If you live in the Midwest like I do you may be wondering if we will ever see green grass or temperatures above 40* Fahrenheit ever again. Chicago is experiencing the coldest and snowiest winter in 35 years. The average temperature through February has been 18.8* F, along with 67.4 inches of snow (average snowfall is 28.1 inches). March has certainly come in like a lion, with snow the first five days of the month (pushing the snow total to 73.5 inches) along with the coldest March 3rd (-2* F) in 130 years. The calendar tells us spring is a few weeks away, but I’m not so sure.
As we look towards the change of season (very eagerly), we also eye the start of a new quarter. The S&P 500 continues its run to the upside, putting in new contract highs twice in the last week. The bulls are still running but it hasn’t been a straight run to the top. The market has had a nice climb up after putting in a low for the year at the beginning of February. I think the long term outlook is still to the upside, but it might get knocked back a bit first.
TRADE IDEA
With some big data on the near horizon (Employment Situation), I don’t want to step out with a futures position. I think we may see a dip in the S&P in the near future, but the upward trend will continue into the second quarter. I like buying the April E-Mini S&P 500 1875-1900 call spread at 10 points ($500.00) or better. By being long premium we are defining risk to the cost of entry plus fees and commissions. If the market can survive some probable weak job numbers, I think it can make a strong push to the 1900 level. The April options expire on 4/17/14, so we have over a month for the market to make a move. If the trade doesn’t look to be going in our favor, I would limit a loss to half the cost of entry.
The winter weather can get the best of you sometimes. You can dread having to deal with simple tasks of carpools, commuting to work or going to the grocery store. It can make you feel like you are stuck in the cold and brutal winds forever. Trading can have the same effect when things aren’t going your way. Unlike the weather you can take a break from playing the markets. Take the time if you need to and evaluate your trading. Give yourself some time off, and come back fresh and rejuvenated. Unfortunately for those us wanting an end to winter, Mother Nature doesn’t take requests.
For those interested Walsh Trading is holding our weekly grain webinar series this Thursday February 27th at 3pm central time hosted by our Senior Grain analyst Tim Hannagan.
Tim has been ranked #1 by Reuters and Bloomberg in 2011 and 2012 for his most accurate end of year price predictions for soybeans and corn. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES
