We finally got some red at the end of the day, but once again, it wasn't enough to get us filled. Stocks slid into the close of the third quarter today as commodity prices soared. At the same time, the disappointment on the economic front gave little encouragement to traders as the Street braced for more key data that comes out during the final two trading days of the week. The problem for us is that we continued to struggle with our fills in today's session. For tomorrow, we'll have some key adjustments to make, but first let's recap the action from today's session.

There was a little uneasiness this morning after the ADP report on private employment showed a jump in job cuts. The Street was looking for a gain of 40,000 jobs in today's release. Instead, the actual data showed a decline of 23,000 jobs in March. This was not a very good sign heading into Friday's more important non-farm payrolls.

At the same time, February's ADP figure was revised downward to show a loss of 24,000 jobs last month. This means that the new number is a fairly flat reading, which wasn't the bump upward that traders were anticipating. While that actual report is not the big enchilada, like the one we'll get on Friday morning, it is seen as a gauge of how non-farm payroll number will come in. Based on today's release, we shouldn't be all that optimistic.

The next piece of data came out today mid-morning when the Chicago Purchasing Managers Index was released. Following in the pattern of disappointments, the index fell to 58.8 in the month of March. This was down from the previous reading of 62.6 and below analysts' expectations of 61.0. This release shows a slight slowdown of business activity in the Midwest. While the number wasn't a huge drop, the real disappointment was that there were no signs of a pickup in business spending.

Shortly after this release, the Factory Orders were announced. Keeping with the trend of subpar data, the orders for February came in under expectations. Ahead of the release, analysts predicted a jump of 0.8% in new factory orders. Instead, the actual figure was at 0.6%. Although this doesn't seem like much of a drop-off, the problem is that last month's figure of 0.5% was the downward revision from the previous reading of 1.7%. Now that's a sizable downward revision, and not in a good way. The chart below shows the massive rebound that we've seen in the data during the recent Market rally, but with the number already elevated, we have to wonder if it's now losing steam.

Graphic from Briefing.com

Oil faced some selling pressure today in a bearish report from the Energy Information Administration. The government numbers showed an uptick in both crude and gasoline supplies last week, surprising most traders. The oil inventories rose to 2.9 million barrels, which was above the 2.1 million barrels that the Street was expecting. At the same time, gasoline stockpiles climbed by 300,000 barrels last week. This was quite a contrast from the 1.3 million barrel drop that analysts had forecasted.

When we combine today's ADP report (showing continued pressures on the jobs front) with the jump in supplies, it should help bring down the price of crude and gasoline, one would think. The funny thing about today's trading in crude was that before the release of the EIA data, oil was actually hitting a new high for the year at nearly $84 a barrel. After running into some selling intraday, it bounced right back due to the weakness in the dollar. It was kind of hard to believe that it actually gained $1.39 on the day to settle at $83.76 a barrel on the New York Mercantile Exchange.  

Today's Economic Reports

After a pre-Market tumble just after the ADP report was released, the Dow Jones Industrial Average actually made a nice recovery after the opening bell rang. The large-cap index spent most of the day hovering around the break-even region but really struggled during the final hour and a half of the session. The index closed near its low of the session, down 50.79 points at 10,856 points. On the daily chart, the Dow appears to be bumping up against some selling pressure intraday. Let's see if this continues during the rest of the week.  

The S&P 500 gave us a similar trading pattern intraday. After overcoming the early selling in pre-Market trading, the index had a nice little gain going intraday. But the final hour and a half of the session really took the wind out of its sail. The S&P 500 found itself down 3.84 at the closing bell. This left the index sitting at 1,169 points and just off its low for the trading day. The index looks like it's going to test its rising 20-day moving average on the chart (light blue line). After this, the next support level will be its rising 50-day moving average (red line). Let's keep a close eye on both of these lines the rest of the week.      

The Nasdaq Composite appeared to be dragging down the other two indices today. It finished the day just off its low with its loss of 12.73 points at 2,397.96. Just as in the chart for the S&P 500, we want to watch the two closest moving averages during the next two trading days. If there's any more selling, these are going to be the ones to provide some support to the tech-laden index.

