Here’s What To Do If Volatility Goes Even Lower

  • November 12, 2004
  • Mark Melin

Thursday, November 11

Thursday Recap: Our
portfolio had yet another profitable day Thursday as the cash Dow finally broke
out of it’s trading channel.
The day
started gap up for the Dow, then it moved lower to test the lower end of the
trading channel we have identified for the past five days. 
When this test was successful, the market’s measure took off higher,
first breaking the trading channel, backing off and then moving higher going
away to end the day at 10470, up some 84 points.  



Volatility
continued to slide on Thursday and is currently trading near 13, closing just
below the recent months lows.  Ultimately
I think we could see volatility go even lower, but once it reaches the 10-12
range it could be a screaming buy. 



Prediction
for Friday:  From this point going
forward I think we’ll stair-step higher with up days followed by consolidation
followed by a sharp up day.  As
such, on Friday we might see some action on both sides of the flat line. 
We’ve pretty much reached the target I established a few weeks ago. 
We’ll have to watch the markets to see if we can bust through this
level and move to test the 10550 level. 



Portfolio
Strategy:  Right now we’re delta
positive.  We might look to collect
some additional premium on Friday and may place that ten year note trade.Â