Many of the indices are in a trading range. Read on to discover where support and resistance are found.

1. Option Queen Letter
By the Option Royals
Jeanette Young, CFP®
, CMT, M.S. and Jordan Young, CMT
4305 Pointe Gate Drive
Livingston, New Jersey 07039
www.OptnQueen.com
optnqueen@aol.com
April 10, 2016, 2016
The new Fiduciary rule regarding the sales of investment products in retirement accounts puts a
restriction on investment advisors, cautioning them to only deliver products that are appropriate
for the client. This puts the onus on the compliance officer to make sure the brokers under his or
her watch comply. Another layer of regulation will be applied but little to nothing is being done
to safeguard the investors from the reaches of the insurance industry. This industry's huge lobby
in Washington safeguards its every move. These products, some of which can advertise that that
they are guaranteed, have had special permission to lull the public into feeling safe when, in fact,
they are no safer than mutual funds or ETFs. We remember in the mid 80’s when one of these
companies went belly up. Calling the holders of the annuities and explaining that they would
only get back 20 cents on each dollar invested in their safe and secure insurance policy was
certainly scary to observe. Time and time again we had heard from the investors that these were
insured product, sadly, not insured enough. The commissions on these products are the highest
in the industry and the commission trails continue until the relationship with the buyer ends.
As to the markets, we seem to be stair stepping higher so long as we don’t break the lows seen in
the Thursday session. There is confusion and bantering from the Fed as they try to keep the
markets calm. Unfortunately, they, the Fed, seem more concerned with market action than
monetary policy. This isn’t a good sign. We agree that the USA is the strongest of the
developed market economies but we also agree that the lion’s share of the upside has already
been seen in our markets. It is likely that commodities and emerging markets will bottom and
just might out-perform in the short term. Prudence is always advised and just remember that
these assets are still in a bottoming process and could stall.
The Rail Time Indicators reported that the March 2016 weekly average fell 14.2% to the lowest
levels seen since 1988. The blame was placed on greatly reduced shipments of coal. If you
remove coal, we still saw a reeducation in carloads but only by 1.2%. Coke, car parts and
waste/scrap were up 24.5%. The transportation of petroleum, both Canadian and US, was also
depressed. This tells us that there is still weakness in demand for many commodities that are
being transported.

2. Although the S&P 500 futures rallied in the Friday session it printed an inside day on the chart,
we neither took out the previous high nor the previous low. The indicators are diverging with the
RSI pointing higher and our own indicator pointing lower. The stochastic indicator looks as
though it could issue a buy in a session or two. The Bollinger Bands are contracting. The
market looks as though it is rolling over to the downside but might just be trading in a range
defined by horizontal lines at 2075, mid line at 2050 and lower line at 2007. The daily 1% by 3-
box point and figure chart, although positive, is in an area of congestion. The 60 minute 0.2% by
2-box point and figure chart has a downside target of 1983.09 and a current internal downtrend
line. This chart looks as though this market is rolling over. The most frequently traded price
was 2043 and the highest volume was seen at 2041.75. Respect the aforementioned horizontal
lines and remember that once the Bollinger Bands stop contracting that they will expand again
bringing increased volatility to this market.

5. Although the NASDAQ 100 declined 0.75 handles (points) in the Friday session, we have a doji-
like candle stick on the chart. The Bollinger Bands continue to contract while both the stochastic
indicator and our own indicator continue to point lower. The RSI is going sideways. Should
4441.50 fail to support the market, we will see 4365. On the upside, should we close above
4532, on a weekly basis, we will likely rally to 4695. The most frequently traded price was 4500

6. but the heaviest volume was seen at 4462. The daily 1% by 3-box point and figure chart has an
upside target of 4951. The 60 minute 0.2% by 3-box chart has a downside target of 4296.85 and
really needs to hold 4445. The S&P 500 and the NASDAQ 100 are moving together.

9. The Russell 2000 rallied 4.90 handles (points) in the Friday session and remained below the
downtrend line. The Bollinger Bands are contracting slightly. The indicators are showing some
confusion with the RSI pointing higher, our own indicator pointing lower and the stochastic
indicator trying to bend up to issue a buy-signal, although that signal is days away. The volume
is down. The down trending channel lines are 1103 and 1080. The most frequently traded price
was 1098 and the heaviest volume was seen at 1091.50 where 6.3% of the day’s volume was
traded. If this market can close above 1116.80 for two days, you will see a rally to 1150.
Should the market trade below 1059.50 you will see 1052.10 and below that, 1025.

13. Crude oil rallied 2.40 handles (points) in the Friday session. All the indicators that we follow
herein continue to issue a buy-signal. The volume is picking up, due to fear, short-covering or
boredom, we are not sure. The US Dollar weakness has helped crude. The fact is that with all
the attention on crude oil, it still remains stuck in a trading range with resistance at 41.90 and
support at 34.82 and 33.60. Until or unless this market breaks above or below those levels, we
will continue in our current trading range. The daily 1% by 3-box point and figure chart has an
upside target of 44.75. The 60 minute 1% by 3-box point and figure chart has an upside target of
43.87 and the price just broke above the downtrend line. The most frequently traded price in the
Friday session was 39.58 but the highest volume was seen at 39.28.

16. Gold rallied in the Friday session adding 3.3 handles (points). Gold has enjoyed the currency
wars and now is enjoying the US Dollar weakness. We still remain in a trading range between
1193-1206 on the downside and 1260.90, 1280.70 and 1287.8 on the upside. The Bollinger
Bands are contracting. The RSI has bent slightly to the downside and the stochastic indicator is
bending over to the downside but has not issued a sell-signal. Our own indicator continues to
issue a buy-signal. The volume is dropping which is not good for the bulls. The upward
trending channel lines are 1223.60 and 1245.76. The 60 minute 0.25% by 3-box point and
figure chart has an upside target of 1269.11. The 1% by 3-box point and figure chart has an
upside target of 1707.61. That said, there is still a downtrend line on the chart, halting
movement to the upside. The most frequently traded price was 1237.50. So long as gold
remains in its trading range, we will continue to treat it as range-bound. Just as an aside, the
platinum gold spread is huge and looks somewhat lopsided.

19. Following a week of total indecision, the US Dollar index closed the Friday session at 93.80 with
the day's session producing a strong thrust to the downside. Since the index's setting of a lower
high on January 16th, the dollar has been trending to the downside. Following the March 17th
break of the 95.64 support line, the index has been trending to the lower end of a trading range
that has been in effect since March of last year. Last week the index broke the 95.21 support
level and currently on course to hit 93.32. The Bollinger Bands are gently expanding with the
upper band at 96.78 and the lower band at 93.80. The 20 period simple moving average is 95.29,
the 5 period exponential moving average is 94.50 and the index is below both. The RSI continues
to point lower while our own indicator has not issued a signal. The 30 minute OHLC 0.1% x 3
point and figure chart continues to be in a down-trend with one countertrend internal trend line.
There continue to be activated downside targets at 93.48 and 90.54 with one unactivated
downside target at 92. On the upside, there is one inactivated target at 95.76. The dollar likes
trading ranges and looking at the charts, we can' help but notice how both the price and the
volatility of this instrument have become decidedly inflated in recent years

20. Risk

21. 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.
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