We saw a little more red today, but nowhere near the kind of selling that we needed for our trade alerts. It felt like another uneventful session with stocks somewhat stuck in a range for the third straight session and the trading volume continuing to be fairly light for the second holiday-shortened week in a row. Although there was some selling, we still struggled to get any fills. We'll make some adjustments for tomorrow, but first let's recap today's uneventful session.

The lone piece of economic data this morning came from the Chicago Purchasing Managers Index (PMI). The data didn't disappoint the bulls today when the PMI climbed to 60.0 in December. This jump surprised most traders, who were looking for a decline in the index ahead of the release. Today's number was a nice increase over the 56.1 reported in November. This shows improvement in both production and new orders in the Midwest. Similar to most of the charts we've been looking at lately, the one below shows a nice bump from its bottom at the beginning of the year.

Graphic from Briefing.com

In the only other report released today, the demand for oil and gasoline both increased last week, but not as much as analysts were expecting. Today's inventory report released by the Energy Information Administration showed that the U.S. supply of crude dropped by 1.5 million barrels last week. While the increase in usage was expected during the holiday week, it wasn't quite the level that traders were looking for. Ahead of the release, consensus was calling for a drop of 2.2 million barrels for the week. At the same time, gasoline supplies declined by 300,000 barrels last week. This number was also much less than the drop of 2.2 million barrels that was predicted. Despite the disappointment in the EIA numbers, oil still managed to gain $0.41 a barrel to finish the session at $79.28 a barrel on the New York Mercantile Exchange.

However, the trading today seemed to revolve around the rising dollar. It appears that money is flowing into the greenback as a way to hedge against future rate hikes by the Central Bank. With economic conditions improving, investors are betting against possible inflation and a pull-back in the easy money that the Fed has been pouring into the system over the past year and a half. The strength in the dollar spelled trouble for most commodities today. Gold tumbled $5.50 per ounce to settle at $1,091.50.

The financial sector was in the news today with troubled financing firm GMAC facing some serious pressure. According to various reports, the company is expected to receive a government bailout to the tune of another $3.5 billion in the near future. This should help keep the company afloat. Of course, it already has received $13.5 billion in U.S. government funds. After all, what's another few billion when it's coming from the taxpayer?

Today's Economic Reports

It was light volume across the board today with very little volatility. This kept the Dow Jones Industrial Average in a small trading range. This trading range was mostly in the red territory today, but the large-cap index broke into the green at the close today. The Dow settled up 3 points on the session at 10,548. The index appeared to gain some support from the old resistance level on the daily chart. Let's watch to see if it's able to continue holding above this barrier.

The S&P 500 also managed to creep into positive territory at the end of the session. The index climbed 0.23 of a point to close at 1,126.42. The S&P 500 also seemed to find some support near an old resistance level on the chart. It'll be interesting to see if it's able to finish the week with a gain tomorrow.

The Nasdaq Composite certainly had a tough session yesterday with all of the trouble out of the tech sector. However, it was able to bounce back and lead the Market higher for most of the trading day. It closed up 2.88 points at 2,294.28. This helped the tech-laden index earn back some of its losses from yesterday and put the Nasdaq back into positive territory for the week. Let's see if it's able to stay there tomorrow.

The range-bound trading meant there was little movement in the VIX (CBOE VOLATILITY INDEX). With the gains in the indices at the end of the session, this took the VIX lower by 0.24 of a point. It settled below the 20 point barrier at 19.47 points.   

We're finally starting to see some red this week, but it hasn't been nearly enough to get most of our spreads filled. While we'd love to sit back and wait, we're starting to run out of time with another holiday break taking place on Friday. Due to this and the fact that that premium has really started to dry up, we're going to once again make some adjustments to our remaining trade alerts. We've been extremely patient this cycle, but so far we haven't been rewarded. Let's get slightly more aggressive with these adjustments and see if we can get the remaining spreads filled tomorrow morning. There's nothing we'd love more than to have five nice spreads working for us heading into the New Years Day Holiday this weekend.

