The Fed announces at 2:15.
Not much else matters until then and then we have Non-Farm Payrolls on Friday and nothing matters until then either so it makes sense that we are flat-lining, more or less this week, as we gather more data to see if we can justify these amazing gains for the month.
We had a rough day shorting oil yesterday as it was a nickel and dime game as we crossed each .50 line but, while we won a few battles, oil won the day and is at $98 this morning in the Futures (/CL) where we're shorting it again into the inventory report. The run-up in oil gave us the opportunity to take some March USO shorts in Member Chat for our $25,000 Portfolio as well as a new SCO, with an aggressive new play on the Feb $36/37 bull call spread for .40, which has a .60 upside (150%) in 16 days if oil drops back to about $96.
That's a speculative play but we put it in both of our $25,000 Portfolios and risked a virtual $800 on 20 contracts and, since the $36 calls are $1.15 (covered with the $37 calls sold short at .75), we can also roll out of the position before the $36s go below .60 – but more on that if it has to happen (hopefully not, as that would likely mean $100 oil). Like a lot of things, yesterday's rally in oil has been propelled by a big dip in the Dollar, which bottomed out (we think) at 79.40 this morning.
Unfortunately, a bouncing Dollar is a danger to all stocks and commodities and, while the Dollar chart looks bearish – with a falling 50 dma acting at a tough top of the recent range – the fundamental reality of the situation is that we simply are NOT printing money faster than Japan and certainly not faster than Europe and, in fact, the demand for Dollars is increasing as housing activity goes up along with employment. So, 79, maybe 78.50 but lower than that is very unlikely and, once we pop back over 80 – shorts will begin to cover and we'll have a nice little pop, which should lead to a market pullback – hopefully not too severe.
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