Friday’s Levels
Thursday Recap:Â We had a good
day Thursday with a $235 profit.Â
In our prediction for Thursday, we said the
market would touch both sides of the flat line. That occurred. Further, we
said we would watch for a test of support in the morning and then a bounce, and
in fact we initially identified the 9900 level as our lower support zone
number. In fact on Thursday, the cash Dow started the day higher out of the
gates, then around mid-morning dropped below the flat line to test the 9900
level. When buyers emerged, the cash Dow once again traded on the opposite side
of the flat line to test the daily top near 9970. When this failed the cash Dow
came down to settle just below the flat line, ending down a slight .07 on the
day.Â
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Charts from
www.stockcharts.com
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^next^
Prediction for Friday:Â As we
expected, the cash Dow is likely to move higher into options expiration Friday
today. The market is starting to price in some potentially good news from the
OPEC meeting this weekend, so we’ll also want to keep an eye on oil today. A
break below $40 per barrel could lead to a market rally.Â
On the upside for the cash Dow we’ll watch the
9980 level initially. Although the pre-open futures are indicating a move above
this level, we could see some sellers emerge here. After this we’ll watch the
200-day moving average, which currently resides near 10037. This area is also
near some chart resistance near 10050 — an area the Dow has yet to hold. If the
market gets into this region Friday, it might not be a bad time to become a
light seller near the 200-day MA and then a bigger seller near 10050-60 on the
cash Dow.Â
On the downside, keep an eye on 9900. If this
breaks intraday it could signal trouble and a potential nasty test of the
200-day moving average on the S+P — and if we test this level again it could be
broken.
However, overall I expect a few moves both up and
down today with essentially sideways trading. At the end of the day I don’t
expect the Dow to close over 10000.Â
Portfolio Strategy:Â Right now
we’re delta positive. Yesterday I didn’t rotate the options because the premium
stayed strong in the options, I’ll potentially look to rotate towards the end of
the day.Â
Yesterday’s Results and Current Portfolio
Status:Â Â
Daily Profit: $235
Â
10100 June Mini Dow Put Option: We are short 2 put options. Yesterday it closed
at 250, down 25. Profit yesterday with this position was $250.
Â
10600 May Mini Dow Call Options: We are short 2 put options. Yesterday this
option settled at 1, unchanged. Profit yesterday with this position was $0.Â
Â
10600 June Mini Dow Call Option: We are short two call options. Yesterday it
closed at 5, unchanged. Profit yesterday with this position was $0.
Mini Dow Futures: Yesterday we sold one June mini
Dow at 9951. Yesterday it closed at 9954. Loss yesterday on this position was
$15. We are short one mini-Dow.Â
Trading Method:Â Mark Melin strategically short
sells options and then directionally trades within this short options portfolio,
always hedging one position against another with the goal of generating
consistent profits.
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DISCLAIMER:
Past performance is not necessarily indicative of future results.
There is a substantial risk of loss in commodity futures and options
trading. It is not suitable for all investors. Only you can determine
whether this trading suits your particular needs and risk tolerance.
All profit and loss representations are hypothetical and based on the real
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being made that any account will or is likely to achieve profits or losses
similar to those shown.