Market Update 12/10/09

After a large gap up the SP-500 could not follow thru to the upside. There was generally a lack of interest from both buyers and sellers resulting in a 7 point range for the entire day. The gap up stopped me out of my

SPY puts for a nominal loss.

I will look to put on a straddle on Friday for exposure to the explosive directional move that the market is building up for. (See previous posts). This period of a tight ranges and low implied volatility on options is the ideal time to open a straddle. This position will eliminate the need to be right on the direction of the move, but requires a large move to profit. I will post the strike and month of the straddle when I open the position.

The eventual move out of the rectangle area on the 45 minute $SPX chart will be a large one. The only question is which way and when. Markets being what they are it will be when the fewest expect it and the most are wrong.



Good trading.

KW