NEW TRADE ALERT (3)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 580-570 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 580 strike price

Buy 15 January Puts at 570 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $585.00.

S&P 100 INDEX (OEX)

OPENING 490-480 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 490 strike price

Buy 15 January Puts at 480 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $492.50.

Google Inc. (GOOG)

OPENING 580-570 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 580 strike price

Buy 15 January Puts at 570 strike price

Total Credit 0.35 per contract

Potential Profit $525.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $582.50.

RUT DAILY CHART

OEX DAILY CHART

GOOG DAILY CHART

CURRENT JANUARY POSITIONS

PCLN 200-190 BULL PUT SPREAD (15 Contracts entered on 12/29/09)

PCLN CLOSED AT $223.61Today (23.61 points away from our put spread)

Profit potential of $35.00 per contract

Contingent Stop Order set at $202.50

Priceline had a rough start to the session this morning but was eventually able to turn things around. After hitting its 20-day moving average (light blue line) on the chart, the stock reversed and was able cut its loss on the day. By the time the closing bell rang, it was down only $1.06 at $223.61. In tomorrow's session, we'll be watching to see if it's able to once again hold above this line. As long as this happens, we feel very good about how we're sitting heading into the weekend.

As always, Trade Happy and Trade Smart

We saw a little more red today, but nowhere near the kind of selling that we needed for our trade alerts. It felt like another uneventful session with stocks somewhat stuck in a range for the third straight session and the trading volume continuing to be fairly light for the second holiday-shortened week in a row. Although there was some selling, we still struggled to get any fills. We'll make some adjustments for tomorrow, but first let's recap today's uneventful session.

The lone piece of economic data this morning came from the Chicago Purchasing Managers Index (PMI). The data didn't disappoint the bulls today when the PMI climbed to 60.0 in December. This jump surprised most traders, who were looking for a decline in the index ahead of the release. Today's number was a nice increase over the 56.1 reported in November. This shows improvement in both production and new orders in the Midwest. Similar to most of the charts we've been looking at lately, the one below shows a nice bump from its bottom at the beginning of the year.

Graphic from Briefing.com

In the only other report released today, the demand for oil and gasoline both increased last week, but not as much as analysts were expecting. Today's inventory report released by the Energy Information Administration showed that the U.S. supply of crude dropped by 1.5 million barrels last week. While the increase in usage was expected during the holiday week, it wasn't quite the level that traders were looking for. Ahead of the release, consensus was calling for a drop of 2.2 million barrels for the week. At the same time, gasoline supplies declined by 300,000 barrels last week. This number was also much less than the drop of 2.2 million barrels that was predicted. Despite the disappointment in the EIA numbers, oil still managed to gain $0.41 a barrel to finish the session at $79.28 a barrel on the New York Mercantile Exchange.

However, the trading today seemed to revolve around the rising dollar. It appears that money is flowing into the greenback as a way to hedge against future rate hikes by the Central Bank. With economic conditions improving, investors are betting against possible inflation and a pull-back in the easy money that the Fed has been pouring into the system over the past year and a half. The strength in the dollar spelled trouble for most commodities today. Gold tumbled $5.50 per ounce to settle at $1,091.50.

The financial sector was in the news today with troubled financing firm GMAC facing some serious pressure. According to various reports, the company is expected to receive a government bailout to the tune of another $3.5 billion in the near future. This should help keep the company afloat. Of course, it already has received $13.5 billion in U.S. government funds. After all, what's another few billion when it's coming from the taxpayer?

Today's Economic Reports

It was light volume across the board today with very little volatility. This kept the Dow Jones Industrial Average in a small trading range. This trading range was mostly in the red territory today, but the large-cap index broke into the green at the close today. The Dow settled up 3 points on the session at 10,548. The index appeared to gain some support from the old resistance level on the daily chart. Let's watch to see if it's able to continue holding above this barrier.

