funds that started the current turmoil. The company's troubles have just spiraled out of control since those problems and on Friday the Federal Reserve and JP Morgan threw the company a life preserver.

In the dramatic move by the Fed, it announced that it was lending JP Morgan funds, which would then be loaned to Bear Stearns for an initial period of 28 days. The move is aimed at keeping the 85-year-old company, who is suffering from a severe cash crunch, afloat and prevent the crises from spreading to the rest of the economy. Although JP Morgan is the intermediary, the risk on the loan is being taken by the Fed. The last time that the central bank has acted in this manner was during the Great Depression.

The move did little to reassure Bear Stearns (BSC) investors. Its stock was nearly sliced in half on Friday. It fell 47% to a nine-year low of $30.

According to a News Alert from the Wall Street Journal on Sunday afternoon, Bear Stearns is closing in on a deal to sell itself to J.P. Morgan for $2 a share in a stock-swap transaction, people familiar with the matter say. J.P. Morgan will exchange 0.05473 shares of its common stock per one share of Bear Stearns stock. Both boards have approved the transaction. According to the report, both sides are attempting to complete an agreement before financial markets open in Asia. The current negotiations put a price tag of around $236 million for the embattled investment firm. According to the alert, the value of the buyout hinges on Bear's Madison Avenue headquarters, which could be valued at around $1.2 billion based on going market rates.

On Friday, the news out of Bear Stearns far out-shadowed the surprisingly positive news earlier in the morning. Analysts were shocked when the CPI (Consumer Price Index) came in unchanged for the month of February. The data from the Labor Department was much better than the 0.3% gain that had been expected. Even the Core inflation, which excludes the volatile energy and food, was also unchanged last month. The Street was expecting a rise of 0.2%. This was the first time that core inflation was flat since November of 2006. Perhaps the most shocking part of the report was that energy prices posted a 0.5% decline with gasoline prices falling by 2% in February.

The CPI data was welcomed with open arms on Friday because it raised the odds for a rate cut. With inflation not rising, it should make it easier for the Fed to lower its key interest rate this week. It even increased the odds of a larger cut than was earlier expected. Futures traders in Chicago priced in almost a 60% chance that the Fed would cut its rate target by a full percentage-point next week.

Despite the increased odds of a significant cut, we worry about the potential side effects of more rate cuts. They will undoubtedly take the value of the Dollar even lower and we firmly believe that the inflationary numbers were just an anomaly. With commodities continuing to soar, we are likely to see a large bump in next month's data. This is not to say that we don't expect the Fed to make a significant cut next week. Rather, we are just worried about the consequences of one.

On Friday, gold futures went above the $1,000 mark in trading. But it settled below it at a record close $998.10 per ounce. Meanwhile, it fell by just $0.12 cents, but remains near record levels at $110.21 a barrel.

Friday's anxiety in the financial markets sent the 10-year note up 24/32 to yield 3.434%. The two-year note also gained 10/32 to yield 1.463%. The Dollar continued its slide compared to the Yen and Euro.

At one point, the Dow Jones Industrial Average was down over 300 points on Friday. After making nauseating moves from red to green to red, the index finished the day almost 200 points lower. At the closing bell, it was 194 points lower at 11,951. This puts the Dow nearly 10% lower on the year.

The S&P 500 was crushed thanks in part to the financial sector on Friday. It shed 2.1% on the session at finished at 1,288. Its year-to-date return of -12% is leading the Dow in the negative column.    

After hitting its upper channel line last Wednesday, the Nasdaq Composite couldn't break through it. On Friday, it shed 51 points after bumping up against the same resistance line. The 2.3% loss took the index down to 2,212. For the year, the tech-heavy index is down over 17%.

Even with the continued turmoil in the Market, we made it through another week with all of our spreads intact. The problem is that things appear to be falling apart tonight (Sunday). Markets around the world are selling off based on the news surrounding Bear Stearns and fear that there could be a "run on the bank" at other investment banks.

Due to this, the Fed made a rare move Sunday evening to cut the lending rate (discount rate) for loans to financial institutions to 3.25% in an attempt to prevent the crises from spreading. This cut will take place immediately while the Central Bank is also creating another lending facility for large investment banks to secure short-term loans. This facility will be available Monday morning.

