UPDATE

The SPY is closing today below the 50 DMA, so Monday we'll start adjusting our Feb position.

Update

Looks like the Dec high around 111.75 & 50 DMA around 111.35 may be the next stop area for the $SPY. We'll adjust if it closes below there.

We made a new Jan closing high on the $SPY today. When we close decisively above 115.15 we will adjust our position. http://bit.ly/7GvL5s

UPDATE - The $SPY tested 115 and sold off remaining in the 115/113 Stage 3 channel. Our position is in profit and the Greeks look good.

TRADING SYSTEM SIGNAL - OPEN FEB POSITION

Our "window of opportunity" is beginning to open up and it's time to initiate our February position. It's a new year and with it comes the hope that the economic recovery will be confirmed by the guidance from the 4th quarter earnings announcements to come out over the next 2 or 3 weeks. Just in case things aren't as rosey as the Market has priced in we'll make sure our position is properly hedged to protect us from a downside earnings season surprise. Volatility has come down to more comfortable levels with the VIX closing under 18 on the 11th. But we'll stick with our Calendar and Butterfly strategies in case the apple cart gets upset.

We are in a Market Structure Stage 2 on the Daily Chart, and a Stage 3 consolidation occurring on the 30m Chart. So we'll set up for business with a Calendar Spread at the 114 strike:

Calendar Spread

Open - 6 Mar/Feb 114 SPY Call Calendars for about $0.98

Hedge the Calendars:

Open - 1 Feb 108 SPY Put at about $0.98 (1 covers 6 Calendars)

Conditions are beginning to form for the opening of our February Income Spread Position. http://ping.fm/UjLLm

Head's Up! Next week we'll start monitoring the Market for an entry signal for our February Income Spread position. http://ping.fm/wSQbj