The BP crisis in the Gulf of Mexico has rightfully been analysed (mostly) from the ecological perspective. People's lives and livelihoods are in grave danger. But that focus has equally masked something very serious from a financial perspective, in my opinion, that could lead to an acceleration of the crisis brought about by the Lehman implosion.

People are seriously underestimating how much liquidity in the global financial world is dependent on a solvent BP. BP extends credit - through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of. The Gold community should think about the financial muscle behind a company with 100+ years of proven oil and gas reserves. Think about that in comparison with what a bank, with few tangible assets, (truly, not allegedly) possesses (no wonder they all started trading for a living!). Then think about what happens if BP goes under. This is no bank. With proven reserves and wells in the ground, equity in fields all over the planet, in terms of credit quality and credit provision - nothing can match an oil major. God only knows how many assets around the planet are dependent on credit and finance extended from BP. It is likely to dwarf any banking entity in multiples.

And at the heart of it all are those dreadful OTC derivatives again! Banks try and lean on major oil companies because they have exactly the kind of credit-worthiness that they themselves lack. In fact, major oil companies, conversely, spend large amounts of time both denying Banks credit and trying to get Bank risk off of their books in their trading operations. Oil companies have always mistrusted bank creditworthiness and have largely considered the banking industry a bad financial joke. Banks plead with oil companies to let them trade beyond one year in duration. Banks even used to do losing trades with oil companies simply to get them on their trading register... a foot in the door so that they could subsequently beg for an extension in credit size and duration.

For the banks, all trading was based on what the early derivatives giant, Bankers Trust, named their trading system: RAROC - or, Risk Adjusted Return on Credit. Trading is a function of credit bequeathed, mixed with the risk of the (trading) position. As trading and credit are intertwined, we might do well to remember what might happen to global liquidity and markets if BP suffers what many believe to be its deserved fate of bankruptcy. The Intercontinental Exchange (ICE) has already been and will be further undermined by BP's distress. They are one of the only "hard asset" entities backing up this so-called exchange.

If BP does go bust (regardless of whether it is deserved), and even if it is just badly wounded and the US entity is allowed to fail, the long-term OTC derivatives in the oil, refined products and natural gas markets that get nullified could be catastrophic. These will kick-back into the banking system. BP is the primary player on the long-end of the energy curve. How exposed are Goldman sub J. Aron, Morgan Stanley and JPM? Probably hugely. Now credit has been cut to BP. Counter-parties will not accept their name beyond one year in duration. This is unheard of. A giant is on the ropes. If he falls, the very earth may shake as he hits the ground.

As we are beginning to see, the Western pension structure, financial trading and global credit are all inter-twined. BP is central to this, as a massive supplier of what many believe(d) to be AAA credit. So while we see banks roll over and die, and sovereign entities begin to falter... we now have a major oil company on the verge of going under. Another leg of the global economic "chair" is being viciously kicked out from under us. Ecological damage is not just an eco-event on its isolated own. It has been added to the list of man-made disasters jeopardizing the world economy. The price tag and resultant knock-on effects of a BP failure could easily be equal to that of a Lehman, if not more. It is surely, at the very least, Enron x10.

All the counter-party risk associated with the current BP situation means the term curve of the global oil trade has likely shut down. Here we have yet another credit-based event causing a lock-up in markets that will now impede trade and commerce. It looks like an exact replication of the 2008 credit market seizure could ensue all over again - and it could probably be a lot worse. The world is in a far more delicate state now.

Although never really discussed, the world is highly reliant on BPs provision of long-term credit to many core industries. Who makes good on all the outstanding paper that so many smaller oil, gas and electricity companies, airlines, shipping companies, local bus, railway and transportation networks that rely on BPs creditworthiness and performance for? It doesn't take a genius to figure out how this could all unwind. If BP has to be bailed-out, like a bank, the system will have to print even more unimaginable amounts of money.

