MONDAY'S OUTLOOK

All three indexes are at or near a 50% retracement after Friday's rally. This could mean that they are about to make another move down...but it could also mean that the buyers are back and the indexes are about to break to new highs. There is no way to know what the market will do next. Normally I would bet that it would drop significantly, but I have to respect the strength of the bulls over the last few months. If you haven't yet bought any puts on the indexes (SPY, DIA, and QQQQ), this is a great place to enter a new trade. The reward to risk here is fantastic. If you have existing positions, it is best to just hold them. If the market breaks to a new high, we'll stop out and immediately buy calls. If the market breaks below last Thursday's low, we'll add to the put position. I wouldn't buy calls on the VIX here unless you are using the trade to hedge some other bullish positions. Silver looks like it could still go higher. You can trade silver using the SLV.