Stocks surge from energy prices and better-than-expected economic data. The Dow Jones Industrial Average posted its eighth weekly advance in a row after Friday's strong session. Stocks were able to look past the Goldman Sachs mess and the lingering issues from Europe as the Market climbed on the final trading day of the week.

In the latest news out of Greece, the country has decided to request aid from the European Union and the International Monetary Fund (IMF). Greece is hoping that this rescue package will help break the selling in its own financial markets. This did play out for a half of a trading day, but then the Greek markets began to sell-off once again. We continue to take the standpoint that this has already been baked into our stock market, but since it's in the headlines every day, we feel the need to at least mention it.

On the economic front, it was a tricky durable goods report that came out before the opening bell. The headline number could have been a little misleading when the release showed a drop of 1.3%. This was well below the expectations that we'd see a 0.1% increase in orders. However, inside the report, the data showed some excellent numbers, once it excluded transportation. Keep in mind that non-defense aircraft orders carry a weighting of 67% in the report. But if we toss out that data, the rest of the durable goods orders jumped 2.8%, which would have been the biggest increase since 2006. So once we discount that headline number, it really was quite a good report. The chart below shows how fast we've bounced back since the lows we hit just two years ago.

The other big piece of economic data released on Friday came from the new home sales and didn't need much of an explanation. Ahead of the release, analysts were looking for an increase to 330,000 new sales in March. However, the release showed a higher number of 411,000 new home sales during the month. While the number was certainly very good and above expectations, there is some concern that this market is still subsided by the government's homebuyer credits that remain in effect until April. Once this is removed, it will be very interesting to see if the home sales drop off once again. The chart below shows the nice little bounce from the increase in home sales.

The optimism about the U.S. economy and possible resolution to the problems in Greece helped fuel another rally in the oil market. Crude jumped $1.42 a barrel on Friday to close at $85.12 a barrel on the New York Mercantile Exchange. This is despite a huge supply of crude, which we seem to report nearly every week in the weekly inventory report.

Today's Economic Reports

The Dow Jones Industrial Average turned in a huge 185.62 point gain for the week. This was helped by Friday's 69.99 point rise, which left the large-cap index sitting at 11,204 points. On the daily chart, the index blew right past the old resistance level that has been holding the index down over the past two weeks. As long as earnings stay strong, we should see the Dow keep moving north from these levels.

The S&P 500 was helped by the jump in energy prices on Friday. The index rose 8 points, which pushed the S&P 500's weekly gain up to 25 points. The 2.11% advance left the index sitting at 1,217 points heading into the weekend. Just like the Dow, the S&P 500 has moved above the old resistance from the past two weeks and now doesn't appear to be bumping up against any barriers. This should give the index some room to run on the upside.  

The Nasdaq Composite climbed another 11 points on Friday, but lagged the S&P 500 on a percentage basis for the week. Despite this, the tech-laden index was still able to rise 48 points during the past five sessions. This 1.97% gain left the Nasdaq sitting at 2,530 points on Friday's close. On the chart, the Nasdaq hasn't climbed as high as the other two indices above the resistance from the last two weeks, but it did break through this barrier. Let's see if strong earnings on the tech front can keep this index moving north over the next week.  

The VIX (CBOE VOLATILITY INDEX) had another interesting week with some moves higher followed by more drops. On Friday, the "fear index" moved up 0.15 of a point to finish the week at 16.62 points. Although the VIX finished the week well off its trading low for the five sessions, it still fell from where it was one week earlier. Let's continue to monitor this index for any spikes in volatility over the next five sessions. Remember, a jump in the VIX is great for getting our fills, but then we want to see the index drop as the option cycle carries on.

All in all it was a very good week for our spreads. We added a put spread on Apple on Thursday, which seemed to be perfect timing. We got a little selling first thing Thursday morning, which helped us get the fill. Then the stock took off like a rocket and we seem to be sitting in great shape in this spread.

Our other two index spreads couldn't be sitting much better at this time. Both the OEX and RUT have climbed significantly after we got filled in those spreads and now we're left with huge cushions.

For tomorrow, we're going to attempt to get one more spread working for the May option cycle. We're going to come back with another put spread on the RUT. As many of you know, we love to layer this index with multiple spreads when possible. Because the RUT has moved well above our first put spread, we think we can come back in with another one at higher strike prices and take advantage of the strong momentum in the small-cap index.

