Response:   Absolutely.  I think we should pick up some premium within 2 hours from when the unemployment numbers are released this Friday.   If the market rallies, let’s open some bear call spreads, and  if the market sells off, let’s open some bull put spreads.  Once the market moves, it’s my guess that the market will stabilize rather quickly as investors/traders/money mangers await Q4 earnings that start to come out next week.   I’ll send out an advisory tomorrow, Thursday, with my thoughts on strike price placement.

Per economic data, factory orders, the ISM index and pending home sales all came in better than expected.  As a result, we believe that the the major indexes will hold above either their 100 day or 200 day lines.  (for specific moving averages and support levels for each index please refer to Sunday’s advisory)

Let’s take advantage of this recent spike in volatility and pull back of the RUT and SPY and continue to bring in premium on our Nov bull put spreads this week, per the trade recomendations in Sunday’s advisory.

We’ll watch the market daily to see if we still might have the opportunity to open our November bear call spreads.  If we do, we’ll send out new strike prices since our current  strike prices are no longer valid.   Unfortunately, because of how the market is behaving we might not have an opportunity to open our bear call spreads this month.  We’ll keep you posted.

back to just below its upward sloping channel and its 50 day SMA, and with today’s rally it’s back above the 50 day line and has moved back inside the channel.  This also is bullish and is demonstrating strength.    The RUT, on the other hand, overreacted and dropped below its upward sloping channel and its 50 day SMA, but it did, so far, hold above its 100 day SMA near 565.   With the DOW showing considerable strength, and the S&P 500 index successfully back inside its channel and above its 50 day line, there is a good chance that the small cap investors will want to “catch up” and possibly take this big pull-back in the RUT as a buying opportunity.   We believe that the RUT will meander upward over the next few days giving us a better opportunity to open our top November bear call spreads.   Therefore, let’s be patient and wait a few more days.  The bear call spread strike prices that we show in Sunday’s advisory are no longer valid and we’ll have to reset them in the next few days.   And per the bottom bull put spread, we most likely will wait until after the employment numbers come out next Friday.

Here are the events over the next week that could move the markets and that we need to monitor:

1) Earnings  -  However, half of the S&P 500 earnings are already in, 80% have met or exceeded expectations, about 60% exceeded top-line revenue growth expectations, which is good, but investors are not impressed.  Therefore, earnings information is already priced into the market and investors are back to watching, and reacting to, economic data.

2) Chicago PMI comes out tomorrow, Friday.  So as long as this is OK, the DOW and SPY should continue to hold steady or gently climb and the RUT might climb a little faster.   Refer to Sunday’s advisory for details on the economic calendar.

3) The ISM manufacturing index comes out on Monday the 2nd and if it’s OK the market should hold steady or climb, and the RUT might/should climb a little faster to catch up to the strength that is exhibited by the DOW.

4) Unemployment comes out on Friday the 6th and most likely this number will be bad, economists are expecting the unemployment rate to hit 9.9%, and most likely it will.  When this happens, this will put a damper on the overall market and our short lived bounce rally will be over for a few weeks.  Thus, we need to open our top bear call spreads before the unemployment number comes out on Friday the 6th.  Right after this number comes out, and if we have a strong DOWN day as we are expecting, this is when we’ll start to open our bottom November bull put spreads.

As soon as we set our new options strike prices we’ll send out an email advisory to all MCTO subscribers.

The market is skittish in trying to figure out which way to go next and is getting choppy.   Because the market has been pulling back, we have not had a chance to open our top bear call spreads yet.  (including the auto-trade accounts)  Our next chance will be this Thursday the 29th when the Q3 GDP is released, and if it’s good the markets could have a strong UP day giving us the opportunity to open some of our top spreads.

With this said, unemployment numbers are coming out next week on Friday the 7th and the market probably will go into a holding pattern starting next Wednesday as investors await this release.