The S&P 500 also managed to creep into positive territory at the end of the session. The index climbed 0.23 of a point to close at 1,126.42. The S&P 500 also seemed to find some support near an old resistance level on the chart. It'll be interesting to see if it's able to finish the week with a gain tomorrow.

The Nasdaq Composite certainly had a tough session yesterday with all of the trouble out of the tech sector. However, it was able to bounce back and lead the Market higher for most of the trading day. It closed up 2.88 points at 2,294.28. This helped the tech-laden index earn back some of its losses from yesterday and put the Nasdaq back into positive territory for the week. Let's see if it's able to stay there tomorrow.

The range-bound trading meant there was little movement in the VIX (CBOE VOLATILITY INDEX). With the gains in the indices at the end of the session, this took the VIX lower by 0.24 of a point. It settled below the 20 point barrier at 19.47 points.   

We're finally starting to see some red this week, but it hasn't been nearly enough to get most of our spreads filled. While we'd love to sit back and wait, we're starting to run out of time with another holiday break taking place on Friday. Due to this and the fact that that premium has really started to dry up, we're going to once again make some adjustments to our remaining trade alerts. We've been extremely patient this cycle, but so far we haven't been rewarded. Let's get slightly more aggressive with these adjustments and see if we can get the remaining spreads filled tomorrow morning. There's nothing we'd love more than to have five nice spreads working for us heading into the New Years Day Holiday this weekend.

NEW TRADE ALERT (3)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 580-570 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 580 strike price

Buy 15 January Puts at 570 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $585.00.

S&P 100 INDEX (OEX)

OPENING 490-480 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 490 strike price

Buy 15 January Puts at 480 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $492.50.

Google Inc. (GOOG)

OPENING 580-570 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 580 strike price

Buy 15 January Puts at 570 strike price

Total Credit 0.35 per contract

Potential Profit $525.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $582.50.

RUT DAILY CHART

OEX DAILY CHART

GOOG DAILY CHART

CURRENT JANUARY POSITIONS

PCLN 200-190 BULL PUT SPREAD (15 Contracts entered on 12/29/09)

PCLN CLOSED AT $223.61Today (23.61 points away from our put spread)

Profit potential of $35.00 per contract

Contingent Stop Order set at $202.50

Priceline had a rough start to the session this morning but was eventually able to turn things around. After hitting its 20-day moving average (light blue line) on the chart, the stock reversed and was able cut its loss on the day. By the time the closing bell rang, it was down only $1.06 at $223.61. In tomorrow's session, we'll be watching to see if it's able to once again hold above this line. As long as this happens, we feel very good about how we're sitting heading into the weekend.

As always, Trade Happy and Trade Smart

Little by little we'll get our fills this month, but it's taking some time. The selling today helped us get our fill in the PCLN spread, but the rest are still a ways away. However, we still think that we're going to get a session or two of selling this week. Because of this, we still want to keep our strike prices a little farther out of the money. While they might seem like a long shot tonight, this can change pretty quickly if we get that selling tomorrow. Because of this, let's try for one more day at these strike prices.

NEW TRADE ALERT (3)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 560-550 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 560 strike price

Buy 15 January Puts at 550 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $565.00.

S&P 100 INDEX (OEX)

OPENING 480-470 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 480 strike price

Buy 15 January Puts at 470 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $482.50.

Google Inc. (GOOG)

OPENING 560-550 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 560 strike price

Buy 15 January Puts at 550 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $562.50.

We got some selling this afternoon, but it wasn't enough to help us with our fills. While the pull-back didn't come today, we know that it's coming. We just have to be able to use enough patience to hang in there until it takes place. With this as our plan, let's sit tight and keep throwing these orders out there as day orders and see if we get that move in our favor on Tuesday. If not, then we'll re-evaluate tomorrow night.

NEW TRADE ALERT (4)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 560-550 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 560 strike price

Buy 15 January Puts at 550 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $565.00.