The VIX (CBOE VOLATILITY INDEX) was able to climb in today's session, but not by all that much. It inched up 0.46 of a point to finish the session at 17.59 points. The "fear index" has a ways to go before we get too concerned, but a little nudge up in the VIX would certainly help us get our fills tomorrow.   

With the pre-Market futures taking a nose-dive this morning, we were very optimistic about getting some fills today. However, the indices had bounced back by the time the opening bell rang and pretty much wiped away any chance that we had on the day. There was some late selling that came at the end of the day, but it was too little too late for our spreads. For tomorrow, let's continue to get a little more aggressive in our trade alerts and see if this can lead to some fills.

We are also adding another put spread on our old favorite the OEX. This index caused us a little problem a few months ago, but we like the pattern it's giving us on the chart. We also like the fact we can come in 25 points out of the money and place our strike prices below some solid support levels. Let's throw this one out there tomorrow along with the others and see if we can get some fills.

NEW TRADE ALERT (4)

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 630-620 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 630 strike price

Buy 15 April Puts at 620 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 $635.00.

Apple Inc. (AAPL)

OPENING 210-200 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 210 strike price

Buy 15 April Puts at 200 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 stock reaches $212.50.

CME Group Inc. (CME)

OPENING 290-280 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 290 strike price

Buy 15 April Puts at 280 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 $292.50.

S&P 100 INDEX (OEX)

OPENING 510-500 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 510 strike price

Buy 15 April Puts at 500 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 $512.50.

RUT DAILY CHART

AAPL DAILY CHART

CME DAILY CHART

OEX DAILY CHART

As always, Trade Happy and Trade Smart

We got a little more selling today, but it still didn't do the trick. For tomorrow, we need to be a tad bit more aggressive. Let's lower our credits once again and see if we can finally get some trades started for the month of April. Even if we're filled in all three spreads tomorrow, we plan on adding some additional spreads in tomorrow night's newsletter.    

NEW TRADE ALERT (3) for Income Spread Trader -

Regular Members

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 610-600 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 610 strike price

Buy 15 April Puts at 600 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 $615.00.

Apple Inc. (AAPL)

OPENING 210-200 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 210 strike price

Buy 15 April Puts at 200 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 stock reaches $212.50.

CME Group Inc. (CME)

OPENING 280-270 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 280 strike price

Buy 15 April Puts at 270 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 $282.50.

As always, Trade Happy and Trade Smart

It was another interesting session, but no luck with the fills. For tomorrow, let's keep the orders the same for just one more session. We're getting some patterns on the chart that appear to be suggesting a pull-back. Let's give it one more day before making another adjustment. We know it's tough to wait so long for our entries this month, but let's hold out one more session and see if we get paid to wait.   

NEW TRADE ALERT (3)

for Income Spread Trader - Regular Members

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 610-600 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 610 strike price

Buy 15 April Puts at 600 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 $615.00.

Apple Inc. (AAPL)

OPENING 210-200 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 210 strike price

Buy 15 April Puts at 200 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 $212.50.

CME Group Inc. (CME)

OPENING 280-270 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 280 strike price

Buy 15 April Puts at 270 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 $282.50.

Stocks finish the session flat, but still post another gain on the week. Things got a lot more interesting at the end of the week with the indices struggling to hold onto positive territory. Despite the uptick in volatility, we still continued to struggle with our fills. We'll make some adjustments to our trade alerts, but first let's recap Friday's action.   

Friday's session started off with some bad news in the pre-Market with the downward revision for the fourth quarter Gross Domestic Product reading. Ahead of the release, the Street was looking for no revision, or a reading of 5.9% in the release. However, the previous reading was downgraded by 0.3% to a new figure of 5.6% for the fourth quarter. At the same time, the GDP deflator was revised higher to 0.5% due to rising prices.

