Ugh, we are still stuck in a trading range. Will we break the monotony or will finally find a direction?

1. Option Queen Letter
By the Option Royals
Jeanette Young, CFP®
, CFTe, CMT, M.S.
4305 Pointe Gate Drive
Livingston, New Jersey 07039
www.OptnQueen.com
optnqueen@aol.com
April 17, 2016
NEWS FLASH: we have negative interest rates in many investment accounts today. True they
are not called negative interest rates but rather inactivity fees. These are, fees assessed on
accounts with cash deposits that have not had trades for a given period of time. An inactivity fee
= negative interest rates. You would think that money sitting in a money market account, adding
to a brokerage firm’s book, would pay interest, right? No, you are charged a fee if you are not
actively investing or trading. It’s all about how you name the asset. So parking fees are
assessed; not all firms have them but many do.
Sadly, the NYMEX and COMEX trading floors, the last commodity trading floors open in New
York City, will close by the end of 2016. The NYBOT, before it was acquired by ICE, moved to
the One North End Avenue location in 2003 after the NYBOT trading floor, at Four World Trade
Center, was destroyed by the 9/11 attack. NYMEX had moved to this space years earlier to
accommodate a need for more room. NYBOT’s move to One North End Avenue rejoined the
commodities traded on NYMEX and NYBOT to a massive, common floor. NYBOT occupied
the left side of the seventh floor at North End Avenue adjacent the COMEX on the right. Our
pits were different from the COMEX in that we relied on a halo of screens circling the outer
edges of the ring for trade information, while the COMEX depended on electronic wall boards.
Downstairs, energy and platinum were traded on the third floor with escalators linking the
different products. . To us trading animal pit traders, food was an important part of our day,
naturally. Various dining options were available on the seventh and third floors with formal
dining on the tenth floor, fitted with a terrace overlooking the New Jersey skyline. Today, what
is left of the trading pits is confined to a portion of the building’s third floor. Food, while still
available, is not quite what it was. Traders have been relegated to local restaurants and, of
course, food trucks.
There was a time when increased volume in a particular pit on the trading floor would draw in
traders from surrounding rings as they vied to “get a piece of the action” in what can at best be
described as total mayhem. Ah those were the days: ugly jackets, course traders, paper stroon
floors and a bee-hive of activity. While today this is all gone, it is not forgotten: getting
spurred…….laughing, and enjoying the craziness of trading, both bad days and good days alike.
Remembering, even if there was a devastating day, the sun would come up tomorrow…..next
trade!

2. On a more sensitive note, it was reported that the Saudi’s have threatened to sell $750 Billion of
US assets if the US does not bend to its wishes regarding a pending bill in congress……This is a
serious case of too big to fail which doesn’t involve the US banks. We, here in the USA, should
take note that we have given other governments this sort of power by selling them our debt.
What if China didn’t like one of the proposed changes being made by congress? Okay now
what? Do we allow a foreign government to dictate to our congress and bend to their wishes?
Whether or not the bill is ridiculous (and by the way it isn’t), no foreign power should be so
audacious so as to dictate to us what we can and cannot do. Does our constitution give foreign
governments power over the bills pending in our congress? While we believe diplomatic
solutions should certainly be utilized to resolve the matter at hand, under no circumstances
should we allow foreign powers to make such bold threats in response to domestic matters..
Now what?
The S&P 500 lost 1.75 handles (points) in the Friday session closing just below the horizontal
resistance line. Although for the week, the index added some upside points, the volume fell
gradually as the week progressed. The market is close enough to the old high, achieved in May
of 2015, for it to realize a new high with just a few rally days. As a trader, one views the high
and wonders if the momentum will take the price higher just to see where the stops are above
that old high. As a floor trader we knew as we approached a high that the market would probe
to see what was above that level. All the indicators that we follow are curling over to the
downside but only the RSI is issuing a sell-signal. The Bollinger Band are beginning to expand.
Should there be follow-through on that expansion, increased volatility would result. It has been
a bit too quiet lately…..The most frequently traded price was 2074 and the highest volume was
2076. The 60 minute 0.2% by 3-box point and figure chart looks extremely positive and has an
upside target of 2101.39. The daily 1% by 3-box point and figure chart is also bullish although
the market clearly is in an area of price concentration. Until or unless this market breaks out of
the range and clearly makes a run for the May 2015 high, it will stay trapped in a trading range.
The situation at the moment is really not tradable until the market either fails to break out or
breaks out.