S&P 100 INDEX (OEX)

OPENING 480-470 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 480 strike price

Buy 15 January Puts at 470 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $482.50.

Google Inc. (GOOG)

OPENING 560-550 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 560 strike price

Buy 15 January Puts at 550 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $562.50.

Priceline.com Incorporated (PCLN)

OPENING 200-190 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 200 strike price

Buy 15 January Puts at 190 strike price

Total Credit 0.35 per contract

Potential Profit $525.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $202.50.

Will stocks ever pull back? Not yet. Stocks continued to hit new highs for the year on Thursday's holiday-shortened session, leaving our put spreads in the dust once again. The continued march up the chart by the indices last week made it impossible for our new trade alerts. Odds keep increasing for a retracement in the Market, but so far we haven't gotten the one that we've needed. We'll discuss our strategy for Monday in a bit, but first let's take a look at the few things that did happen on Thursday.

As expected, the trading volume on Thursday was extremely light. For the week, volume reached only half of what normally is traded on an average week for 2009. Regardless, the results matter even if the trading floor was sparse and the electronic exchanges showed thin trading all week long.

We often talk about certain trends that are taking place and during the recent run it appears that traders are casting aside any negative data and are instead giving everything a positive spin. Even if we might debate the merits, we want to trade with the prevailing winds. With everything moving higher, we know that our put spreads are on the right side of the momentum, but we need to get filled before we can enjoy the ride.

On Thursday morning, the focus centered on the weekly initial jobless claims, released before the opening bell. According to the government, this rate dropped from 480,000 in the prior week to 450,000 new claims. Not only was this a nice drop from the previous report, it was also lower than the 470,000 claims that the analysts had predicted ahead of time. This data doesn't take any spinning because the continuing drop in new claims should spell good news in the next non-farm payroll report, as well as, unemployment rate. The chart below shows the nice downward trend that we've seen over the past several reports.

Graphic from Briefing.com

While the initial claims number was better-than-expected on Thursday, the durable goods orders were disappointing. The Street was looking for a jump of 0.5% in November, but the actual number came in at 0.2% for last month. Traders use this as an indication of how the fourth quarter GDP number will come in. Based on this, we should continue to see some growth in the economy. While the number was definitely positive, the low figure shows that growth remains subdued and nowhere near robust. Despite the underperformance in the report, the chart below does show a nice upward trend in the data.

Graphic from Briefing.com

Despite the weak demand, oil continued climbing on Thursday. It rose $1.38 a barrel to finish the week at $78.05 a barrel on the New York Mercantile Exchange. This helped crude gain nearly 5% during the short trading week. Meanwhile, the dollar lost ground against the other major currencies.

Thursday's Economic Reports

It was a solid week of gains for the Dow Jones Industrial Average even though it was only three and a half days. The large-cap index rose 191 points during that time frame and broke out to a new high for the year when it closed at 10,520.10 points. This helped the index finally break through that resistance at 10,500 points and hold above it. The only stocks struggling on the session were in the healthcare sector, which remains in unease over the current healthcare legislation. The rest of the Market has been continuing to march higher. Let's see if the Dow can continue climbing during the last trading week of the year.

The S&P 500 was certainly stronger than the Dow last week on the chart. It broke through its resistance earlier in the week and then continued moving north. The index advanced another 5 points on Friday to finish the week at another new high on the year at 1,126.  

The Nasdaq Composite remained the leader last week when it shot up 3.35% over the short trading week. The tech-heavy index climbed 16 points on Friday alone to finish the trading week up 74 points at 2,285. Our only question is when is it going to take a break to let us get into our put spreads?

The good news for the Market meant bad news for the VIX (CBOE VOLATILITY INDEX). The "fear index" continued sliding on Thursday, losing 0.24 of a point to finish the week at 19.47 points. If this index continues to slide, the Market is probably headed higher.  