Graphic from Briefing.com

Friday's number kind of reinforces many of the expectations that are out there for the economy. The positive reading for the fourth quarter GDP does show that the economy has moved out of the recession. However, we're not looking at an economy that is firing on all cylinders. Instead, the growth is probably due more to the restocking of inventories, which will be done at a very conservative pace until we see real demand showing up.

Although the downward revision in GDP was not good news, the Market didn't look too bad early on Friday morning. Of course, this was helped out by the University of Michigan's consumer sentiment index. After giving us a preliminary loss in its reading two weeks ago, the index actually reversed course on Friday morning. The index jumped from its initial reading of 72.5 two weeks ago to a final reading of 73.6 for the month. While the Street was looking for an increase to 73.0, the actual reading was a little bit more pleasing to traders. The chart below shows the nice upward trend in the index.

Graphic from Briefing.com

Oil continued to lose steam at the end of the week. It fell $0.97 a barrel last week, helped out by a $0.53 decline on Friday alone. This decline took crude down to the $80.00 a barrel mark at the session's close. Gold seemed to follow suit last week when it dropped $3.20 a troy ounce to finish the five day stretch at $1,104.20 on Friday's close. Let's see if commodities continue to face selling pressure this week.

Friday's Economic Reports

During the last two trading days of the week, the Dow Jones Industrial Average had some very large gains working intraday. However, it struggled to hold onto those moves higher in each of the trading days. On Friday, it still managed to hold in positive territory at the close, but only by 9.15 points. But this did secure a 108 point gain for the index last week, leaving the Dow up 1.01% for the five sessions. On the chart, the large-cap index appears to be bumping up against some resistance levels intraday. Let's see if this continues to be a problem for the index in the upcoming week.

The S&P 500 also ran into some troubles intraday during Thursday and Friday's trading sessions. On both days, it finished very much like the other indices, near its low of the trading sessions. On Friday, this still meant a small gain for the S&P 500. It hung onto a 6.69 point gain at the close. This helped lock in a 0.58% advance for the week with its closing price of 1,166 points on Friday. Just like in the Dow, let's watch to see if it continues to bump up against resistance intraday at the start of the new week.     

The Nasdaq Composite wasn't able to finish the session in positive territory on Friday. Unlike the other two indices, the Nasdaq fell 2.28 points on the day, closing at 2,395 points. However, it still was able to climb 20 points on the week, helping the tech-laden index to gain 7.01% over the last four weeks. On the daily chart, the Nasdaq does appear weaker than the other two indices with its rather large red body on Friday's candle. Let's see if this is foreshadowing an ugly week for the index coming up.

The VIX (CBOE VOLATILITY INDEX) finally showed some signs of life last week. After hitting a low in the neighborhood of 16 points last week, the VIX started to move higher on the chart. It made a new high for the week on Friday, but wasn't able to hold onto that gain at the close. The index finished the session down 0.63 of a point at 17.77 points. Let's see if it continues to climb at the beginning of the week.  

The green start to the week made it really tough for our fills during the last week. We finally started to see things go our way last week with some selling creeping back into the Market. However, the selling was quite fast and furious for our put spreads.

On the daily charts, it's quite evident that we're seeing the indices bumping up against some decent resistance levels. If we can get a little retracement at the beginning of this week that should really help us get filled in our put spreads.

Although we think the odds of this happening are pretty good, we can't waste any more time being patient with our new trades. We need to at least get three of them going this month before the time value starts to disappear.

Due to this, we're going to adjust our trade alerts for Monday to see if this can do the trick. Let's keep the alerts out there as day orders for tomorrow. If we don't get filled on Monday, we'll once again make some adjustments tomorrow night, but at a more aggressive approach.

NEW TRADE ALERT (3)

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 610-600 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 610 strike price

Buy 15 April Puts at 600 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 $615.00.

Apple Inc. (AAPL)

OPENING 210-200 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 210 strike price

Buy 15 April Puts at 200 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 $212.50.

CME Group Inc. (CME)

OPENING 280-270 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 280 strike price

Buy 15 April Puts at 270 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 $282.50.

