Here Are Wednesday’s Significant Levels

Although the gains were somewhat modest on Tuesday, it was nonetheless a
significant day for the markets. For its part, the S+P cleared strong
resistance near 1125, the NASDAQ held its own at the 2000 level and the Dow
cleared and held 10325 chart resistance.

The day started with the Dow essentially trading between
our predicted 10300 support and 10350 resistance, with 10325 serving as a
mid-reference point. For much of the day it looked like the Dow would
consolidate, but strong buy interest was evident whenever the Dow moved to
10300. The fact that buyers wouldn’t even let the market’s measure touch its 20
day exponential moving average provided a clue that the market might be ready
for another move higher. As such, at the end of the day the Dow sprinted past
10350 resistance to close at 10381, up some 52 points.

Prediction for Wednesday: I expect to see
strength between now and Thursday. However, we could see a test of support
first. Further, when the market reaches this level you might want to sell:

If the various markets hold their respective support
levels, in particular S+P 1125 and Dow 10350, I then anticipate a move to touch
the 50 day moving average. If the market reaches this level before the Thursday
at the lunch hour, I would sell the markets at that point. I would expect that
once the markets touch this level they will back off for a while before
attempting another move higher. Further, Friday’s unemployment number might
keep a lid on any significant market activity above the 50 day moving averages.

Portfolio Strategy: We’ve been
essentially delta positive ever since the Dow double bottomed at 10,000 and
right now we continue delta positive. However, we’re going to get ourselves
negative once the Dow touches the 50 day moving average, which currently sits
near 10470. Stay close to your e-mail, we may have a trade this morning.

Daily Profit: $405

10500 April Mini Dow Put Options: We are short one put
option. Yesterday this option closed at 190, down 42 points from the previous
close (each point is worth $5). Profit yesterday with this position was $210.

10000 April Mini Dow Put Options: We are short four put
options. Yesterday this option closed at 30, down 5 points from the previous.
Profit yesterday with this position was $100.

10400 April Mini Dow Call Options: We are short two call
options. Yesterday this option closed at 90, up 13 points from the previous
close at 77. Loss yesterday with this position was $130.

9700 April Mini Dow Put Options: On 3/24/04 we bought 2
9700 mini Dow put options for 75. Yesterday they closed at 10, unchanged. Loss
on the day with this position was $0.

Mini Dow Futures: On 3/30/04 we bought 1 mini Dow futures
at 10358. The Dow future closed at 10357, up 46. Profit yesterday on this
position was $225. We are long two mini Dow future.