We certainly getting tired of chasing this thing higher and we know that you probably feel the same. Sooner or later it is going to take a step backwards and that's when we'll get our fills. Until then, we don't want to get too aggressive because we know that's when we end up getting burned. We've made some aggressive adjustments for Thursday morning, which we still feel will be good entries this week if we get one day in the red. Let's stick with those same alerts for Monday and see if we get lady luck to shine our way for just one morning this month.

If we didn't have such trouble getting filled last month, we wouldn't feel so bad about last week. But there's not a lot we can do about trying to get into put spreads when the Market keeps climbing. Let's try to be the "smart money" by sitting back and using our patience. We almost always get paid well when we're patient so let's try to stick to our guns and our same trade alerts for Monday.

At the same time, we're going to add one additional trade alert for Monday. We're going back to an old favorite, Priceline.com Incorporated (PCLN). As many of you know, we've traded this one for the past two years quite frequently in both the Regular and Professional Trader newsletters. We took a break from it last month, but we like way the stock has performed lately. It is coming off a huge gap on the chart after its strong 3rd quarter earnings results, which gave us a bit of a pause thinking that it might pull back some. Instead, the stock has steadily worked its way back up the chart with no signs of slowing down. We've been bullish on the fundamentals behind this company for quite some time and now we like the technicals once again. Let's stay a tad bit conservative with our new spread, but let's still find a way to profit from the put side in this one. Keep in mind that we're still going to need a pull-back to get filled, but let's be ready in case we finally get the one we've been waiting for.

NEW TRADE ALERT (4)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 560-550 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 560 strike price

Buy 15 January Puts at 550 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $565.00.

S&P 100 INDEX (OEX)

OPENING 480-470 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 480 strike price

Buy 15 January Puts at 470 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $482.50.

Google Inc. (GOOG)

OPENING 560-550 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 560 strike price

Buy 15 January Puts at 550 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $562.50.

Priceline.com Incorporated (PCLN)

OPENING 200-190 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 200 strike price

Buy 15 January Puts at 190 strike price

Total Credit 0.35 per contract

Potential Profit $525.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $202.50.

RUT DAILY CHART

OEX DAILY CHART

GOOG DAILY CHART

PCLN DAILY CHART

As always, Trade Happy and Trade Smart

The economic data came in disappointing, but a jump in commodities helped hold up the Market. Heading into the trading day, traders were preparing for some surprises to the upside, but that didn't happen. While we did get an early drop across the board, it wasn't enough to get us filled in any new trades as the Market came back and held onto narrow gains at the end of the session.

After the existing homes sales data came in better-than-expected yesterday, everyone was bracing for the same kind of upbeat report today from the new home sales report. But that didn't happen. Instead of the increase in sales that economists had forecasted, the actual number showed the lowest number of sales since last spring. According to the Commerce Department, sales of new homes dropped 11.3% in the month of November. In the past few months we've seen much improving data during recent months, helping fuel hopes that the housing market and economy has turned the corner. Today's report dampens the mood of this taking place or at least the pace of the recovery.

Graphic from Briefing.com

The disappointment in the homes sales seemed par for the course today as far as economic data was concerned. The personal income and spending figures were also somewhat of a miss today when the actual numbers increased less than expectations. While the income was up over last month, the reading of 0.4% was less than what the Street was expecting. At the same time, personal spending actually fell in November compared to its previous report. In today's release, the government said that personal spending stood at 0.5% in November, down from the 0.6% for October according to the Commerce Department. While it was certainly a disappointment, at least the trend is still moving higher on the chart below.

Graphic from Briefing.com

Following suit on Wednesday, the University of Michigan's index of consumer sentiment also improved, but less than the Street was expecting. The index hit 72.5, which is its highest level in over two months. However, the Street was looking for a number in the neighborhood of 74.5 heading into the release. So like the rest of the economic data released today, the number was an improvement but not as good as what was expected ahead of time.