We're going to keep this spread at a conservative level, but still pick up a nice little premium for the amount at risk. This should help push our profit potential up for the month without adding too much risk. However, we'll certainly need some selling and an uptick in volatility on Monday in order to get the fill. If this doesn't happen, that's ok. We're only going to take on this new spread if it comes to us. Because we have a nice profit already working for us this month, we can be picky. Let's just throw this one out there for Monday and see if it comes to us.

NEW TRADE ALERT (1)

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

RUSSELL 2000 INDEX (RUT)

OPENING 680-670 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 680 strike price

Buy 15 May Puts at 670strike 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 $685.00.

MAY POSITIONS

OEX 500-490 BULL PUT SPREAD (15 contracts)

OEX CLOSED AT $552.66 Today (52.66 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $502.50

The index faltered a little bit on Thursday, but then bounced back like a rocket after hitting its 50-day moving average (red line) on the chart. The index was able to add another 3.30 points on Friday to finish the week 52 points above our put spread at $552.66. We seem to be in great shape in this spread as we move into the first trading week of May. Let's just sit back and see if it can keep moving up the chart.  

RUT 630-620 BULL PUT SPREAD (15 contracts)

RUT CLOSED AT $741.92 Today (111.92 points away from our put spread)

Profit potential of $45.00 per contract

Contingent Stop Order set at $635.00

The small caps just can't be held down. The index continued its terror on the chart during the final two trading days of the week. It capped off the amazing week with a 7.61 climb on Friday, pushing the RUT up to $741.92 points on Friday's close. This gives a huge cushion in our put spread heading into the final four weeks of the May cycle. It also opens up some room for us to add another put spread this month, if we can get the right set-up.  

AAPL 230-220 BULL PUT SPREAD (15 contracts)

AAPL CLOSED AT $270.83 Today (40.83 points away from our put spread)

Profit potential of $35.00 per contract

Contingent Stop Order set at $232.50

After the rough cycle we had last month as far as getting filled in the spreads, we were due for some luck to land on our side. That seemed to happen on Thursday morning when we got filled in this put spread right before the stock decided to blast off once again. Apple has been on a terror since its earnings release last week and we appear to be in great shape to profit from this strong upside momentum. The stock climbed another 4.36 points on Friday and is now sitting nearly 41 points above our put spread. As long as we avoid a big meltdown in this stock, or another Steve Jobs medical condition, we should be in great shape in this put spread.

As always, Trade Happy and Trade Smart

Earnings give Market boost but lack of conviction with the move higher. After the initial move higher this morning, stocks spent most of the session range bound as the economic data dried up and the focus remained on the earnings reports. The end result was a mixed session with the major indices closing fairly unchanged on the trading day.

Traders like what they heard from Apple and Morgan Stanley this morning, which helped push stocks higher out of the gate. Once again, Apple blew past expectations thanks to strong iPhone sales. After crushing expectations by $0.88 a share, the company once again tried to lowball its forecast for the next quarter. For years we've been talking about this same old routine where the company tries to set the bar low so that it can blow right past expectations, just like today. Well, it was that same old routine today. Analysts weren't really falling for the same old trick. UBS upgraded the stock along with several others in an upgrade parade this morning.

Helping out the financial sector, Morgan Stanley capitalized on an uptick in trading revenue during its first quarter. The company topped Wall Street's estimate by $0.46 a share with revenues jumping 213% year-over-year. This helped ease some of the uneasiness in the financial sector, but there were still plenty of rumblings taking place.

Concern still remains over the proposed $90 billion tax that the Administration is prosing in the new financial regulation. At the same time, it appears some of the heat is lifting from the Goldman Sachs fall-out last weekend. Evidently, the government's case might not be as strong as first reported last Friday. Let's not jump to any judgments just yet because we're sure this new cycle will continue to remain front and center the rest of the week. 

In the only bit of economic data today, there was an unexpected jump in crude supplies announced in the weekly inventory report. According to the government's Energy Information Administration release, crude supplies rose 1.9 million barrels last week. Ahead of the report, analysts were expecting a decline of 200,000 barrels. At the same time, gasoline supplies increased 3.6 million barrels last week, drastically above the 300,000 barrel increase that the Street was expecting.

Today's Economic Reports

The Dow Jones Industrial Average appeared to be bumping up against some resistance on the daily chart. However, the large-cap index still was able to move up 7 points on Wednesday, finishing the day at 11,124.92 points. Let's keep a close eye on this resistance near 11,150 on the chart. If it can break through this barrier, we could be looking at another big move for the index.

It was kind of a rough start to the trading week for the S&P 500. The index fell all the way down to its 50-day moving average (red line) before it was able to rebound and finish higher on Monday. On Tuesday, the index kept moving higher but then ran into some selling pressure in today's trading. The index gave back 1.23 points to finish at 1,205.94 points. Let's see if it can once again move higher to test last week's high or if it runs into more selling pressure the rest of the week.

The Nasdaq Composite had a very nice gain going in today's session, but it wasn't able to hold onto all of it at the close. Instead, the tech-laden index was only able to keep 4.30 points of its advance at the closing bell. However, this still puts the Nasdaq at 2,504.61 points, which is a solid gain for the week so far. Just like the other charts, let's see if the Nasdaq can make it back up to that resistance near 2,520 points on Thursday to test that old high.

The VIX (CBOE VOLATILITY INDEX) started the session on Monday moving higher, but the rebound in the Market meant trouble for the "fear index." Volatility started to dry up and the VIX started to fall. The VIX kept falling on Tuesday but actually bounced back with a 0.59 point advance today. This leaves the index at 16.32 points, which is well below where it was trading on Monday morning. Let's keep an eye on the index to see if it remains subdued or if it starts moving back up the chart near that 20 point level.   

We had a pretty good start to the trading week on Monday. We were able to get everyone filled in the RUT spread as well as any lingering traders filled in the OEX spread from last week. Now with everyone on board, we can start focusing on filling up our portfolio the rest of this week.

At the start of the week, we were a little concerned about the selling pressure from Friday. Although we saw a sharp downdraft on Monday, the Market appeared to stabilize and has moved higher off those levels.

With this in mind, we want to stay on the put side of things with our remaining trades this month. While there still might be another shoe to drop in this Goldman Sachs case or any other unexpected event, the overall trend remains bullish. This is especially true with the earnings data blowing the doors off the expectations (for the most part). If they keep topping estimates, it's going to be hard to keep a lid on this Market. No matter how overbought we might be at these levels.

For tomorrow, let's continue to be safe with our new strike prices. We're going to head back to one of our old favorites, Apple. We wanted to wait for the stock to release earnings before jumping back into this one. Our only concern is that the stock might not slow down enough for us to get into this spread. We're going to come in with a low credit and see if we get lucky tomorrow morning. Let's ride the upward momentum to a nice profit in this one.

NEW TRADE ALERT (1)

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

Apple Inc. (AAPL)

OPENING 230-220 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 230 strike price

Buy 15 May Puts at 220 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 $232.50.

MAY POSITIONS

OEX 500-490 BULL PUT SPREAD (15 contracts)

OEX CLOSED AT $550.05 Today (50.05 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $502.50

The tumble on Monday helped our remaining traders get filled in this put spread, which seemed to be perfect timing. Since that drop, the index has turned higher. It finished Monday higher and then ran to the upside on Tuesday. However, it ran out of steam in today's session when it finished the trading day down 1.03 points at $550.05. On the chart, it looks like the OEX might hit some resistance near 555 points. On the downside, the index appears to have some support from its rising 50-day moving average (red line). Let's keep an eye on both of these levels the rest of the week.

RUT 630-620 BULL PUT SPREAD (15 contracts)

RUT CLOSED AT $726.19 Today (96.19 points away from our put spread)

Profit potential of $45.00 per contract

Contingent Stop Order set at $635.00

The small caps ran into a little trouble on Monday, but since then it has been straight up. The index was able to climb 4.30 points in today's session, finishing the day at 726.19 points. This gives us nearly 100 point cushion right off the bat in this spread. We couldn't be any happier so far in this one. The RUT appears to be bumping up against its high from last week on the chart. But with a huge cushion in this one, we're not going to get very concerned about any pull-back in the near-term.

As always, Trade Happy and Trade Smart 

Stocks tumble after trouble with Goldman Sachs spreads across all sectors. Word that the SEC had charged Goldman Sachs with fraud charges quickly spooked traders on Friday and caused a broad-based sell-off. At the same time, earnings results also disappointed the Street and economic data also came in below expectations.