The market, intellectually lazy and slow to realization, as it often is, probably has not woken up to it yet - but the BP crisis could unleash damage similar to the banking crisis. A BP failure through bankruptcy could make Lehman look small in comparison, and shake the financial house of cards we live in even more severely. If the implicit danger of the possibilities imbedded in such an event doesn't make an individual now turn towards gold at full speed, it is likely that nothing will.

Source: http://oilprice.com/Energy/Energy-General/A-Bankrupt-BP-Worse-For-The-Financial-World-Than-Lehman-Brothers.html

By Jim Sinclair at JSMineset via Oilprice.com who offer detailed analysis on Oil, alternative Energy, Commodities, Finance and Geopolitics. They also provide free Geopolitical intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

The S&P 500 futures contract plowed higher for the day and for another week. We have seen this index rally for the past three months. It is now approaching the 0.618% Fibonacci retracement number which is at about 1237.86. We observe on the daily action, a pattern of softness intraday with buying at the end of the day. There could be two possible reasons for this behavior; one is that institutions are making their decision late in the day and investing in the last hour of trading and the other, those who were short all day looking for a market correction, threw in the towel by the end of the day and covered their positions. We believe that it may be a combination of the two causing the end-of-day rallies. We certainly understand the reasoning for this. After all, how happy can you be earning 0.45% on your money and then enjoying the tax you have to pay on that interest your money earned? Basically, you are losing money, even if we were to factor in very tame inflation. (Many economists believe that we are in a disinflationary environment, we disagree and believe that we are in stagflation.) Yes, the market has been overbought for months, but this behavior can continue until it ends. Reasonable people understand that this will persist until it doesn't. Remember, actions once put in to motion tend to remain in that direction. To change direction we need to see exaggerated force in opposition to the current force and since the "buy the dips" crew is back in action that force is lacking. Think about bad habits like smoking; it is easier to keep smoking than to quit. Quitting takes a lot of effort and pain. Besides, bull markets are a lot more fun than are bear markets.

Earnings season begins on Monday with Alcoa's release after the close. Expectations are running to the high side and the market will meet those expectations. Think about the comparisons to last year and logic tells you that it won't take much to beat out last year's projected depression levels and that this year's "happy happy joy joy" projections will be positive. The question you need to ask is whether the forward looking projections will be correct. Are we moving into an expansion or something less positive? Unless people find employment and incomes improve, this recovery will be doomed. How healthy is the market really, are we fooling ourselves into buying the propaganda produced by our government? Will we actually be able to pay our debts without crushing our children's future? Is our currency behaving better because everybody's is a lot worse than ours is. These are just a few questions that will eventually need to be answered.

It seems that as winter gives way to spring and the blossoms appear our mood improves and we feel compelled to open our wallets and take a little risk. We have noticed investors, are taking more risk than usual. Money appears to be leaving the perceived safety of the money market funds, and is being invested in the equity market where, it has a greater chance of finding returns. That said, here is a little comment about the Bollinger bands. The S&P 500, the NASDAQ 100 and the Russell 2000 all close at or above the Bollinger bands on the charts. When reviewing past history of these indices, you will note, that the Bollinger bands will become wider as the market moves to extremes (either up or down). Rarely is this extreme seen for more than three or so days. If you are buying into the breakout, remember that we will retreat from the upper Bollinger band and likely return to near the 20 day moving average. We need to point out that in July of 2008, we rallied above the upper Bollinger band for many days and did not return to the 20 day moving average until December of 2008. This period could be similar, but only time will tell. This is just an observation not a fact written in stone.

Opening at the Broadhurst Theatre in New York City on April 27th, "Enron" the musical. How about as a follow-up Broadway show: "Obamacare the drama" or "Ruben and Greenspan the Follies." We love the fact that we can make fun of ourselves. It is healthy and harmless might even warn us not to do it again, something like Prohibition, the subject of many movie scripts.

Monday: Alcoa releases earnings after the close. Tuesday: March import prices are released at 8:30 and February international trade is released at 8:30. Wednesday: March CPI is released at 8:30, March retail sales are released at 8:30, February business inventories are released at 10:00, Chairman Bernanke testifies on "the Hill," and the Fed Beige book is released. Thursday: March industrial production and capacity utilization is released at 9:15, and the Philly Fed Survey is released at 10:00. Friday: March housing starts and April Michigan sentiment is released at 9:45 to 10:00.

