WEAKNESS AHEAD?

The market showed some weakness as it neared the 1150 area on the S&P 500. That possible resistance would need some confirmation, but it could be an early signal of an upcoming sell off...or a pause before a breakout rally. The price action in the DOW and S&P 500 over the last three days shows that the sellers might be starting to gain some strength. We should know the answer tomorrow. Gold sold off pretty good after being up in the early part of the day. The put option recommendations on GFI and GLD look pretty good so far. I also like FCX as a possible put option trade if the stock price can close below $77.50. They key here is a closing price below $77.50. That price level is important confirmation for the bearish trade. If a put option is purchased before that confirmation, it would significantly increase the risk in the position...many of you learned that from the put option recommendation on the SPY a few weeks back. We wanted to get in if it dropped below 106. We never got that confirmation which should have prevented us from losing money in that trade. Today's price action on the VIX was bullish...which of course could be bearish for the market. Keep a close eye on that indicator. If it starts to spike up, we want to be prepared to buy puts on the SPY or DIA and profit from a potential move down. If the S&P 500 breaks out above 1150 tomorrow, we want to keep an eye on the volume numbers to see if the volume increases significantly. If it does, we might want to look for some call option trades that we can get into.