The sour news seemed widespread on Friday, which caused the Market to sell-off across the board. However, we easily coasted to another 100% profitable month as our spreads all expired worthless on Friday. We'll recap our spreads in a bit, but first we want to take a look at what unfolded on Friday.

The big news on Friday was that the Securities & Exchange Commission charged Goldman Sachs with fraudulent behavior. Evidently, the SEC is accusing the financial giant of misleading investors in its securitizing of assets for Paulson & Company, who then placed large bets against the securities. Goldman Sachs was quick to fight back on Friday stating that the allegations were untrue and without merit.

The problem we have is that this won't be a one day story. It's likely to continue simmering into the new week and could cause more even more anxiety for the Street. On Saturday alone, word leaked out that GS knew about the possibility of the SEC filing nine months ago, but failed to release the information to investors. This could get quite ugly for the company and other financials if there are other targets out there for the SEC. Let's keep a close eye on this story as events unfold.

The fear in financials caused money to flow out of stocks and back into the safety of Treasury investments. The 10-year Treasury hit its lowest yield in nearly a month. The dollar also seemed to benefit from all of the anxiety on Friday, rising against other currencies.

In economic news on Friday, there was an upbeat housing report when the residential construction starts jumped to the highest level since 2008. February's starts were revised up to 616,000 from its previous reading of 575,000. Permits also rose nearly 50,000 in March to reflect a new reading of 685,000. The chart below shows that the numbers appear to be bouncing upward. We'll have to wait to see if this new trend can maintain its strength.  

While there was some good news in the housing market on Friday, the more important consumer sentiment report was nowhere close to positive. To the contrary, the University of Michigan's consumer sentiment index plummeted to its lowest level since last fall. The drop showed deterioration in confidence, which fell from 73.6 in March to 69.5 in April. This was drastically lower than the 75.0 that the Street was expecting ahead of the release.

Commodities also slid on the Goldman Sachs news Friday. Oil finished the session down 2.4% at $84.67 a barrel on the New York Mercantile Exchange. Gold also remained under pressure because of the news. Paulson & Company is one of the world's largest investors in gold and traders believe that the company could face some pressure from investors to redeem shares in the near future. Not only would this give Paulson & Company a liquidity issue, it would also force a lot of selling pressure in the commodity market. That's why it's easy to see why the uneasiness spread to commodities on Friday.

Friday's Economic Reports

The Dow Jones Industrial Average ran into a buzz saw on Friday, tumbling 125 points on the session. Despite the heavy selling on the final trading day of the week, the large-cap index still managed to hold onto a 21 point gain for the week. That just shows how bullish the first four sessions were last week. It translated into a 0.19% advance for the index over the five sessions, leaving the Dow at 11,018 points at the close. While it's hard to complain about a gain, we could definitely sense a sentiment change on Friday. Let's see if this carries through to the new trading week on Monday.     

The S&P 500 did have the same luck of holding into positive territory for the week. The index got hammered on Friday when it gave back 19.54 points. This put the S&P 500 down 2.24 points for the week when it closed at 1,192. With financials getting slammed after the news came out regarding Goldman Sachs, it was pretty obvious that the S&P 500 was going to take a beating. Let's see if this heavy selling persists in the financials on Monday.   

The Nasdaq Composite was on fire last week until Friday's session rolled around. The tech laden index fell by 34 points on the final trading day of the week, but still managed to hang on to a 27 point gain for the week. That was pretty amazing considering where the other indices finished the week on Friday. The tech-laden index's 1.11% gain last week made it seven straight weekly advances for the Nasdaq. Let's see if it can hold off the negative sentiment at the start of the new week.

The VIX (CBOE VOLATILITY INDEX) finally came to life on Friday. After sputtering below the 16 point level last week, the "fear index" rallied strong on Friday. It climbed 2.47 points to finish the week at 18.36 points. If the selling keeps coming on Monday, the VIX should continue to rise. We love to see the increased volatility at the beginning of the cycle because it means higher credits for our new spreads. However, we just don't want to see the VIX continue climbing after we're in the new spreads.  

We knew the pull-back would eventually come, but we just didn't know what would be the catalyst behind the selling. The question now is how big of a retracement will we get?