The US Dollar Index retreated in the Friday session. Should the US Dollar Index close below 80.52, the door will be open to 79.65 and 78.77. The uptrend line for the Monday session is at 80.98 or so. The 5-day moving average is at 81.41. The top of the Bollinger band is at 82.56 and the lower edge is seen at 79.85. The stochastic indicator, the RSI and our own indicator all continue to issue a sell-signal with plenty of room to the downside. The Thomas DeMark Expert indicator continues to point higher at overbought levels. We are above the Ichimoku Clouds for the daily time-frame but in the clouds for both the weekly and the monthly time-frames. The uptrend line on the weekly chart is at 80.87. It looks as though the US Dollar Index could see further declines in the short term. To turn this chart positive you will need to see a close above 81.99.

The S&P 500 futures contract closed above the upper Bollinger band in the Friday session. This index has been grossly overbought for months and remains overbought as measured by the RSI and the stochastic indicator, both of which continue to point to higher levels. Our own indicator is not overbought but does continue to issue a buy-signal. The Thomas DeMark Expert indicator is issuing a sell-signal. The uptrend line is seen at 1174.89. The 5-day moving average is at 1178.47. The top of the Bollinger band is at 1190.44 and the lower edge is seen at 1150.72. The rally in the Friday session can only be seen as a substantial breakout to the upside. We do need to see some follow-through of this action with better volume. We are above the Ichimoku Clouds for both the daily and the weekly time-frames, but remain below the clouds for the monthly time-frame. We are overbought on all time-frames, daily, weekly and monthly. The next real area of resistance is at the 0.618 level of 1237.86. We do have signs of exhaustion on the weekly chart.

The NASDAQ 100 rallied 0.61% in the Friday session underperforming the S&P 500's rally of 0.75% and the Russell 2000 rally of 0.70%. The problem we see is that the NASDAQ and the Russell 2000 have led this rally and now seem to be falling behind the rally in the S&P 500. Still the NASDAQ 100 managed to close at the upper edge of the Bollinger band in the Friday session. The NASDAQ closed at the highs of the day. The 5-day moving average is at 1969.38. The top of the Bollinger band is at 1990.92 and the lower edge is seen at 1922.62. Naturally, we are above the Ichimoku Clouds for the daily, weekly and the monthly time-frames. We are overbought on all time-frames. All the indicators that we follow continue to point higher at overbought levels. Overbought is a relative term, in an bull market, overbought levels can be seen for extended periods of time so don't let the condition fool you into believing that there has to be a sell-off. We will remain at these levels until the daily stochastic breaks below 57 and the RSI breaks below 65. When looking at the point and figure chart, you will notice that the NASDAQ 100 broke out of a double top at 1987.50.

The Russell 2000 closed above the upper Bollinger band in the Friday session. All the indicators are overbought but only the RSI and stochastic are issuing a continued buy-signal. The Thomas DeMark Expert indicator is issuing a fresh sell-signal and our own indicator is flat-lining. The 5-day moving average is at 690.45. The upper edge of the Bollinger band is at 701.43 and the lower edge is seen at 667.15. Should the market retreat, good support will be seen at 648.90. We are above the Ichimoku Clouds for the daily and the weekly time-frames. We are overbought for all time-frames. There is little overhead supply to keep this market down. Don't fight the trend until it no longer is the trend. The uptrend line is at 693.10.

Crude oil has been in retreat since touching a high of 87.09 in the Tuesday session. There is a strong uptrend line at 82.03 if broken will open the door to 78.57 and 74.59. We are above the Ichimoku Clouds for the daily, weekly and monthly time-frames. The 5-day moving average is at 84.75. The top of the Bollinger band is at 87.16 and the lower edge is seen at 78.40. While we are in retreat, we see some support at 83.09. The market is demonstrating a disconnect with the US Dollar. Generally speaking, as the dollar retreats, crude oil (priced in US Dollars) rallies. Lately, we have not seen this connection. Crude oil also plays into the recovery/expansion chatter. Should the global economies expand, naturally there will be increased demand for crude oil and the price should increase. Many economists see disinflation in our future. We see stagflation in our future, increased prices with stagnate wage growth. Thus, we have less money to spend on ever higher bills.