5. The NASDAQ 100 lost 7.50 handles (points) in the Friday session and remains below the
horizontal resistance line. We did see the market poke through the resistance line in the
Thursday session but close slightly below that line on reduced volume. The stochastic indicator
is about to issue a sell signal and the RSI has already done so. Our own indicator is rolling over
but no signal has been issued. The Bollinger Bands are steady at this time. The most frequently
traded price and the highest volume price was 4540 for the Friday session. The 60 minute 0.2%
by 3-box point and figure chart is bullish but not wildly bullish. The daily 1% by 3-box point
and figure chart has an upside target of 4951.93 and does look bullish. As with the S&P 500
until or unless this index breaks out of the trading range or confirms staying inside the trading
range we would avoid it. That said, if there is a break-out or a retreat, we would act on that
depending on the volume and the thrust.

8. The Russell 2000 did break out of its range in the Wednesday session and has followed through
that breakout by staying above the horizontal resistance line at 1116.80. The market close up
2.50 handles (points) in the Friday session. All the indicators that we follow continue to point
higher. Our own indicator, although pointing higher is curling over to the downside. The
volume is also fading which is of some concern. For a true break-out we should see increased
volume. The most frequently traded price was 1124.50 but 15.2% of the day’s volume was

9. traded at 1127.50. The 12 by 3-box point and figure chart is clearly bullish but also need to me
higher to establish a better break-out.

11. The US Dollar Index lost 0.238 handles (points) in the Friday session, closed within the
established trading range and left an outside day candlestick on the chart. This could indicate
that this market is about to change directions from down to up. An outside day candlestick or
bar prints a lower low than the previous trading day and a higher high than the previous day.
Both the RSI and stochastic indicator have issued a buy-signal. Our own indicator continues to
point lower. The volume for the week has been low. The most frequently traded price was
94.95 but 13% of the volume was seen at 94.675. The 60 minute 0.2% by 3-box point and figure
chart has a downside target of 90.694 and a downtrend line above it. The daily 0.5% by 3-box
point and figure chart also has a downside target, 91.717. We believe that this market is in a
trading range and that it is near support and likely will bounce from this or slightly lower levels.
That said, should the support level fail to hold for two-days on a closing basis, we believe that
lower levels will be in the future. Many multi-nationals are hoping for the US Dollar to weaken
so that they might regain some competitive advantage, or at the least a level trading field, both
here at home and abroad.

13. Crude oil lost 1.10 handles (points) in the Friday session. Although this market poked above the
horizontal resistance line on three occasions, this past week, it was unable to close above that
level. The movement on Friday decisively pushed the market inside its trading range. All the
indicators that we follow are issuing a sell-signal. The most frequently traded price was 42.50.
The 1% by 3-box point and figure chart has an upside target of 43.87. The daily 1% by 3-box
point and figure chart has a target of 44.75. The spread, although narrower than its historic

14. norm, between Brent and WTI is getting a little wider, it is still narrower than normal. It is
interesting to note that platinum and WTI are trading together in the same direction, which at this
time, is down. The spread is constant.

16. Gold gained 9.2 handles (points) in the Friday session but remained inside its trading range. The
RSI is pointing higher and the stochastic indicator is curling to the upside but has not issued a
buy-signal while our own indicators clearly is pointing lower. This is divergence in indicators
which is a caution flag for traders. The Bollinger Bands appear to be contracting slightly. The
nicest thing we can say about this chart is that it shows a range-bound market that is dull. The
most frequently traded price was 1230. The daily Market Profile chart shows a market stuck in a
range. The daily 1% by 3-box point and figure chart has an upside target of 1707.61. The 60
minute 0.3% by 3-box point and figure chart has an upside target of 1270.65. The spread
between platinum and gold remains steady but exceedingly wide and historically upside-down.
We would consider trading the spread, unfortunately we do not know when this will reverse and
there will be lots of risk in that trade. We will continue to watch it closely.

20. Risk
Trading futures, options on futures and retail off-exchange foreign currency transactions involves
substantial risk of loss and is not suitable for all investors.
Past performance is not necessarily indicative of future results.
Copywrite 2016 The Option Royals