Tuesday, December 15, 2009

Thoughts

Yesterday the S&P 500 had its highest close of the year. As the indices edge higher, so does the dollar. I believe that this correlation is starting to break down. The dollar has been moving higher off the November bottom 74.21 now trading at 77.35, that a 4.43% rise in the dollar. I think the dollar has some more room to run, but could come up to some over head resistance at 77.74, and it might have a slight pull back at that number, but I believe it will cut right through.

The S&P 500 $SPX has been a great vehicle to trade delta neutral this month, the range has been tight and IV is falling off a cliff. I still think that the S&P year end will be 1120-1125, and the $VIX could have a chance of trading in the teens. Technically the chart is not doing much, not much to report on, except the sideways action.

Income trades are working very well in this tight range market, I plan on closing some of them today. This was also the first month ever where I traded $MNX the mini Nasdaq in a double diagonal, and I will continue to trade the $MNX. Now, I have been trading the $NDX, and you can get in trouble very quickly and have more money in a trade because of the 25 point wide strikes. It’s cheaper to trade the $MNX and the chart and components are the same as the $NDX.

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