RUT DAILY CHART

AAPL DAILY CHART

CME DAILY CHART

As always, Trade Happy and Trade Smart

We got the selling that we wanted today, but it was a little too late in the session. However, if we get the same kind of internal weakness that we encountered at the end of today's session, we think we can get filled tomorrow morning. Let's use some adjusted strike prices and take advantage of the uptick in volatility that we saw today. The combination of these two things should help us get filled on Friday.

NEW TRADE ALERT (3)

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 610-600 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 610 strike price

Buy 15 April Puts at 600 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 $615.00.

Apple Inc. (AAPL)

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

Sell 15 April Puts at 200 strike price

Buy 15 April Puts at 190 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 $202.50.

CME Group Inc. (CME)

OPENING 280-270 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 280 strike price

Buy 15 April Puts at 270 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 $282.50.

Stocks fall as bad economic news and more problems in Europe cause traders to dump equities and commodities. While the selling was prevalent for the whole session, the velocity wasn't enough to help us out with our new trade alerts. Unfortunately, three days into the new option cycle, we still struggled to get filled. We'll talk about our trading plan for tomorrow a little bit later in the newsletter. For now, let's take a quick recap of today's session.  

The economic data didn't start out all that bad this morning when the durable goods report came out before the opening bell. The data was actually upbeat with the increase of 0.5% for the month of February. Today's release showed an uptick in business investing. While the number was 0.1% below expectations, there was a very nice upward revision in January's report. The new number for last month showed a 3.9% jump in durable goods. But there was some disappointment in the transportation spending. This was the real laggard in spending over the last month, which analysts are blaming on the harsh weather conditions. The weather always makes for a nice scapegoat during the winter months. But even with this lagging sector of the economy, the chart below shows a very nice upward trend in the data.

Graphic from Briefing.com

The numbers were pretty ugly this morning on the housing front. The new home sales fell to an all time record low in February. The seasonally adjusted rate now stands at a mere 308,000. This was down from January's number of 315,000, which was revised up from an initial reading of 309,000 reported last month. Despite the small revision upward, today's report still marks the second straight month that home sales remained at record low levels. The more troubling sign for us is that the government is still subsidizing the housing market with its home buyer tax credits. Perhaps this isn't artificially inflating these numbers, but we certainly wonder just how ugly these numbers really are without those incentives to buy.

After a decent rebound last fall, the chart for new home sales has turned south once again. It's just plan ugly when we look at the reversal on the chart below.

Graphic from Briefing.com

Buying in the greenback heated up today thanks to a rating downgrade of Portugal's sovereign credit rating. At the same time, ratings agency Fitch warned that another downgrade might be coming unless the country changes its course. News like this always leads to money finding its way back into the perceived safety of the U.S. currency.

The side-effect of the rising dollar is trouble for commodities like crude. Oil fell to its lowest level in over a week today due to fear that the U.S. currency will make a comeback due to the problems in Europe. Of course, it certainly didn't help that today's Energy Information Administration report showed a huge 7.25 million barrel increase in supplies last week. This was dramatically higher than the 1.4 million barrel gain that the Street was expecting ahead of the release. The bearish action caused oil to dip below $80 a barrel intraday, but it was able to settle down only $1.30 at $80.61 a barrel on the New York Mercantile Exchange.  

Today's Economic Reports

After yesterday's surge in the Dow Jones Industrial Average, we were hoping for some kind of a pull-back today. We got a small one, but it wasn't enough to help us in our fills. The large-cap index fell 52 points in today's session, leaving the large-cap index at 10,836 points. The 10,900 point appeared to be a little resistance for the Dow during the last two trading sessions. But if the index can make it through this level, the next stop appears to be at the 11,000 point region. On the downside, we'll watch yesterday's low and then the 10,700 point level which has a little more solid support for the Dow.

