Thursday’s Levels
Wednesday Recap: In our
prediction for Wednesday, we said the cash Dow could touch both sides of the
flat line and that we expected an upside bias going into the end of this week.Â
In fact on Wednesday, the markets started to the downside but overall held up
despite yesterday’s big gains. After an early pullback that held initial chart
support and moving average support, the markets then proceed to move steadily
higher in a coil formation. On the day The Dow was down just 7.73, and the S&P
500 up just 1.90, with the NASDAQ the bigger relative performer, up a strong
11.50 and clearing its 50-day MA.Â
Prediction for Thursday:Â We
will likely move higher and challenge overhead resistance. On the cash Dow
we’ll watch the 10170 level with an eye on our longer-term target near the
10200-50 level. While the NASDAQ was a good performer on Wednesday, its
relative upward price momentum could be slowed today, and there is a chance the
Dow could lead to the upside.Â
In terms of the S+P, as you can see in the chart above, the broad-based index
touched the 50-day MA yesterday and couldn’t get past this level. We’ll keep an
eye on this level today, and I expect it to be broken. When this happens, the
50-day MA will then become support. Overall I’m looking for the S+P to test the
1125 level, and this could be the top of the market and determine the near-term
direction of the market.Â
Yesterday’s Results and Current Portfolio
Status:Â Â
Daily Profit: $45
Â
10100 June Mini Dow Put Option: We are short one put option. Yesterday it
closed at 125, down 5. Profit yesterday with this position was $25.
Â
9700 June Mini Dow Put Options: On 5/24/04 we sold one put option for 70.Â
Yesterday this option closed at 30, down 2. Profit yesterday with this position
was $20.
10600 June Mini Dow Call Option: We are short one call option. Yesterday it
closed at 5, unchanged. Profit yesterday with this position was $0.
Mini Dow Futures: We came into the day flat the mini Dow future.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 to generate consistent profits.
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