The price of crude rose today after the weekly Energy Information Administration reported a drop in supplies last week. This helped oil gain $2.27 a barrel to settled at $76.67 a barrel on the New York Mercantile Exchange. Gold also rallied with a $7.30 advance, taking the metal up to $1,093.30 an ounce. Both commodities were helped by the falling dollar in today's session.

Today's Economic Reports

The Dow Jones Industrial Average rose for the fourth straight session, although it wasn't all that impressive. The large-cap index climbed 1.51 points to finish the session just above its opening price at 10,466 points. Once again, the Dow is closing in on the resistance at 10,500 points on the daily chart. Let's see if it's able to test this barrier in tomorrow's abbreviated session.

The S&P 500 fared better in today's trading, gaining 2.57 points and breaking through its tough resistance barrier on the daily chart. The index held above this mark when it closed at 1,120 points today. Let's see if it can keep moving north in tomorrow's trading.

Out of the three major indices, the Nasdaq Composite has been the strongest this week by far. The tech-laden index surged 16 points in today's session, taking it up to 2,269. This was the fourth straight bullish day for the Nasdaq, which could make it number five in tomorrow's session if it once again finishes the day in the green.

The VIX (CBOE VOLATILITY INDEX) barely made it into positive territory at the end of the day when it gained 0.17 of a point. The "fear index" fell sharply during the first two trading days of the week and now stands at 19.71. Now that it has broken below the 20-point level, let's see if it continues falling.

We don't know about you, but we're getting tired of not getting filled. As we said earlier in the week, we really want to be in several positions before we hit the Christmas break. Because we're profiting from time-decay, there's nothing better than getting paid when the Market is closed. For tomorrow, we're going to get a little more aggressive by once again moving our strike prices up and dropping the credits. While this does reduce our profit potential, we want to at least have a few spreads working for us this weekend. Unless we get a pop on the open, we think these adjustments should do the trick.

NEW TRADE ALERT (3)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 560-550 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 560 strike price

Buy 15 January Puts at 550 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $565.00.

S&P 100 INDEX (OEX)

OPENING 480-470 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 480 strike price

Buy 15 January Puts at 470 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $482.50.

Google Inc. (GOOG)

OPENING 560-550 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 560 strike price

Buy 15 January Puts at 550 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $562.50.

RUT DAILY CHART

OEX DAILY CHART

GOOG DAILY CHART

As always, Trade Happy and Trade Smart

It was another tough session for getting filled in our put spreads. While we want to continue to use patience, we also don't want to be sitting back and not getting any new trades filled heading into the break later this week. Due to this, let's make some adjustments for tomorrow and see if we get a little pullback to help us get into the new trades.

NEW TRADE ALERT (3)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 550-540 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 550 strike price

Buy 15 January Puts at 540 strike price

Total Credit 0.45 per contract

Potential Profit $675.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $555.00.

S&P 100 INDEX (OEX)

OPENING 470-460 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 470 strike price

Buy 15 January Puts at 460 strike price

Total Credit 0.45 per contract

Potential Profit $675.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $472.50.

Google Inc. (GOOG)

OPENING 550-540 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 550 strike price

Buy 15 January Puts at 540 strike price

Total Credit 0.40 per contract

Potential Profit $600.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $552.50.

The jump right out of the gate this morning made it impossible for us to get any fills today. While we do have plenty of time this cycle, we are very weary of running into the same issue we had last month. We want to get several positions going before Christmas so that we can get paid over the long weekend. However, we don't want to chase the spreads after just one session especially with the catalyst behind the move being merger and acquisition talk. In our experience, these types of moves are usually short-lived. With this in mind, let's keep are spreads the same for tomorrow and see if this will do the trick.

NEW TRADE ALERT (3)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 540-530 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 540 strike price

Buy 15 January Puts at 530 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $545.00.

S&P 100 INDEX (OEX)

OPENING 465-455 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 465 strike price

Buy 15 January Puts at 455 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $467.50.

