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

It was another week and another solid gain for the Market. While the news cycle might have slowed down last week, the buying continued at a slow and steady pace. Friday's economic data wasn't as bullish as we saw earlier in the week from the other reports, but there was still enough bullish sentiment out there to keep the indices in the green at the close. Until we get a reason to sell, the upward trend appears to be on auto pilot.  

The key economic data on Friday morning came from the retail sales report that was released before the opening bell. The February numbers showed a nice bump of 0.3% for last month, which was above the 0.2% that the Street was expecting. But even better than that number, core retail sales (which excludes autos) actually jumped nearly 0.9% in February. This comes after the same sales rose 0.6% in January. The chart below shows the nice trend in the data, which is bringing the core sales back to within the normal range for the last decade.

Graphic from Briefing.com

While these numbers were very good news for traders, there was a bit of sour news when the previous retail sales figure for January was revised downward to show only a 0.1% increase. Previously, the January figure was believed to be 0.5%. This downward revision kind of took a bite out of Friday's strong report because it leaves some doubt that February's numbers might also get revised lower in the future.

The other bit of economic data that came out on Friday was from the University of Michigan's consumer sentiment index. The preliminary reading for the month of March showed a drop to 72.5, which was under expectations and below the 73.6 that was the final reading for February. The good news is that this is only a preliminary number and often changes when the final figure is reported in two weeks. The other thing to keep in mind is that this usually has little correlation to actual consumer spending. However, it's always a good thing to see an improving consumer sentiment when two-thirds of our economy relies the consumer.

Graphic from Briefing.com

The final bit of economic news released on Friday came in the form of the business inventories. While the Street was looking for a small rise in inventories, the actual number showed no gain in the month of January. This comes after December's report showed a decline of 0.3%. With inventories not rising, it doesn't bode well for GDP (Gross Domestic Product). With the inventories already at extremely low levels, we would like to see the inventories start to rise. This would show some strength in consumer demand or at least some confidence about the future.

Crude pulled back $0.87 a barrel on Friday. This caused oil to fall 0.32% for the week when it closed at $81.24 a barrel on the New York Mercantile Exchange. Gold followed suit when it fell $6.50 an ounce to finish the week at $1,101.50 on Friday.

Friday's Economic Reports

The Dow Jones Industrial Average made it two weeks in a row of gains for the large-cap index. The thirty stocks rose a mere 12 points on Friday, but were able to gain 58 points for the week with its closing price of 10,624 points. On the chart, the Dow was finally able to make it through the resistance at 10,600 and then keep moving higher. The index now appears ready to make it up to the next barrier near 10,730 on the daily chart. This resistance level should be much tougher for the index, but if the other indices can break through their 52-week highs, the Dow should also be coming along for the ride.

The S&P 500 broke through its 52-week high on Friday's session, but wasn't able to hold above it at the close. However, the index did close 0.25 of a point into positive territory on Friday. This capped off an 11 point gain for the index over the past five trading sessions. Its closing price of 1,149 points on Friday also locked in two straight weekly gains for the index. On the chart, let's keep a close eye on how the index handles the resistance from its 52-week high. If it can make it above this mark and hold, the bulls should remain in control this week. If not, there might be some profit-taking setting in for the near-term.

The Nasdaq Composite wasn't quite as strong as the other two indices on Friday. It actually dropped 0.80 of a point at the close, leaving the tech-laden index at 2,367.66 points. While it was a red finish for the index, the Nasdaq was still able to climb 41 points during the last five trading days. On the chart, the index continues to make new 52-week highs on almost a daily basis. Let's see if this can continue during expiration week.

The VIX (CBOE VOLATILITY INDEX) made a little recovery on Thursday, but wasn't able to hold onto a gain at the close. On Friday, it continued falling and gave back another 0.48 of a point to finish the week at 17.58 points. We wouldn't be surprised to see the volatility kick up a notch with the indices testing some key resistance levels on the chart this week.

As we head down the home stretch this week, we really couldn't ask to be sitting much better across the board. All of our spreads have huge cushions built up and we still have a rising Market. Of course, we would love to see another calm week of trading this week with an uneventful expiration on Friday.

