Here’s Why You Might Want To Take Some Off The Table

  • September 9, 2004
  • Mark Melin

Wednesday Recap: Yesterday
Fed Chairman Greenspan gave us what we were looking for: a positive outlook on
the economy.  Further, bond traders
in Chicago viewed the comments as confirming their beliefs that a rate hike
after September is not a done deal.  Ultimately
that lead the market to touch both sides of the flat line. 
I was looking for a test of 10400 yesterday, but we couldn’t get past
yesterday’s highs — despite Fed chairman Greenspan’s positive comments on the
economy.    On the day the
cash Dow, in choppy action, closed down some 30 points. 
Is that telling us something?



Sellers
were in control of technology stocks on Wednesday. 
For it’s part the NASDAQ 100 once again tested — and failed — at
its 50-day moving average.  That
could be telling us something. 



Prediction
for Thursday:  We could once again
touch both sides of the flat line on Thursday with an upside bias. 
There are a few keys to this market to watch. 
First, I’d like to see tech stocks climb above and hold their 50-day
moving averages.  If this happens,
we could see some traction in all markets. 
If this doesn’t happen, we could see a pull back in all stocks. 
A pullback at this point in time wouldn’t be a surprise. 
While over its 200-day moving average, the Dow is bumping up against a
downtrend line (not shown) and is overbought on a daily basis. 
After a massive 500-point up move, I wouldn’t be surprised to see a
wave down at some point.  You will
also recall that last week in our portfolio strategy section we mentioned that
we would want to get neutral or negative Thursday (today) or Friday. 
As such, now might not be a bad time to take a little off the table. 



Portfolio
Strategy:  Right now we are delta
positive and have been for the past few weeks. 
I think its time to move to a neutral and potentially negative portfolio
stance.  This doesn’t change the
longer term outlook, rather we could start to see a short term dip in price
action. 

Delta: +146.6

Theta: -15.32

Maintenance Margin: $5,270 (May vary from broker to broker.)

Previous Day’s
Results and Current Portfolio Status: 

Daily Loss: $270

10100 Sept. Mini Dow Call Options

Long 5. 

Yesterday these options settled at 240, down 20. 

Loss yesterday on this position was $500.

These options expire September 17.

10300 Oct. Mini Dow Call
Options

Short 5. 

Yesterday these options settled at 167, down 8.

Profit yesterday with this position was $200

These options expire October 15

10400 Oct Mini Dow Call
Options

Short 1. 

Yesterday these options settled at 114, down 6

Profit yesterday with this position was $30

These options expire October 15