There's no doubt that we're going to see a massive sell-off on tomorrow's open. There's nothing that moves the market more than fear and panic. Hopefully the spike down does not last long. Our plan is to sit tight and attempt to weather the storm that is brewing. With volatility spikes like we'll encounter on tomorrow's open, usually it's the worst possible time to unwind spreads. Instead, we're going to keep a very close eye on all the market internals. If our plan changes tomorrow, we'll send out an alert intraday.

If we make it through tomorrow in tact, we still have a big hurdle with the FOMC meeting. However, this is a holiday-shortened week. With Good Friday taking place at the end of the week, all of our spreads will expire on Thursday. This leaves us four full days for our stock options and three full days for our index spreads (will expire at the open on Thursday). Let's take a look at where we're sitting in all of our spreads heading into the home stretch..........

CURRENT MARCH SPREADS

POT 125-120 MARCH BULL PUT SPREAD (20 contracts entered on 02/05/08)

$83.00 per contract profit potential

Potash finished the wild session with a slight move up on Friday. It gained $0.06 and closed the week at $160.46. After the stock's wicked sell-off on Monday, the rest of the week turned out very well for our put spread. Heading into the final four days of the cycle, we are sitting comfortably with a 35-point cushion.

AAPL 115-110 MARCH BULL PUT SPREAD (10 contracts entered on 02/05/08)

$96.00 per contract profit potential

Once again, Apple tested resistance at $130 on Friday but was turned back. It finished the session $1.33 lower at $126.61. After falling below this old support level at the beginning of February, Apple has spent the last month and a half attempting to get back above it. The stock will probably need some upside assistance from the overall Market to make it through this barrier. Heading into the final week of the March options cycle, we're sitting in decent shape in this position. The stock closed on Friday 11 points above our put spread. We also have two good support levels between the stock and our position.

MNX 165-160 MARCH BULL PUT SPREAD (15 contracts entered on 02/19/08)

$65.00 per contract profit potential

For the last two sessions, MNX has tested support at $170 before bouncing off it. On Friday, it was able to close above it, but was down $3.66 on the session and closed at $171.38. We really would like to see the index hold above this level this week. If it falls below it, we also have decent support at the low of last Monday and Tuesday. We'll keep this spread on a tight leash if it breaks these support levels.

RUT 620-610 MARCH BULL PUT SPREAD (10 contracts entered on 02/21/08)

$55.00 per contract profit potential

Despite the volatility last week, the RUT turned in a good performance. Although it shed $16.81 on Friday, our cushion got increased last week. This spread remains our strongest position with nearly 43 points between the index and our put spread. This gives us plenty of room to hopefully coast to the finish line in this one.

PCU 95-90 MARCH BULL PUT SPREAD (15 contracts entered on 02/22/08)

$50.00 per contract profit potential

Southern Copper Corp. was hit with a downgrade on Friday from JPMorgan. This helped the stock lose $2.70 on Friday and finish the week at $108.86. The analyst lowered the rating due to valuation and gave the stock a new price target of $91. Remember, we rarely agree with analysts, but need to keep a close eye on them because they do influence the stock price. Even with this pessimism on the last day of the trading week, we still are in solid shape in this spread. The stock is sitting almost 14 points above our "short" strike price.

PCLN 110-105 MARCH BULL PUT SPREAD (15 contracts entered on 02/25/08)

$70.00 per contract profit potential

Priceline put a lot of pressure on our spread at the beginning of last week, but then worked its way up the chart. That was until Friday, when it gave back $4.86 and finished the session lower at $117.63. The good news is that we are sitting better heading into this week than we were last Sunday. With over 7 points between our spread and the stock price, we would like to see small moves this week. However, we realize this is not likely to happen. But we will keep a close eye on this spread over the next four days.

As always, Trade Happy and Trade Smart

ARE YOU NOT RECEIVNG NEWSLETTERS CONSISTENTLY?