Our only complaint this month was the limited number of spreads that we entered. However, the opportunities just didn't seem right when we wanted to add additional positions. Despite this, we were pretty happy with the credits that we took in this cycle. We were finally able to get the credits up there to the $0.50 range, with is a better return for our funds at risk. It's not quite back to the old days when we were bringing in around $0.75 for a spread, but we're getting closer. For now, let's take a look at how each position is sitting heading into the final week of the March options cycle.

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

RUT CLOSED AT $676.59 Today (116.59 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $565.00

Small-caps have been on a terror over the past two weeks, which has been great news for our put spread. The index made a new 52-week high on Friday, but wasn't able to hold in green territory at the close. Instead, it finished the session down $0.63 at $676.59. However, it was still able to post another solid week of gains and give us a mammoth amount of breathing room heading into the final four full days of trading in this one. We should be able to keep this one on auto pilot this week.

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

PCLN CLOSED AT $238.91Today (38.91) points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $202.50

Priceline ran out of gas on Friday, but still is sitting in great shape for our put spread. The stock is marching up the chart along its 20-day moving average (light blue line) and is giving us an ascending triangle pattern on the chart. If it's able to break above this resistance level, it should take off like a rocket once again. But with the stock nearly 40 points above our "short" strike price, we shouldn't have anything to worry about in this spread for the remainder of the cycle.

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

GOOG CLOSED AT $579.54 Today (89.54 points away from our put spread)

Profit potential of $45.00 per contract

Contingent Stop Order set at $492.50

Google's fight with China continues to be a soap opera, but the stock has sure been moving higher. It had another nice gain going on Friday, but wasn't able to hold onto it at the close. The stock actually gave back 1.60 points on the day, but still is up nicely on the week with its closing price of $579.54. This gives us a massive cushion heading into expiration week, which should allow us to sit back and put our feet up in this one.

As always, Trade Happy and Trade Smart

Stocks edge higher as Market stays range-bound for third straight session. The economic data continued the positive trend this week, but the Market has taken a breather after last week's meteoric rise. Of course, this has been perfect for our put spreads as we head into the final week and a half of the March options cycle. But before we take a look at our current positions, let's recap today's action.

The economy received some encouraging news this morning from the Commerce Department in the wholesale inventory report. In the release, U.S. wholesale inventories unexpectedly fell 0.2% in January. This was much better than the 2% increase that the Street was expecting ahead of the release. The fall in supplies is partly explained by the 1.3% surge in sales during the same time period. At the same time, wholesale goods on hand compared to sales hit a record low in the month of January. The chart below shows how dramatic this number was on an historical basis. It also shows how far this data has come since the middle of our last recession.

Graphic from Briefing.com

When we combine this data with the declining inventory levels, it looks like the economy is going to get a boost from wholesalers needing to restock their inventories. This should bump up factory production levels and spur new hiring. All in all, it's very good news for the economy, as long as it wasn't a one-month wonder. 

The price of oil got another boost this morning from the Energy Information Administration's weekly inventory report. The government data showed a 1.4 million barrel increase in supplies last week. This was less than the 2.1 million barrel gain that analysts had predicted. At the same time, OPEC announced that worldwide demand should grow by 900,000 barrels per day in 2010. The combination of these reports helped oil jump over the $83 a barrel mark in today's trading. It settled up $0.60a barrel at $82.09 on the New York Mercantile Exchange.

The only other news on the session was on the corporate front. The ironic thing about today's leadership was that it came from some of the downtrodden stocks like Citigroup and AIG. With the rumors circulating that the government might come through with another short-ban on government-owned stocks, it appears that the shorts were running for the hills today. It seemed like a classic "short squeeze" to us. Other government controlled companies like Freddie Mac and Fannie Mae also enjoyed big moves on a percentage basis today. 

Other than this, it appears that traders were sitting back and waiting for more data to come out later in the week and into next week's action-packed sessions.

Today's Economic Reports

The Dow Jones Industrial Average eked out a 2 point gain in today's session, taking the index up to 10,567 points. After last week's surge higher, we were kind of expecting a breather this week and that's exactly what we've gotten during the first three sessions. The Dow has run into a little resistance from the 10,600 point area, but we still don't think this will be a long-term barrier for the large-cap index. As long as we don't get any troubling data, we expect the Dow to continue moving north and test its high from back in January. Let's see if this happens yet this week or if we need to wait until next week to see this play out.      