The good news for our spreads was that when the selling finally came, our spreads were so far out of the money that it didn't cause us any concerns at all. We had so much breathing room in our positions that we could have withstood nearly a week of the same type of selling and still coasted to the finish line unscathed. Let's enjoy times like this because it isn't always this easy.  Before we get to the new trades, let's take a quick re-cap of our how our profit turned out for the month of April.

APRIL POSITIONS

RUT 630-620 BULL PUT SPREAD (15 contracts entered on xxx)

Profit of $40.00 per contract

CME 290-280 BULL PUT SPREAD (15 contracts entered on 04/06/2010)

Profit of $35.00 per contract

OEX 520-510 BULL PUT SPREAD (15 contracts entered on 04/06/2010)

Profit of $37.00 per contract

While the profits could always be bigger, let's not get too upset about another 100% profitable month. Especially after all the troubles we ran into at the beginning of the cycle when we couldn't get a position filled if our lives depended on it.

All of this aggravation caused us to take an early jump on the May cycle last week. We threw two new trades out there last week and got a fill in the OEX spread. We held off attempting to get filled in the RUT on Friday and that might have worked in our favor.

With the news still swirling around Goldman Sachs, we could easily see plenty more anxiety on Monday. With this in mind, we're going to throw another RUT put spread out there and see if we can get the index to come to us. Normally, we'd like to add several more spreads for Monday, but not with the headwinds that we saw at the end of last week. Let's use a little caution and see how the start of the week shakes out.

We are also going to send the OEX spread back to the auto trade brokers on Monday for those members not filled last week. Because we have nearly everyone in this spread already, this spread will only apply to those members not currently in this position.

NEW TRADE ALERT (2)

Please Note: This is a Day Order and Limit Order. The OEX spread only applies to those members not filled last week.

FOR MAY CYCLE

RUSSELL 2000 INDEX (RUT)

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

Sell 15 May Puts at 630 strike price

Buy 15 May Puts at 620strike 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 $635.00.

S&P 100 INDEX (OEX)

OPENING 500-490 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 500 strike price

Buy 15 May Puts at 490 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 $502.50.

RUT DAILY CHART

MAY POSITIONS

OEX 500-490 BULL PUT SPREAD (15 contracts)

OEX CLOSED AT $544.68 Today (44.68 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $502.50

The OEX tumbled like the rest of the Market on Friday, but even more so because of its heavy allocation to the financials and commodities. However, the good news is that this should help the remainder of our members get filled in the same put spread as the rest of us. With a cushion of nearly 45 points, we still think we have a very good spread working for May.

As always, Trade Happy and Trade Smart

Stocks fly after earnings and economic data add fuel to bull's fire. We got a double dose of strong economic reports and earnings data in the same session, helping the Market to catapult to new heights on the year. Evidently good times are here again, and by the way, let's just forget about the troubles at Alcoa that caused the selling ripples on Monday.   

The earnings data got the Street fired up this morning when JP Morgan, Intel and CSX all reported strong quarterly results. JP Morgan got the financial sector moving, Intel ignited a semiconductor rally while CSX helped both the large-caps and the transports. The bullish earnings pretty much hit every area of the Market, which caused widespread buying across the board.

Meanwhile, the economic data just added to the bullish sentiment on Wednesday. We've been talking for some time now about how fear of low interest rates could start to cause higher inflation. So far, that hasn't been the case and in today's release of the Consumer Price Index, these concerns remain in check. The release was just what the analysts predicted, a modest 0.1% increase in the index.

Graphic from Briefing.com

Even better than the CPI data, this morning's update on retail sales had a much more favorable reaction on the Street. According to the Commerce Department, retail sales spiked 1.6% last month, its largest increase in four months. It was also ahead of the 1.3% that the analysts had predicted. If consumers are starting to spend again, this is very good news for the economy and should help any consumer-related stocks. The chart below shows the nice rise in this data.

Graphic from Briefing.com

The release of the Fed's Beige Book this afternoon helped keep the positive sentiment in the Market. This regional economic indicator showed upbeat data in consumer spending, which seemed to be a trend in today's session.

Of course, the strong consumer helped oil break its losing streak when it rose $1.79 a barrel to settle at $85.84 on the New York Mercantile Exchange. It also didn't hurt that the weekly oil inventory report showed a surprising drop in supplies.