Gold is headed higher as people become concerned, not about inflation but rather, about currency risk. Gold the ultimate currency has been inching higher as the PIIGS problems continue. The Euro has been battered and the US Dollar is plagued with debt. The market is concerned about the Pound Sterling and most other currencies ergo, gold becomes the vehicle of choice. You can trade gold in all currencies. Simply stated this has kept the demand for gold high. The 5-day moving average is at 1131.86. The top of the Bollinger band is at 1158.06 and the lower edge is seen at 1078.42. Gold is overbought and will issue a sell-signal in the Monday session. It likely will retreat to 1145.80 and then 1132.80, but will find a bid upon shallow retreats. We have supply up to the December 2009 highs. It does look as though, we are going to go through those highs in the not too distant future.

Crude oil broke through the $80 a barrel ceiling repeatedly during the week but kept falling back as hedge funds placed big bets on the Euro's decline.

The fiscal drama in Greece held global markets hostage much of the week as worries about the impact of the Greek crisis on the euro outweighed comments from Federal Reserve chairman Ben Bernanke about continued low interest rates in the U.S., pushing the euro down against the dollar and damping crude prices.

The euro recovered some ground on Friday amid new reports of European aid for Greece after falling to a nine-month low of $1.3440 on Thursday. Germany's state-owned bank KfW may take part in a planned Greek bond offering next week, according to market reports.

The Wall Street Journal reported on Friday that a small group of elite hedge fund traders have concluded that the euro could be headed to parity with the dollar and their bearish bets are increasing the downward pressure on the 16-nation currency.

The Journal compared the situation to the hedge fund attack on the dollar in 2008. However, the trades are not expected to lead to a collapse of the currency as the attacks of George Soros on the British pound did in 1992, the paper said.

Positive U.S. economic data on Friday, including a revised fourth-quarter GDP annual growth rate of 5.9%, help crude oil futures claw back some of Thursday's losses and near the $80 threshold again. Nymex's benchmark West Texas Intermediate settled at $79.66 on Friday, after topping $80 earlier in the week.

In spite of crude's difficulties in staying above $80, some analysts issued bullish prognoses for energy futures. Goldman Sachs forecast a new trading range of $85 to $95, up from the $70 to $80 of the past several months, amid supply disruptions from the North Sea and Venezuela and the impact of the Total refinery strike, which was resolved earlier this week.

Other analysts, too, looked for fundamental supply and demand considerations to reassert themselves amid the currency turmoil and lift crude oil futures into a higher trading range. Oil futures prices gained more than 9% in February but remained below January's highs.

By Darrell Delamaide of OilPrice.com who focus on, Fossil Fuels Metals, Crude Oil Prices and Geopolitics To find out more visit their website at: www.oilprice.com

Today's Gold Session Settled $22.00 Lower... ($1129.40)

Today's Gold trade could not maintain early gains as world economic data pressured the
allure to the "precious metals". China unexpectedly raised Reserve Interest Rates (50 Basis points) starting January 18th. This move by the central bank of China is in
accordance to their commitment to slow down rising inflation as well as tightening their monetary liquidity. Today's action by the China Central Bank created a late session sell-off in the Gold market resulting in a $22.00 Lower session. The trading range for Comex Gold today had a range of $23.60 consisting of a High of $1152.30 and a Low of $1128.70. This is kind of a 'win"-"win" situation for China because their action today sent the price of gold lower and as they are seeking to build their bullion reserves the raising of rates makes Gold more affordable.

