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For: Monday 03-15-2010

Buck on the Brink?

The US dollar index has been in a well defined trend channel, starting the end of last year. Longer term we have the market into an old congestion area from the middle of last summer. Monday’s action held trend line and staved off the Friday decline. If we see a close below the line we will look to buy put spreads to try and capture the anticipated decline.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: On close below 7995 versus the June futures in the next week, buy June 79-76 put spread for a debit if 67 points a limit. Risk three quarters of the premium paid on the trade initially. (>$510 not including commissions and fees), Look to take profits if the market trades to the 7750 level or doubles in value.