The S&P 500 also shed 6 points in today's trading, leaving the index at 1,167 when the closing bell rang. Although the index gave us a fairly decent red candle today, the S&P 500 remains in positive territory on the week and the uptrend is still intact. Let's see if this continues to play out the rest of the week.    

The Nasdaq Composite started the session by gapping lower at the opening bell. It continued to fall and by the end of the trading day, it was down 16 points at 2,398. Although it was certainly a decent loss for the tech-laden index, the size of the candle was still fairly small compared to the two green candles the Nasdaq has given us so far this week. Let's see if this was a fluke or if there's a little more selling to come.    

The VIX (CBOE VOLATILITY INDEX) made a move higher on Friday. Of course, it's been quite a while since we saw any selling like we did on Friday. This helped the "fear index" climb by 0.35 of a point and finish the week at 16.97 points. Let's keep an eye on the VIX next week to see if there's any uneasiness remaining out there.

We got a little spike in volatility on Friday, but that really didn't bother us one bit. Actually, we would prefer to get a little red before the new cycle starts anyway so we can have an increase in the option pricing. At the same time, it also allows us to come in a little bit lower on a few of our new spreads. But before we get to this, let's take a look at how the cycle turned out for us on Friday.

Our final new spread for Monday morning is going to be with a spread that we're bringing down from the Professional Trader Newsletter. We've been trading this one for the past few months with great success and feel that we have a fairly safe spread setting up for April. This stock has been riding its 20-day moving average (light blue line) up the chart over the past month. Over the last week, it has been stuck in a trading range on the chart. We want to take advantage of the selling on Friday by placing a put spread 41 points out of the money while still picking up a nice premium in this spread. Let's start with these three put spreads for Monday and see if we can get the April cycle started on the right foot.

NEW TRADE ALERT (3)

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 600-590 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 600 strike price

Buy 15 April Puts at 590 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 $605.00.

Apple Inc. (AAPL)

OPENING 195-185 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 195strike price

Buy 15 April Puts at 185 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 $197.50.

CME Group Inc. (CME)

OPENING 270-260 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 270 strike price

Buy 15 April Puts at 260 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 $272.50.

RUT DAILY CHART

AAPL DAILY CHART

CME DAILY CHART

As always, Trade Happy and Trade Smart

With the Market continuing to charge higher, it made for another tough day for our fills. Although it might seem like a long-shot tonight, we're still going to keep our strike prices the same for tomorrow. Let's see if we can get the Market to come to us. If not, we'll adjust the trade alerts in tomorrow night's newsletter.

NEW TRADE ALERT (3)

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 600-590 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 600 strike price

Buy 15 April Puts at 590 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 $605.00.

Apple Inc. (AAPL)

OPENING 195-185 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 195strike price

Buy 15 April Puts at 185 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 $197.50.

CME Group Inc. (CME)

OPENING 270-260 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 270 strike price

Buy 15 April Puts at 260 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 $272.50.

The uneventful session we had today made it difficult for our new trades. But with plenty of time left in this cycle, let's try to use some patience. For tomorrow, we're going to keep the alerts the same and see if we can get a little selling to help us get filled.

NEW TRADE ALERT (3)

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 600-590 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 600 strike price

Buy 15 April Puts at 590 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 $605.00.

Apple Inc. (AAPL)

OPENING 195-185 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 195strike price

Buy 15 April Puts at 185 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 $197.50.

CME Group Inc. (CME)

OPENING 270-260 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 270 strike price

Buy 15 April Puts at 260 strike price

Total Credit 0.50 per contract

Potential Profit $750.00

The Market finally fell, but we still coasted to an easy profit this month. Friday marked the end of another option cycle and allowed us to walk away with decent profit. The best thing was that it was back to being the easy cycle that we've become accustomed to over the past year and a half.

There's nothing better than entering the spreads four weeks out and then letting them expire worthless on expiration. Cycles like this one make us feel like we get paid to take a walk in the park. Let's enjoy times like this because we know from the previous couple of cycles that it's not always this easy. Before we recap the spreads that went out worthless on Friday, let's discuss what unfolded on Friday.