Today's Economic Reports

The Dow Jones Industrial Average had its first triple-digit advance is quite some time. The large-cap index finished the session up 103 points at 11,123.11. It nearly made a 1.0% gain on Wednesday. On the chart we saw a nice uptick in volume today, which is always good when it's going with your trend. With nothing but put spreads currently, we like to see the strength behind the moves to the upside.      

The S&P 500 topped the Dow today with its 1.12% advance on Wednesday. The index broke through the 1,200 point barrier and finished the session at 1,210 points. It was also the index's largest point gain since the first week in March. On the chart, let's see if it can finish the week above that 1,200 point area.    

It was evident at the open that the Nasdaq Composite was going to have one heck of a session. The tech-laden index gapped higher on the open and didn't look back. It finished the day up 38 points at 2,504 points. This translated into a 1.58% increase on Wednesday alone. Let's see if the tech stocks keep the momentum going the rest of the week.

All of the buying today did some damage to the VIX (CBOE VOLATILITY INDEX). The "fear index" dropped below 16 points with its .61 of a point tumble. This leaves the VIX sitting at 15.59 points heading into the final two trading days of the week.

The nice drop we got on Monday was very good for our members that got filled in our new OEX spread; we just wish we could have gotten everyone into the RUT spread as well. The good news is that we got an early start for the May cycle.

With the strong bullish sentiment that has consumed the Market, it seems like it's going to be tough to get filled in a new put spread tomorrow. However, as we often witness, the Market can turn on a dime. Due to this, let's adjust our RUT trade alert just in case we get an earnings miss tomorrow morning or any profit taking after today's big move higher. In either case, let's be prepared in case the Market gives us a gift.

NEW TRADE ALERT (1)

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

FOR MAY CYCLE

RUSSELL 2000 INDEX (RUT)

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

Sell 15 May Puts at 630 strike price

Buy 15 May Puts at 620 strike price

Total Credit 0.55 per contract

Potential Profit $825.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $635.00.

APRIL POSITIONS

MAY POSITIONS

RUT 630-620 BULL PUT SPREAD (15 contracts entered on xxx)

RUT CLOSED AT $722.40 Today (92.40 points away from our put spread)

Profit potential of $40.00 per contract

Contingent Stop Order set at $635.00

It was another excellent day for the small-cap index. The RUT surged 15.37 points on Wednesday to put the index 92 points above our put spread. With time running out, there's not much to discuss in this one. It was just another nice cycle for our put spread on the RUT.

CME 290-280 BULL PUT SPREAD (15 contracts entered on 04/06/2010)

CME CLOSED AT $319.47 Today (29.47 points away from our put spread)

Profit potential of $35.00 per contract

Contingent Stop Order set at $635.00

The CME should be out of reach after today's 9.27 point advance. The CME has been in the news over the pending legislation in Congress regarding regulations, but this hasn't slowed down its stock. It finished the session almost 30 points above our "short" strike price with just two trading days left in the April cycle. We should be able to relax in this one the rest of the way.  

OEX 520-510 BULL PUT SPREAD (15 contracts entered on 04/06/2010)

OEX CLOSED AT $553.02 Today (33.02 points away from our put spread)

Profit potential of $37.00 per contract

Contingent Stop Order set at $635.00

With the S&P climbing high in today's session, our OEX spread should be well out of reach. The OEX rose 6.14 points in today's session and is now trading over 30 points above our put spread heading down the home stretch. As with our other spreads, there's just not a whole lot to talk about in this one.

MAY SPREADS

OEX 500-490 BULL PUT SPREAD (15 contracts entered on 04/12/2010)

OEX CLOSED AT $553.02 Today (53.02 points away from our put spread)

Profit potential of $37.00 per contract

Contingent Stop Order set at $635.00

We're sitting with an even bigger cushion in our May spread than our April one. Of course, we have a lot more time left to go in this one, but so far so good. Let's just sit back and see if the index can keep moving up the chart.

As always, Trade Happy and Trade Smart

We had some success for the auto traders in the OEX spread this moring, but not the RUT. We are going to send the same alerts back to the brokers tomorrow for those members not filled on Tuesday. However, we're going to lower the credit by a nickel on the RUT trade to see if this helps our chances. Keep in mind that we'll probably still need a move down tomorrow, like the one we got this morning, in order to get filled.

NEW TRADE ALERT (2) for Income Spread Trader -

Regular & Pro Trader

Please Note: This is a Day Order and Limit Order. The OEX alert only applies to those members NOT filled on Tuesday. Thanks.