We publish our weekly newsletters on Sunday and Wednesday evenings. They are then sent out via email and posted on our website. We also send out trade alerts and supplemental newsletters as needed. If you are not receiving these newsletters or trade alerts consistently, we suggest you take the following steps.

1. Check your spam folder for our emails.

2. Add info@incomespreadtrader.com to your email address book.

By adding our email address to your address book, this usually will allow our emails to get around your spam filter. If you take these steps and continue to not receive our emails, please contact our technical support department at info@incomespreadtrader.com.

Today's follow-through attempt runs out of energy. The Market was poised to continue its upward momentum today, but skyrocketing oil prices put a damper on the bullish sentiment. This turned the morning gains into losses by the closing bell.

Today's move came one day after the Dow Jones Industrial Average spiked to its largest one-day gain since 2002. The 416-point surge came after Fed announced that it would lend Treasurys in exchange for mortgage-backed securities. The big news came when the Fed said that the plan to take difficult-to-trade securities out of circulation would apply to banks and bond dealers.

The Federal Reserve said it would lend up to $200 billion for 28 days in order to provide relief to the credit markets. The other impressive part of the Fed's plan was that it involved four foreign central banks. These banks acted in coordination with the Fed by announcing actions to help alleviate the global credit crunch. This plan was welcomed on the Street with many feeling that it was a way to get to the heart of the problem without its usual rate cut that would raise inflation concerns.

Speaking of inflation, oil prices actually fell after the EIA's (Energy Information Administration) weekly inventory report showed a rise in crude supplies. The 6.2 million barrel increase was more than three times the expectations, but did little to hold down the price of oil on the day.

Investors shrugged off the increase in supplies and by the end of the session, oil climbed another $1.17 to settle at $109.92 a barrel on the New York Mercantile Exchange. Meanwhile, gas at the pump hit a new high of $3.25 on Wednesday. According to some analysts, gas prices could hit a national average of $3.75 a gallon this spring.

Gasoline and oil prices extended their record-setting streaks Wednesday, with gas at the pump reaching a new high of nearly $3.25 and crude surpassing $110 for the first time.

Of course, the price of crude wasn't helped when the dollar continued to slide. The euro soared to a new record against the dollar, again.

After continuing the rally this morning, the Dow Jones Industrial Average sold off this afternoon. It gave back 46 points on the session and closed at 12,110. Today's trading formed a reversal candle on the daily chart. However, we've come to expect the unexpected overnight.

The S&P 500 also gave back some of its gains from yesterday. The index shed 11 points on Wednesday and closed at 1,308. Today's high came close to hitting resistance from the upper end of its channel line. This could signal another move lower to finish out the week.  

The Nasdaq Composite looked eerily similar to the S&P chart. The tech-laden index fell 11 points today and closed at 2,243. It reversed sharply today once it hit resistance on the chart. Who knows what tomorrow will bring, but sitting here tonight, it certainly has a bearish look to it.

Yesterday's massive rally brought a sigh of relief to a few of our spreads. We were taking enormous heat in our PCLN and MNX put spreads, but Tuesday gave them a shot in the arm. This was a perfect example of how important it is to give yourself as much time as possible for the stock to move in your direction. We believed in our original analysis and then hung in there long enough for things to go our way. Of course, we have a very long week and a half to go.

We still have a very big hurdle to make it over next week when the FOMC meets. On Wednesday, futures markets were pricing in a 76% chance of a three-quarter point cut at next week's Fed policy meeting. Hopefully we can get some more big cushions built up heading into the announcement so that we can weather any surprises. For now, let's take a look at where we're sitting in all of our spreads..........

CURRENT MARCH SPREADS

POT 125-120 MARCH BULL PUT SPREAD (20 contracts entered on 02/05/08)

$83.00 per contract profit potential

After falling to its 50-day moving average (red line) on Monday, Potash bounced back hard yesterday. It wiped out Monday's loss and moved back above two support levels on the chart. It continued that trend this morning when it started the day higher, but then closed $1.43 lower at $154.79. After today's trading, we are sitting very close to where we started the week. This puts us in good shape with the stock trading almost 30 points above our position.