The S&P 500 was a little bit stronger in today's trading with financials and materials giving the index a boost. It rose 4 points on the day, closing at 1,144 points. For a while in today's trading, it looked as if it was going to test its high from January, but it couldn't keep the buying up for the whole day. Unlike the Dow, the S&P 500 is much closer to really giving a strong test to this resistance level on the daily chart. Let's see if this happens in tomorrow's session.   

The Nasdaq Composite has continued its leadership role this week, giving us three straight green candles on the daily chart. The tech-laden index climbed another 18 points in today's action, taking the Nasdaq up to 2,358 points. If this index continues moving north, it should take the rest of the Market with it.     

It was a rare green candle for the VIX (CBOE VOLATILITY INDEX) today when it nudged up 0.44 of a point to close at 18.36 points. While it was a fractional gain for the index, it certainly has been an extremely calm trading week so far, which has helped the premiums really start to dry up in our put spreads. As long as the VIX stays subdued, we should be in great shape.

The trading volume this week might be light, but the lack of volatility has been perfect for our put spreads. After weeks of turmoil and triple digit moves, the last several sessions have been music to our ears. With huge cushions across the board in all of our put spreads, action like this week should help us coast to the finish line with ease.

Of course, anytime we start thinking about an easy ride to the finish line, the Market tries to throw us a curve ball. Let's keep this in mind as we head into the remainder of the trading week, but let's not sweat the small moves. Unless we get a serious move against us, we should be able to ride out any downturn that we encounter over the next week and a half. The only disappointment is not adding any additional spreads this cycle, but with a healthy profit already safely secured, we shouldn't complain too much. For now, let's just take a look at how each of our spreads are sitting heading into the final two sessions of the week.

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

RUT CLOSED AT $674.93 Today (114.93 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $565.00

There has been no slowing down for the RUT so far this week. The small-cap index climbed 5.30 points in today's trading, leaving the RUT at 674.93 points at the close. With this week's advance, we now have nearly a 115 point cushion in our put spread with just over a week to go until expiration. We shouldn't have anything to worry about in this one.

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

PCLN CLOSED AT $240.99 Today (40.99 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $202.50

Two out of the three candles this week have been green for Priceline. The result has been a nice little gain for the stock during the first half of the week, leaving us with over 40 points of breathing room in our put spread. With some strong support levels on the chart and some nice upward momentum behind the stock price, we should be able to coast to the finish line in this one.

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

GOOG CLOSED AT $576.45 Today (86.45 points away from our put spread)

Profit potential of $45.00 per contract

Contingent Stop Order set at $492.50

Google was back in the headlines today after the company said it will soon be concluding its negotiations with China over its censorship. Of course, this whole discussion just brings back bad memories for us. It was China that started its big descent back in January and now it's news out of the China that's driving the stock price back up the chart. We're just happy to be in the right end of the China play this time. With its 16.26 point climb today, we should have more than enough room between the stock and our "short" strike price at 490. Let's just keep a watchful eye on any more breaking new out of China over the next week or so.  

As always, Trade Happy and Trade Smart

The Market takes flight with improving economy. The unemployment rate held steady while the number of jobs lost last month was much fewer than the Street was expecting. This followed the trend last week of better-than-expected economic data, which helped stocks push higher over the five trading sessions.

After the strong ADP report earlier in the week, we were looking for a fairly decent non-farm payrolls number on Friday and that's exactly what we got. The Labor Department announced that only 36,000 jobs were cut in the month of January. This was down from the 68,000 number that the Street was expecting. The strong report filled Friday morning with optimism.

Graphic from Briefing.com

Adding to the bullish sentiment Friday morning, the latest unemployment rate also surprised traders in its pre-Market release. The Labor Department announced that the rate held steady at 9.7% in February. This was better-than the 9.8% that analysts had predicted and the Street was expecting. With the job cuts declining and the unemployment rate holding steady, there were plenty of reasons to be bullish on an economic recovery in Friday's session. Of course, this means we definitely want to be on the "long" side of the Market.