FOR MAY CYCLE

RUSSELL 2000 INDEX (RUT)

OPENING 620-610 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 620 strike price

Buy 15 May Puts at 610 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 $625.00.

S&P 100 INDEX (OEX)

OPENING 500-490 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 500 strike price

Buy 15 May Puts at 490 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 $502.50.

We struggled with the fills on Monday, however, the futures are pointing lower this morning. Due to this, let's keep our trade alerts the same for today and see if we can get the indexes to fall to our trigger prices.

NEW TRADE ALERT (2) for Income Spread Trader -

Regular & Pro Trader

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

FOR MAY CYCLE

RUSSELL 2000 INDEX (RUT)

OPENING 620-610 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 620 strike price

Buy 15 May Puts at 610 strike price

Total Credit 0.55 per contract

Potential Profit $825.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $625.00.

S&P 100 INDEX (OEX)

OPENING 500-490 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 500 strike price

Buy 15 May Puts at 490 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 $502.50.

We struggled with the fills on Monday, however, the futures are pointing lower this morning. Due to this, let's keep our trade alerts the same for today and see if we can get the indexes to fall to our trigger prices.

NEW TRADE ALERT (2) for Income Spread Trader -

Regular & Pro Trader

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

FOR MAY CYCLE

RUSSELL 2000 INDEX (RUT)

OPENING 620-610 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 620 strike price

Buy 15 May Puts at 610 strike price

Total Credit 0.55 per contract

Potential Profit $825.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $625.00.

S&P 100 INDEX (OEX)

OPENING 500-490 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 500 strike price

Buy 15 May Puts at 490 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 $502.50.

Stocks continue to march up the charts with tech and small-caps leading the way. The large-caps lagged on the week, but the Dow Jones Industrial Average was able to cross the 11,000 point barrier on Friday afternoon. With little pessimism holding down the Market, the bulls have been able to maintain their tight grip on the indices.  

The economic calendar was extremely light last week, which will change this week. However, earnings season also kicks into higher gear in the upcoming week with some large financial institutions and large-caps slated to release their first quarter earnings results.

Looking back on Friday, the only piece of economic data released was the wholesale inventories. The report showed a surprising spike in wholesale numbers, which came in with a 0.6% jump in the month of February. This was not only above the expectations of 0.4%, but also up from the 0.1% that was reported in January. While the increase was a very good sign for the economy, the overall levels remain just off historic lows, which is evident on the chart below.

Graphic from Briefing.com

When the levels are sitting this low, there's probably only one direction that's possible......up. Keep in mind that wholesale inventory levels are just once piece of the inventory pie. The other pieces of the pie come from manufacturing and retail sectors.

If you read any financial publication last week, we're sure you would have run across more talk about Greece. But as we said on Wednesday, we just have a very hard time even talking about the same old problems, week after week. We also find it extremely hard to believe that there's going to be anything new that the Market hasn't already baked into the stock prices (as far as Greece in concerned).

On the commodity front, Gold turned in another impressive performance last week with its 3.2% gain. The shiny metal enjoyed a boost from the declining dollar and made its way up to $1,126.10 a troy ounce at Friday's settlement. If the dollar remains weak, gold should keep moving north.

The price of crude finally ran out of steam at the end of the week, falling three straight sessions. However, oil remains at $84.92 a barrel on the New York Mercantile Exchange, which has many traders perplexed because supplies remain massive and demand is still quite weak. But the sense of optimism for an economic recovery has kept oil moving north on the charts. Let's see if we finally get a meaningful pullback in crude this week because it's just very hard to see this kind of pricing justified based on historical supply and demand figures.

Friday's Economic Reports

The Dow Jones Industrial Average finally topped the 11,000 point mark on Friday, but it wasn't able to hold there at the close. However, the large-cap index did still lock in a 70 point advance on the session and finish the week up .64% at 10,997. For the week, the large-cap index remained a laggard behind the other two major indices. But if it's able to follow their lead, then the Dow should be able to slice right through that 11,000 point resistance line and keep moving up the chart. Let's see if this is what plays out this week.    

The S&P 500 didn't have any trouble with resistance lines on the chart last week. It surged nearly 8 points on Friday, finishing the week up 1.38% at 1,194 points. As long as earnings don't disappoint this week, we could see another leg up the chart for the S&P 500.  