With no economic news on the agenda Friday morning, one would think that it would have been a fairly calm session. But at the same time, we've been a little concerned that we haven't seen much of a retracement after such a huge run up the chart in recent weeks. Well, we seemed to get that pull-back on Friday thanks to Greece back in the news.

Greece is kind of like the unlucky penny that seems to never go away. The on-again-off-again bailout plans from Europe seem to be off again, for the moment. This has caused Greece to announce that it might have to turn to the International Monetary Fund for support if the European nations won't come to its rescue.

The ironic thing here is that the Market has been shrugging off this same kind of news for the past couple of weeks as the indices continued to race higher. But that's how the Market reacts sometimes; it will look past the same news for weeks on end and then one day decide something is different. But let's not give a one-session wonder too much validity until we start to see several red sessions in a row.

The only other real news on the session Friday was the action from the Central Bank of India. The country's Fed hiked interest rates as a way to fight rising inflationary pressures in the country. While U.S. inflation concerns are minimal, traders are concerned about a pattern of other countries increasing their interest rates. Let's keep a close eye out to see if this is a trend around the globe.

While Friday was a good day for the dollar, it meant a rough day for commodities. Oil fell $1.78 a barrel to finish the week at $80.42 a barrel on the New York Mercantile Exchange.

Friday's Economic Reports

The Dow Jones Industrial Average started the session by moving higher right out of the gate. But after hitting its high for the session five minutes into the trading day, the rest of the session was down hill from there. The large-cap index would have finished down even more, but some buying during the final thirty minutes of the day helped it to cut its loss down to only 37 points. It was quite a wide trading range for the session, but the index finished the day in the middle of this range at 10,741.98 points. We've placed resistance and support lines on either side of this candle and will be watching on Monday to see if it takes out either of these lines. Which way it goes will give us an indication of how the week will play out.  

The S&P 500 gave us a similar candle on Friday when the index started higher and then finished the day down 5.93 points at 1,159.90. Despite this pull-back on Friday, it still turned out to be a very good week for the index. Over the next five sessions, let's keep a close eye on its rising 20-day moving average (light blue line) on the chart. If there's any selling in the index, we want to see if the S&P 500 can gain some support from this line. The index has traded above this line through the month of March and we would like it to remain that way into April.   

There was quite a bit more red for the Nasdaq Composite on Friday when the index tumbled 16.87 points to finish the week at 2,374.41 points. The index has appeared to run into some resistance from the 2,400 point area on the chart. Let's see if the index is able to test this line once again this week or whether there's some more selling around the corner. Either way, we have some technical levels marked out on the chart to keep an eye on this week.   

The VIX (CBOE VOLATILITY INDEX) made a move higher on Friday. Of course, it's been quite a while since we saw any selling like we did on Friday. This helped the "fear index" climb by 0.35 of a point and finish the week at 16.97 points. Let's keep an eye on the VIX next week to see if there's any uneasiness remaining out there.

We got a little spike in volatility on Friday, but that really didn't bother us one bit. Actually, we would prefer to get a little red before the new cycle starts anyway so we can have an increase in the option pricing. At the same time, it also allows us to come in a little bit lower on a few of our new spreads. But before we get to this, let's take a look at how the cycle turned out for us on Friday.

RUT 560-550 BULL PUT SPREAD (15 contracts entered on 02/23)

Profit of $50.00 per contract

PCLN 200-190 BULL PUT SPREAD (15 contracts entered on 02/22)

Profit of $50.00 per contract

GOOG 490-480 BULL PUT SPREAD (15 contracts entered on 02/23)

Profit of $45.00 per contract

Now that we've got one good month under our belts, it's time to get that new winning streak alive. While we did get a little selling on Friday, we certainly don't see any shift in the bullish sentiment just yet. Due to this, we need to stay on the put side until we see signs of a real pull-back. But even with this said, in the back of our minds we need to keep that thought that after such a strong bullish run like we've encountered over the past few weeks, odds are that there will be a retracement coming. This is why we need to stay safe and fairly far out of the money with our new spreads this month.

