Dow Futures
This report is as of February 17, 2006

"You try to be greedy when others are fearful, and fearful when others are greedy" - Warren Buffet

Although the market didn't really make much headway until later in the session, it was a decidedly bullish day. After all, the Dow managed to break resistance at 11085, and avoid a wave of liquidation. Traders focused on Bernanke for the second day in a row. The New Fed Chair was determined to discuss topics other than how many more rate hikes were in the cards. The uncertainty is a bit unsettling for many analysts. Some are anticipating that the Fed will go too far, and others claim that they will not go far enough. I guess this type of disagreement is proof that economics is an art, not a science...even if you have a doctorate.

Technically the Dow is a sell. It will take a substantial amount of positive news to force prices higher. I prefer the sidelines until things become a little more clear. If you must trade, this is a great place to short in that you can place a relatively tight stop.

February is the weak link in the "Best Six Months" according to the Stock Traders Almanac. Remember, the S&P has been up 12 of the last 14 trading sessions that immediately precede President's day.

Dow Recommendations
Swing Trade - Flat

Position traders - We are short a March 104 put and a 110 call, we collected about $800, a little nervous on the call side our reverse break even is at 11080!

Option traders - Long the March 108 call and short 110 calls. We paid about $250 for the spread. Our risk is theoretically unlimited above 11,200 and limited to $250 on the downside. Call me if you have questions. This morning we started putting on bearish ratio spreads. We bought the March 110 put and sold 2 108 puts, we were filled at even money...FREE TRADE!