The Nasdaq Composite took back its leadership role last week with tech names leading the Market higher. The tech-laden index rose 17 points on Friday alone and finished the week up 2.14% at 2,454 points. If earnings don't pose a problem this week, we should see the Nasdaq continue to lead the way higher. But remember that earnings often throws a wrench into our plans.    

The bullishness at the end of the week sent the VIX (CBOE VOLATILITY INDEX) lower once again. It tumbled 0.34 of a point on Friday to finish the week at 16.14 points. Let's keep an eye on the 16 point level to see if there's any chance of some support for the VIX. If not, we might see the option premiums drop even farther in the near-term. But then again, just a couple years ago four points seemed to be the norm for the VIX. It kind of seems like a lifetime ago.

Nothing has come easy this cycle as far as our entries have been concerned. But after getting filled, it's been a fairly easy ride this cycle. Keep in mind that it's always a lot more difficult to get filled in put spreads when everything is moving north for the whole cycle. When this happens, it's always difficult to get ourselves to chase the thing higher because odds of a pullback increase with each passing week.

The good news is that we have fairly decent cushions in all of our spreads heading into expiration week. Even if we get a retracement, we should be positioned to ride out any kind of downturn that we might be facing over the final five trading sessions of the April options cycle.

We do have one position that appears to be a little weak, which is our CME position. The stock has given back some of our cushion towards the end of the week, but we still think we should be just fine in this one. However, we'll continue to monitor the position closely this week for any variables that might come up.

Just like the rest of the cycle, we had trouble last week with our RUT trade alert for the May cycle. For tomorrow, we're going to adjust the strikes and the credit and see if we can get this one opened up right away. At the same time, let's go ahead and add an OEX put spread for the month of May. Let's throw two new spreads out there and see if we can get one filled. This should help us get a nice little profit going for the next cycle with our favorite index spreads.

NEW TRADE ALERT (2)

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

FOR MAY CYCLE

RUSSELL 2000 INDEX (RUT)

OPENING 620-610 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 620 strike price

Buy 15 May Puts at 610 strike price

Total Credit 0.55 per contract

Potential Profit $825.00

Once Filled, Use a Conditional Order: Use a Stop or Buy Market if Touched Order if stock reaches $625.00.

S&P 100 INDEX (OEX)

OPENING 500-490 MAY BULL PUT SPREAD (15 contracts)

Sell 15 May Puts at 500 strike price

Buy 15 May Puts at 490 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 $502.50.

RUT 630-620 BULL PUT SPREAD (15 contracts entered on xxx)

RUT CLOSED AT $702.95 Today (72.95 points away from our put spread)

Profit potential of $40.00 per contract

Contingent Stop Order set at $635.00

All the optimism in the Market has caused the small-caps to take off like a rocket. This has pushed the RUT right through the 700 point mark on the chart and the small-cap index appears to have the wind at its back. This has given us a huge cushion in our put spread with not a lot of time left on the clock. We shouldn't have anything to worry about in this spread for the time being.

CME 290-280 BULL PUT SPREAD (15 contracts entered on 04/06/2010)

CME CLOSED AT $312.10 Today (22.10 points away from our put spread)

Profit potential of $35.00 per contract

Contingent Stop Order set at $635.00

The CME is our one spread that doesn't seem to be moving with the rest of the Market. The stock actually fell from where it was on Wednesday night, thanks to Thursday's session. On Friday, it rose a mere 0.33 of a point to finish the week at $312.10. After falling through some key moving averages on the chart, the stock now appears to be finding these same lines to be stiff resistance on the way back up. But even with this playing out on the chart, we still are sitting comfortably at the moment in this put spread. However, we do want to keep a close eye on its price action at the beginning of the week.

OEX 520-510 BULL PUT SPREAD (15 contracts entered on 04/06/2010)

OEX CLOSED AT $545.46 Today (25.46 points away from our put spread)

Profit potential of $37.00 per contract

Contingent Stop Order set at $635.00

It might have been a struggle to get into this spread, but since then it's been smooth sailing. The index finished the week with a 3.44 point gain on Friday, boosting our breathing room in this position. The index is now sitting 25 points above our "short" strike price with not a lot of time left in the April options cycle. Let's see if it continues to be an easy ride to the finish line in this spread.

As always, Trade Happy and Trade Smart