Our RUT spreads have been like money in the bank over the past two years, which is why it's probably no surprise that we're headed back to RUT for Monday. Let's start with a safe and secure one that's nearly 75 points out of the money. As in the past, if we get some more selling we'll be more than happy to add another layer to this spread down the road. But first, let's get filled in this one on Monday.

At the same time, we're heading back to Apple, after sitting out a few cycles on this stock. The company will release earnings the week after the April options cycle, which is great timing for a put spread on this one. Not only do we have the suspense of earnings working to our advantage, we also have a ton of cushion in this new put spread by coming in well below several strong support levels on the chart. The only thing we don't like about this spread is that we're coming in with a 10 point spread instead of 5 points, but that's what we need to do to go so far out of the money and still pick up a decent premium.

Our final new spread for Monday morning is going to be with a spread that we're bringing down from the Professional Trader Newsletter. We've been trading this one for the past few months with great success and feel that we have a fairly safe spread setting up for April. This stock has been riding its 20-day moving average (light blue line) up the chart over the past month. Over the last week, it has been stuck in a trading range on the chart. We want to take advantage of the selling on Friday by placing a put spread 41 points out of the money while still picking up a nice premium in this spread. Let's start with these three put spreads for Monday and see if we can get the April cycle started on the right foot.

NEW TRADE ALERT (3)

Please Note: This is a Day Order and Limit Order.

RUSSELL 2000 INDEX (RUT)

OPENING 600-590 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 600 strike price

Buy 15 April Puts at 590 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 $605.00.

Apple Inc. (AAPL)

OPENING 195-185 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 195strike price

Buy 15 April Puts at 185 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 $197.50.

CME Group Inc. (CME)

OPENING 270-260 APRIL BULL PUT SPREAD (15 contracts)

Sell 15 April Puts at 270 strike price

Buy 15 April Puts at 260 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 $272.50.

RUT DAILY CHART

AAPL DAILY CHART

CME DAILY CHART

As always, Trade Happy and Trade Smart

Steady interest rates help keep stocks moving higher, hitting a 17 month high on Wednesday. Tuesday's decision by the Fed to keep rates in check has helped the Market keep its upward march intact. Of course, it didn't hurt that Japan decided to do the same thing with its key interest rate. With the policymakers using the federal funds rate to spur the economy, the bulls continued to pile into the Market on Wednesday, helping the Dow Jones Industrial Average to hit its highest level since October of 2008.

It was a fairly quiet trading session on Wednesday with the only economic reports coming out early in the session. Before the opening bell, the Labor Department released its Producer Price Index, which showed a huge drop in wholesale prices. This implied that inflation remains in check and shouldn't force the Central Bank to raise interest rates anytime soon.

The drop of 0.6% in February was much larger than the decline of 0.2% that analysts had predicted ahead of the release. The nice thing about today's report is that it tied in directly with the FOMC's statement about inflation remaining in check. This gives more credibility that the policymakers can keep rates near zero for the foreseeable future. If the PPI would have moved higher in today's release, it would have sparked discussion that the Fed would have to hike rates to fight off inflation.

Graphic from Briefing.com

Today's report was a relief for traders after January's increase of 1.4%. The drop was helped by falling gasoline prices during the month of February. At the same time, core PPI (which excludes the more volatile food and energy prices) rose 0.1% in February. This comes after a 0.3% rise the month before. However, the core-PPI was in line with expectations and didn't seem to cause much concern on the Street.

The only other piece of data released on the day came from the U.S. Energy Information Administration. The weekly EIA inventory report showed a small one-million-barrel increase in inventories last week. This was also in line with expectations and didn't have too much of an effect on the price of crude. However, gasoline supplies dropped by 1.7 million barrels last week, which was more than double the decline that the Street was expecting.

