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Market Trend
The trend is down with a signal on the S&P e-mini from the weekly charts back on September 4th. However the daily charts look extremely oversold and we suspect that there might be a bit of a bounce this week.

Commercial Traders
The commercials are continuing to sell the market and are closing in on their record short levels set in March 2001. Like we mentioned last week the S&P dropped to the 770 point level before it hit bottom in 2002 so we could have a ways to fall before we're done.

Seasonal Tendencies
Seasonally October tends to be a very strong month and this week is historically bullish, with the Monday before October expiration up 23 of 27 times and 7 straight times. The Dow has been up 4 of the last 7 times on the Friday expiration day itself.

Trades to take
It seems that we have conflicting data, with the long term trend down, but the daily charts deeply oversold. In addition we have a seasonally bullish period coming up and commercial traders are still selling. So what does this mean? Stand by and chill out. The hardest thing to do as a trader is to sit by and wait patiently, but we've had a couple of good months and we not only want to make money, but keep it as well.

We only want to trade high probability set ups and we're just not seeing any at the moment. However we are entering earnings season, which is a good time to use Strangles so we'll be on the look out for those and keep our readers posted.

Last Week's Trades-

I was talking to a friend of mine who works with hedge funds in London. She told me that many of her clients are down double digits over the last month and half. At OptionSpreadTrades.com we are looking at back to back monthly double digit gains, and as of 10/10 we are up 17% for October and we only entered our first trade last Tuesday.

We closed out two trades this week, one on Harley Davidson (HOG), which we entered on 9/18 for $1.90 and closed out on Friday 10/10 at $7.50 for a $560 per contract profit. That's a 294% return on investment in 22 days.

We closed out Masco Corporation (MAS) which we entered for $2.00 on 9/30 and exited on 10/10 at $5.00 for a 150% return in 11 days.

We entered Ryland Group (RYL) on 10/7 at $2.00. It is now trading at $2.45 suggest you move the stop to better than break even at $2.20.

We set up a strangle trade for Nokia (NOK), which did not execute and we now recommend CANCELING this trade. Due to the volatility in the market the bid/ask spread has gotten too wide, which would make it difficult to turn a profit on this trade.

If you'd like to see the video version of this forecast you can click here
http://www.youtube.com/watch?v=5JPWHOq8vTk