AAPL 115-110 MARCH BULL PUT SPREAD (10 contracts entered on 02/05/08)

$96.00 per contract profit potential

Apple also surged higher on Tuesday, which helped extend our breathing space in our put spread. Similar to most stocks, it gave back a little on Wednesday when it lost $1.32 and finished the session at $126.03. This gives us a cushion of $11.03 in this spread.

The problem is that shortly after the closing bell, it was announced that Apple was hit with a patent infringement suit from ZapMedia Services. The company is suing Apple over the technology used in iPod and iTunes. We'll be monitoring this situation very closely over the next few days to see how it affects the stock.

MNX 165-160 MARCH BULL PUT SPREAD (15 contracts entered on 02/19/08)

$65.00 per contract profit potential

MNX was moving towards our put spread earlier this week, but yesterday's move put some comfort back into this position. The index finished today's session relatively flat with a loss of $0.58. This puts the index at 173.52, which is a little over 8 points above our "short" strike price. Similar to the main indexes, it appears that we are headed lower on the chart. But that's the great thing about trading, just because it looks that way tonight doesn't mean that's what is going to happen tomorrow. 

RUT 620-610 MARCH BULL PUT SPREAD (10 contracts entered on 02/21/08)

$55.00 per contract profit potential

This week's trading in the Russell looks like the MNX. The RUT moved higher this morning, but fell off this afternoon. On the day, it lost 6.50 and closed at 667.31. Out of all our spreads, this one appears to be sitting the safest. We have nearly a 50-point cushion and plenty of support levels between the index price and our put spread.

PCU 95-90 MARCH BULL PUT SPREAD (15 contracts entered on 02/22/08)

$50.00 per contract profit potential

Southern Copper Corp. tested its 200-day moving average (black line) on Monday and then bounced nicely yesterday. Today was a non-event when it lost $0.57 and closed at $112.08. Our position is sitting in good shape with not a lot of time left in this cycle. Our 17 points of breathing room should hold up fine.

PCLN 110-105 MARCH BULL PUT SPREAD (15 contracts entered on 02/25/08)

$70.00 per contract profit potential

Priceline gave us a scare again this week when if flirted with its 50-day moving average (red line) and the support level at our "short" strike price of $110. But it reversed sharply on Tuesday and then had a solid follow-through day on Wednesday. Today's burst of $5.74 was helped along thanks to positive news from the company.

Priceline introduced a new personalized airline ticketing feature it calls Inside Track. It describes this as a sophisticated, yet personal ticket scout that combs through thousands of flights and fares, both now and in the future, to find customers the best possible deals for the trips they want to take. It also touted its elimination of booking fees on published fares

As always, Trade Happy and Trade Smart

ARE YOU NOT RECEIVNG NEWSLETTERS CONSISTENTLY?

We publish our weekly newsletters on Sunday and Wednesday evenings. They are then sent out via email and posted on our website. We also send out trade alerts and supplemental newsletters as needed. If you are not receiving these newsletters or trade alerts consistently, we suggest you take the following steps.

1. Check your spam folder for our emails.

2. Add info@incomespreadtrader.com to your email address book.

By adding our email address to your address book, this usually will allow our emails to get around your spam filter. If you take these steps and continue to not receive our emails, please contact our technical support department at info@incomespreadtrader.com.

The Market was hit was a barrage of bad news today, which took stocks significantly lower. Our main concern was in our PCLN put spread. The stock lost $7.15 in today's session and closed just below our "short" strike price at $109.77. Although this is a good support level on the chart, another session like today will certainly take the stock lower.

We are keeping a close eye on this spread, but want to see what tomorrow brings before making an adjustment. This morning, there were rumors floating around the Street about a possible emergency rate cut by the Fed. Obviously this did not happen, but in this Market, who knows what might take place overnight. For now, we're going to sit tight. But keep a close eye on your email tomorrow in case we encounter another round of selling.

One encouraging sign was that PCLN actually moved up in after-hours trading. However, it didn't have large volume in this move. The other issue is that we've seen stocks move higher after-hours last week, only to sell-off pre-market the following day. We'll be monitoring this tomorrow morning pre-market.

As always, Trade Happy and Trade Smart