Early in the session we received data revealing India's gold volume under ETF's (Exchange traded Funds) rose 55 percent on the year. The seasonal The recent bullion buying surge from India is attributed retail customers and jewelers for festivals like "Makar Sankranti" which is certainly one of the auspicious occasions for Hindus (a Harvest festival) in which the sharing of gifts is tradition... (Gold is the gift of choice) as well as the last days of the 'wedding season". **Makar Sankranti begins January 14...**

My Swing Numbers 1/13 ....February Gold

Resistance # 2............$1171.00
Resistance # 1............$1150.00
Pivot..........................$1137.00
Support # 1.................$1116.00
Support # 2.................$1103.00


Mike Daly / Gold Specialist
PFG BEST
mdaly@pfgbest.com
312-775-3014
877-294-4669
312-563-8029

** There is extreme risk trading futures,options,and forex" **

Do hedge funds have an impact on energy trading?

While the answer might seem intuitive, the debate as to whether they actually do has come to resemble the medieval theological dispute about how many angels can dance on the head of the pin.

Because, like angels, many trades in energy futures are invisible, and it is often not possible to pinpoint where they take place.

And yet, for most of us, including lawmakers on Capitol Hill, it seems obvious that when hedge funds buy and sell billions of dollars worth of oil and gas futures, it must be having an impact on energy prices. While hedge funds and other speculative traders would never dream of taking delivery of a barrel of oil, their trading activity affects the prices for actual consumers of oil and gas and their downstream customers - or so it would seem.

When Gary Gensler, a former Goldman Sachs banker and Treasury Department official, was nominated last year as chairman of the Commodity Futures and Trading Commission - the chief regulator for energy futures trading - he reversed the CFTC party line that speculators don't have an impact on energy trading.

"I believe that excessive speculation in commodity futures can cause sudden or unreasonable fluctuations or unwarranted changes in commodity prices," Gensler said in a written response to lawmakers' questions ahead of his nomination hearing.

Gensler went on to pledge that if confirmed, he would have the CFTC guard against such speculation.

While he stopped short of saying that excessive speculation had taken place in the run-up of energy prices in 2008, he did express the opinion that the rapid growth of commodity index funds and increased hedge fund allocation to commodity assets contributed to the "bubble in commodities prices that peaked in mid-2008."

He noted that non-commercial investors sometimes account for up to 90% of open interest in a contract. (Open interest is a calculation of the number of active trades for a particular market, and is used as an indicator whether trading is becoming more or less active.)

Gensler's answer, enshrined in draft legislation currently before Congress, is to make trades more visible by requiring all over-the-counter derivatives to trade through an approved clearing house. While the thrust of new legislation is to get a better handle on financial derivatives such as credit default swaps, it will give regulators a better picture of all derivatives trading, including energy contracts.

At the same time, the CFTC and the Securities and Exchange Commission both are beefing up their ability to monitor hedge fund activity. The SEC for the first time will require hedge funds to register as investment advisors, and Gensler has pledged closer oversight of the funds that it supervises as commodity pool operators.

The industry, predictably, is pushing back. In congressional testimony on the new legislation, the Chicago Mercantile Exchange, the largest futures exchange in the world, and other exchange operators presented studies based on CFTC data to show that large positions held by index funds and other managed money were not "routinely detrimental" to the commodity markets in the period January 2005 to June 2008.

"All of the trader groups displayed instances of non-optimal behavior (including small traders), but none were consistently harmful to the studied markets," they said.

A task force of the International Organization of Securities Regulators (IOSCO) released a report last March that came to a similar conclusion.

"While reports reviewed by the task force concluded that fundamentals rather than speculative activity was the plausible explanation for price changes, the task force has made a number of recommendations to improve the transparency and supervision of these markets," IOSCO said.

These included suggestions regarding information about the underlying commodities, access to and sharing of information about trading positions, beefing up enforcement powers, and improving global coordination.

The spectacular collapse of the Amaranth Advisors hedge fund in 2006 when it lost $6 billion on natural gas futures did pull back the veil on hedge fund activity in energy markets. Amaranth built up its huge position in natural gas futures through OTC contracts that exactly mirrored the contracts on the New York Mercantile Exchange but remained hidden from regulators, who were unable to enforce position limits designed to rein in speculative trading.