Google Inc. (GOOG)

OPENING 540-530 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 540 strike price

Buy 15 January Puts at 530 strike price

Total Credit 0.45 per contract

Potential Profit $675.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $542.50.

RUT TRADE ALERT for Income Spread Trader -

Regular Members & Pro Trader

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 540-530 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 540 strike price

Buy 15 January Puts at 530 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $545.00.

Stocks rally on the final trading day of the December options cycle, capping off another profitable month for our spreads. It was tech stocks that helped push the Market into positive territory on Friday, but it wasn't enough to move all of the indices into positive territory on the week. However, the uneventful week allowed us to coast to another profitable month with all of our spreads expiring worthless.

Before we take a look at our spreads, let's recap the trading on Friday. Although there was no economic data released on the day, there was plenty of corporate news that helped shape the trading session.

It was the positive earnings in the tech sector that lit a fire under the bulls on Friday. Both Research In Motion and Oracle had upside surprises with their better-than-expected earnings results. This caused the Nasdaq to spike and the other indices to follow suit.

The bounce-back on Friday followed two sessions of selling, ignited from the release of the FOMC policy statement on Wednesday afternoon. Then on Thursday, the Market continued falling after the country of Greece had its debt rating downgraded by Standard & Poor.

The trading volume on Friday did pick up, but that was more to do with the session being a quadruple witching than anything else. Volume rose to 7.2 billion shares, which is significantly higher than the average of 5.7 billion that has been turning over each session so far in 2009.

Crude climbed again on Friday with a $0.71 gain per barrel. This helped oil finish the week up 5% over the past five trading days with its closing price of $73.56 a barrel on the New York Mercantile Exchange. Gold also was up on Friday, but finished the week lower when it settled at $1,110.80 an ounce. Meanwhile, the dollar picked up steam on Friday when it rose against other major currencies.

The activity this week should really slow down due to the shortened Christmas trading week. The Market is set to close early on Thursday. There are no corporate earnings on the calendar, but there will be plenty of economic data coming out. This includes the third quarter GDP (final revision) and housing data set to be released on Tuesday. On Wednesday, we'll get an update on personal income and spending and then will finish up with durable goods orders on Thursday's short session.

Friday's Economic Reports

The Dow Jones Industrial Average was able to climb 20 points on Friday, halting its downward skid. The large-cap index reversed at a nice support level on the chart, but still slipped 142 points on the week. Its closing price of 10,328 points leaves the index back below its 20-day moving average (light blue line) on the chart, but above its 50-day moving average (red line). Let's keep a close eye on both of these averages this week to see if it breaks above or below either of them.   

The S&P 500 also reversed its downward trend on Friday when it moved up 6.39 points on the day. However, it also fell on the week with a 0.36% loss over the last five trading days. It closed at 1,102 points on Friday, which left the index just below its 20-day moving average (light blue line) on the chart. However, just like the Dow, the S&P 500 remains above its 50-day moving average (red line) on the chart. Although it did fall last week, it really isn't sitting too far off its high for the year. One good week could push this index back to that level quite easily.     

The Nasdaq Composite was the bright spot on Friday's session. The tech-laden index gapped higher on the open and then continued rising throughout the day. The index finished the session up 31 points, which pushed the Nasdaq into positive territory for the week. Its closing price of 2,211 points also puts the index near its high for the year. Let's see if it can break out to a new high on this holiday-shortened week.   

Once again, the VIX bumped up against its 50-day moving average (red line) on Friday and then fell from that level. It finished the session 0.83 of a point lower, but did climb on the week with its closing price of 21.68 points on Friday. This week, let's watch to see if it once again presses higher or falls like it did on Friday's session.

Well......it wasn't the perfect option cycle for us, but it got the job done. We had plenty of struggles this month getting everyone filled in the spreads early on in the cycle. But once we got the fills, it was a pretty laid back month. Of course, that's exactly the way we like them!