Graphic from Briefing.com

The uplifting data on Friday helped oil move higher on the session. It rose another $1.44 on the day to finish the week at $81.65 a barrel on the New York Mercantile Exchange. Gold also climbed $2.10 on the day, closing at $1,135.20 a troy ounce.

Friday's Economic Reports

The Dow Jones Industrial Average surged on the session and the week. It jumped 122.06 points on Friday while locking in a 240.94 point gain for the week. This pushed the large-cap index right through a resistance level on the chart and has it headed towards the next one near its high for the year. We find it hard to believe that the Dow won't test this area in the upcoming week. Of course, there's always the unexpected that could throw a wrench in this plan, but for now it appears the bulls are in firm control.    

The S&P 500 also jumped right over the resistance level on the chart during Friday's 15 point advance. The index also managed to rise 34 points over the last five trading sessions and is poised to test its high for the year in the area of 1,150 points on the chart. Friday's closing price of 1,138 points put the index up 3.10% for the week and gave the S&P 500 its best weekly performance since last October. Let's see if it can continue surging into the new week.  

While the other two indices are still sitting well below their highs for the year, the Nasdaq Composite made it right up to this region on the chart during Friday's massive rally. The tech-laden index surged 34 points on Friday, taking the Nasdaq up to 2,326.35 points. This capped off an 88 point gain for the week and has the index sitting at its most significant resistance level in quite some time. If it can keep climbing this week, it should take the rest of the Market with it.    

The bottom continues to fall out of the VIX (CBOE VOLATILITY INDEX). It fell another 1.30 points on Friday, taking the index down to 17.42 points. If the Market continues to climb, we should see the VIX keep moving lower. Let's keep a close eye on the 17 point level because a drop through this level should mean another free-fall for the VIX.

What a week for the Market and what a week for our put spreads! We finally got the big move higher across the board along with the retracement in Google that we had been waiting for. With the Market firing on all pistons and the VIX dropping like a lead balloon, the premiums in our options should start to dissipate at a rapid pace.

We wanted to come back with another spread or two for Monday, but Friday's huge rally made us think twice about this plan. With the indices racing towards their highs for the year, we're afraid that we might get a little profit-taking at these levels. Due to this, we are apprehensive about coming in with some new put spreads at these levels. At the same time, we definitely don't want to be on the call side in case we're wrong and the indices break right through these resistance levels on the chart because then we're looking at some huge moves higher once again. This leaves us with quite a dilemma.

For now, we think the best action is to sit tight and see what unfolds at the beginning of the week. There still could be enough time left on Tuesday or Wednesday to bring in some decent credits, but after this, it's just not worth it. With this in mind, let's see what unfolds and if the opportunity is there we'll send out an alert. If not, let's protect our nice credit and coast to an easy profit for March.

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

RUT CLOSED AT $666.02 Today (106.02 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $565.00

Whenever the economy looks to be turning around, the small-caps are usually the first ones to react to the news. This was the case last week with the RUT surging 13.55 points on Friday, taking the index up to 666.02 points at the close. This gives us a massive cushion in our put spread heading into the final two weeks of the March cycle. We should be able to put this one on ice over the next two weeks.

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

PCLN CLOSED AT $235.34 Today (35.34 points away from our put spread)

Profit potential of $50.00 per contract

Contingent Stop Order set at $202.50

Priceline wasn't able to enjoy the huge gains that we saw everywhere else on Friday, but the stock is coming off a huge rally from Monday that was more than enough for us. Regardless of its lackluster performance on Friday, the stock still gained 2.22 points on the day. This left the stock 35 points above our "short" strike price at $235.34. The stock had been hurt late in the week by its announcement of new convertible debt, but this shouldn't weigh down the company too much. For now, we should be able to sit back and relax in this one as well.  

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

GOOG CLOSED AT $564.21 Today (74.21 points away from our put spread)

Profit potential of $45.00 per contract

Contingent Stop Order set at $492.50

Google finally awoke last week, which was excellent news for our put spread. The stock posted huge gains on the week, climbing 9.62 points on Friday alone. This left the stock at $564.21 at the close and gave us nearly a 75 points cushion in our put spread. What a week it was in this position. Let's watch to see if the stock is able to break above its 50-day moving average (green line) on the chart this week. If so, it could be another big move higher for GOOG.

As always, Trade Happy and Trade Smart