In hearings about Amaranth before various House and Senate committees as well as at the CFTC itself, it became clear, at least to many lawmakers, that contracts on unregulated trading venues can influence prices.

The case was so straightforward that it prompted the Federal Energy Regulatory Commission to flex its new post-Enron mandate to stop manipulation of energy prices by pursuing disciplinary action against Amaranth.

This led to a turf war with the CFTC, which claimed exclusive jurisdiction over futures trading and argued that FERC's mandate extended only to spot trading. FERC countered that when activity in the futures market affected spot prices, it was authorized to act.

Those proceedings ended in a joint settlement last August, before either CFTC or FERC held their administrative hearings and before an appellate court could decide the jurisdictional issue.

But the Amaranth case remains as a reminder of what a hedge fund can do in energy markets if these trades are not more transparent. Legislation bringing more visibility to the market and strengthening the hand of regulators will ensure that hedge fund activity in the energy markets will be more closely monitored and limited.

This article was written by Darrell Delamaide for OilPrice.com who focus on Fossil Fuels, Alternative Energy, Metals, Oil Prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

We have said in previous newsletters that Treasuries tend to rally during November and much of December regardless of fundamentals and that seems to be the only factor keeping bonds and notes above water. On a day in which fundamentals seemed to be decisively bearish in long-term interest rates, the market held its own.

All of the inter-market relationships that traders tend to rely on for guidance have all but vanished into pixie dust. Dramatically higher equities in recent days might have had something to do with the lack of upward momentum but it clearly hasn't triggered the aggressive selling that one might have expected. Similarly, the weak dollar should be a bit more of a drag on Treasuries than it seems to have been as of late.

Although the CPI and the PPI have shown signs of inflation, the commodity markets are flying high. Many of them are trading near multi-month, or even year, highs. In fact, one of the most widely tracked commodities, gold, is trading near an all-time high and seems to be propelled solely by expectations of inflation; yet Treasuries have failed to budge.

Other than the other financial and commodity markets moving, there was little news for the bond market to digest. However, there was a 3-year note auction which was absorbed relatively well. The U.S. government issued $40 billion in 3-year notes at a rate of about 1.4% to a 3.33 bid to cover and an indirect take of 68.5%. The market still maintains a healthy appetite for the Treasuries risk averse, light yield securities.

Perhaps some of the lack of direction has to do with the auctions on tap. The market is said to be expecting a little less demand for the record $25 billion in 10-year notes on deck for tomorrow and the $16 billion in 30-year bonds on Wednesday.

We have been patiently awaiting better levels to be a bull, preferably a bit under 117 (maybe even closer to 116) in the long bond but the opportunity has failed to materialize. We aren't comfortable buying into such quiet markets with either futures or options because the one thing that I have learned is that quiet markets don't stay that way for long.

I prefer waiting for something better, but if you have to be in the markets...the best play might be a long strangle using (cheap) out of the money puts and calls. For instance, you can buy the December 121/116 strangle for about $400.

Support in the 30 year bond lies in the mid-117's then again at 116'30...there is some chance of a temporary, yet swift, slide closer to the 116 area. If this happens, it should be a great place to be a bull.

Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.

October 15 - Yesterday afternoon, our clients were advised to sell puts against a possible Thursday plunge. We recommended to sell the December T-bond 112 and 113 puts for 20 and 26 ticks respectively, or about $312 and $406 before commissions and fees.

October 20 - Our clients were recommended to exit the 112 puts near 6 ticks and the 113 puts near 8. Fills on the 113 puts were coming in at 9, we recommended to make the 6 tick buyback on the 112's GTC. Those that still have a short 113 put open, we recommend a GTC order to buy it back at 9 or 10.

· These orders have all been filled, you should be out of this trade.

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
www.DeCarleyTrading.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

As we move into the last week of October remember, not only is it Halloween, but it is the seasonal time when mutual fund managers take loses for the year, that is if they have any. Then we have portfolio dressing and undressing. So, get your trick or treat candies ready for the goblins and witches that visit your doorstep.