Today's Economic Reports

It was a little tough for Dow Jones Industrial Average to hang onto that new high for the year, but it managed to close just above January's high at the close today. It finished the session up 47.69 points at 10,733.67. This helped the large-cap index mark the new territory on the chart, but also leaves it still flirting with that resistance level. While today's move was very good news for the bulls, we still want to see if it's able to move significantly above this mark over the next two sessions.

The S&P 500 has been much stronger than the Dow on the daily chart over the past few weeks. However, we had some concern when the index fell back below the resistance line during Monday's sell-off. But then the way it bounced back on Tuesday and Wednesday was a very good sign for the bulls. The index rose 6.51 points in today's session, closing at 1,165.87. As long as it can keep climbing the rest of the week, there shouldn't be much doubt about who's in control of this Market.

The Nasdaq Composite might have struggled like the rest of the indices on Monday, but since then there's been no looking back. The tech-laden index jumped 11.08 points in today's trading, taking the Nasdaq up to 2,389.09 points at the close. Let's see if it's able to easily dispatch of the 2,400 point level on the chart over the next two sessions because it doesn't feel like anything can slow down this index.  

The VIX (CBOE VOLATILITY INDEX) made a little move higher on Monday's selling, but since then it has resumed its downward descent. The index fell another 0.80 points in today's session, leaving the VIX at 16.89 points. More importantly, it took out another low on the chart as the fear seems to be quickly subsiding across the board. Let's see if this trend continues the rest of the week.  

The continued bull-run this week has helped us coast through expiration week with ease. With only two trading days left until expiration, we don't see any reason why our spreads shouldn't expire worthless, letting us lock in a decent profit for the month.

While the profit wasn't anything to get too excited about, it does feel nice to get back in the profit column and bounce back from that loss last month. With this month nearly finalized, our focus has shifted to the new spreads for April. With the Market continuing to show us plenty of internal strength, we certainly want to keep things on the put side. With several excellent spreads ready to be rolled out for the next cycle, we are debating the strike prices versus the credit that we'll be able to take in.

Because we want to wait until Sunday evening to release the new spreads, we have to keep several contingencies in mind, just in case we get a few twists and turns heading into the end of the week. But even if we get a curve ball, we think we have several good spreads ready to go for Monday morning. However, first let's take one last look at how we're sitting in our current spreads heading into expiration.

RUT 560-550 BULL PUT SPREAD (15 contracts entered on 02/23)

RUT CLOSED AT $683.98 Today (123.98 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $565.00

The RUT continued to march up the chart this week. After a small setback on Monday, the small-cap index just keeps on making new highs for the year. This was the case today when it rose another 4.39 points to finish the session at $683.98. This extended our massive cushion in our put spread and pretty much seals the deal for our profit. The only question left in this one is where to come in with our put spread for April. We'll have to wait a few more days before we discuss this in Sunday's newsletter.

PCLN 200-190 BULL PUT SPREAD (15 contracts entered on 02/22)

PCLN CLOSED AT $242.92 Today (42.92) points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $202.50

Priceline also was hit with some selling at the beginning of the week but has bounced back nicely for our put spread. The stock moved higher on Tuesday and then much higher today before finishing the session up just 1.11 points at $242.92. With the stock continuing to trade in an ascending triangle pattern, we're still looking for a nice breakout to the upside. If this doesn't happen, there's still plenty of strong support on the chart in case any selling creeps in. The good news is that we shouldn't have to worry about either of these things in the March cycle because our put spread should go out worthless on Friday's close.  

GOOG 490-480 BULL PUT SPREAD (15 contracts entered on 02/23)

GOOG CLOSED AT $565.56 Today (75.56 points away from our put spread)

Profit potential of $45.00 per contract

Contingent Stop Order set at $492.50

Monday was truly painful for Google as it continued to trade based on the news cycle. But with our put spread so far out of the money, we really didn't have much of a concern. The good news is that it was able to stabilize around the 560-point area and even managed to walk away with a small gain in today's session. But as we said, with a 75 point cushion in this one, we really don't have any worries left for this cycle. Let's just sit back and enjoy the ride to the finish line.

As always, Trade Happy and Trade Smart