After really suffering through an option cycle during the prior month, we wanted to slowly dip our toes back in the water and make sure that we used plenty of safety this month. While the profit ended up being smaller than we usually like to see, we can't get too upset about such an easy cycle. All of our spreads finished way out of the money and we coasted to a 100% profitable cycle. Let's go ahead and add up the profits for December.

EXPIRED DECEMBER SPREADS

RUT 500-490 BULL PUT SPREAD (15 Contracts entered on 11/30/09)

Profit of $40.00 per contract

RUT 540-530 BULL PUT SPREAD (15 Contracts entered on 12/08/09)

Profit of $35.00 per contract

OEX 465-455 BULL PUT SPREAD (15 Contracts entered on 11/30/09)

Profit of $49.00 per contract

OEX 485-475 BULL PUT SPREAD (15 Contracts entered on 12/08/09)

Profit of $35.00 per contract

GOOG 550-540 BULL PUT SPREAD (15 Contracts entered on 12/07/09)

Profit of $40.00 per contract

While we would have loved to have 12 profitable months for 2009, it looks like we fell one short. We ended the year going 11 for 12 and a nice profit for the year, but we'll have plenty time to recap that later. When we consider some of the volatility we witnessed this year, we really didn't do too badly. Our only bumpy cycle turned out to be the November cycle, which certainly gave us a beating. Of course, the tough part about that one was that all of our spreads would have finished the month with a profit (as we figured). But that's the way trading goes. We're going to get that kind of hair-raising volatility at times, we just want to be able to control the risk as best possible. This way, we finish the year with a healthy profit the way we did in 2009.

We'll have plenty of time to spend recapping the year that was. For now, let's start getting things started with a nice profit for January of 2010. Let's start things off with our reliable index spreads for the New Year. We're going to try to keep things safe but let's try to inch that profit potential a little higher this month.

We know that we'll see some selling during the end of this year for tax reasons. However, we'll also probably get a lift at the beginning of 2010 with investors putting the money back to work. Let's attempt to take advantage of that increased volatility that this time of the year offers. We're going to start with our reliable spreads that have been like money in the bank.

Both of our indexes from last month and GOOG are offering some excellent opportunities after last week's move. For the RUT, we're going to come back with the same exact strike prices as our second put spread last month. There's nothing we love more than coming in at the same exact levels and picking up an even better credit. Let's take advantage of all the time premium that's out there for January.

At the same time, we're going to come back with an OEX put spread at the same strikes as our first put spread last month. This index hasn't been as strong as the RUT, which is why we're able to come in with lower strikes for Monday. However, we're still able to pick up a very nice credit at these levels. We also like the fact that we're placing our strikes below several very strong support levels, which should help us out if there's any significant amount of selling around the end of the year.

Let's cap off the new trades for tomorrow by coming back with a put spread on Google at the strike prices we originally tried to get last month. This will be down a level from the put spread we actually got filled in and at a credit that also appears to be better. With the stock continuing to hold its bullish momentum, we feel that it should remain strong heading into its earnings release in January. This should help keep the stock price propped up and help us pull in a nice credit along the way. Let's start with these three spreads for Monday and see if we can get the New Year started right.

NEW TRADE ALERT (3)

Please Note: These are Day Orders and Limit Orders.

RUSSELL 2000 INDEX (RUT)

OPENING 540-530 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 540 strike price

Buy 15 January Puts at 430 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $545.00.

S&P 100 INDEX (OEX)

OPENING 465-455 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 465 strike price

Buy 15 January Puts at 455 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $467.50.

Google Inc. (GOOG)

OPENING 540-530 JANUARY BULL PUT SPREAD (15 contracts)

Sell 15 January Puts at 540 strike price

Buy 15 January Puts at 530 strike price

Total Credit 0.45 per contract

Potential Profit $675.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if the index reaches $542.50.

RUT DAILY CHART

OEX DAILY CHART

GOOG DAILY CHART

As always, Trade Happy and Trade Smart