As we enter into November, we are in the last two months of the year, which, if you went long in March of 2009, has been a good year. Had you not gone long and left your portfolio alone for the entire year, it seems as though you would be approaching even for the year. For those of you who sold out at the bottom of the market and ran into cash, you are watching this rally, anticipating the next retreat for a buy. This has been the general behavior of the market, short shallow retreats leading to up thrusts in the market. While we believe that the market is not cheap, if you invest in stocks paying a good dividend and position options as a conversion, you can reap the dividend without much risk. Sometime, a conversion is called a collar. Remember if you do put this strategy into effect, sell the call for after the time the dividend is due. You must take care to collect the dividend or, that strategy will be a bust.

The trashing of the US Dollar has an immediate effect on those companies that export around the world, that is, they make money on the increased trade attributed to the declining dollar. As the US dollar drops in value, our merchandise becomes cheaper and cheaper, thus we attain a competitive advantage. Our trading partners don't like that and will likely try to support the US Dollar rather than losing sales because of the weak dollar. It is likely that either our trading partners will support the US Dollar or trash their currency. Interesting thoughts. Another interesting thought is that insomuch as foreign funds own a great deal of US Dollars, it is likely that they will buy stuff with the US Dollars rather than sitting with low interest rates on a depreciating currency. Perhaps they will buy our stocks which will compensate them for the risk.

As we continue on in earnings season, much of the gloom and doom is being removed from this market. The companies are, for the most part, reporting better than expected earning and they are looking forward to improvement in the economy. Companies have done well during these difficult times, watching their bottom lines, and working at high efficiency. The only thing that doesn't look good, right now, is the employment market. So far, sales jobs have returned to the market but little else is opening up. We need to see an improvement in temporary help and hours worked before we see some improvement in the job market.

When I started working in commodities, almost a decade ago, they were considered a dirty word and certainly not a place for the average Joe to invest. Within the last few years, thanks to investors becoming more open minded, the overall performance of commodities and other asset classes, commodity futures and options are quickly becoming a respectable asset class. Case in point, over the weekend while reading the WSJ there were 3 different scenarios and portfolio allocation suggestions, regardless of the scenario all 3 had a place for commodities. One that fears inflation should have as much as 25% allocated to commodities, one fearing deflation only a 10% allocation, with the middle of the road being 15%. While we agree with the percentages we suggest investors get more informed on trading futures and options not just commodity ETF's.

March 18, 2009 - New York , NY - The Hennessee Group LLC, an adviser to hedge fund investors, believes silver is currently underpriced relative to gold and is therefore advising clients to accumulate positions in the precious metal.

Charles Gradante, Co-Founder of the Hennessee Group, stated

"While we see both gold and silver as safe haven investments, particularly as a hedge against the longer term risk of hyper-inflation, we believe gains in silver will outpace gold." Gradante added, "The gold to silver ratio has reached elevated levels in recent months due in large part to gains in gold. And while we expect gold to continue experiencing gains, we anticipate silver to outperform on a relative basis and lead to a reversion in the gold to silver ratio."

For all you superstitious traders we are Friday the 13th and also the last trading day before the Ides of March (15th). It doesn't get and more spookier than that. Yesterday's huge up move was a continued combination of short covering and sideline cash that does not want to get left behind. The question one has to ask is how much father does this move have to go?

We continue to be long the market medium term as we believe there is still pent up buying. Given the strong gains over the last three trading days the prudent trading strategy is to continue to trade with a trailing stop. We have option expiration next week which will add to the volatility as a huge Index Arb Fund that is currently frozen will have to be unwound before next week's end. Expect more back and forth action today with the possibility of profit taking going into the weekend.

As a trader, one must control that little voice inside that is saying you have missed the bottom and the Stock Market freight train is now quickly leaving us behind so we had better buy. Expect at some point a retest of the Market low (on the S&P that is 666 just to add to the superstition of this market).