If We Take Out 10,400 On The Dow, Then This Is What I See…

We
had a good day yesterday with a profit of $105.
Monday was one of those trading days I love
—

the market moved against our position yet we still profited.
The portfolio was delta negative, looking for a move lower to the
10300-10250 level. While the cash
Dow started lower, testing support near 10350, it then proceeded to bounce and
test the highs of the day near 10400. The
market then moved to trade in a consolidative, coil range for the balance
of the day, ending the day up near 4 points to end at 10391, with the Dow
futures ending up 7 full points.

Like
the Dow, the NASDAQ was up fractionally on after trading on both sides of the
flat line. Make no mistake, we’ll
likely see a move over the summer highs at 2050 before year end — and when
that happens the market could take off. However,
in the near term we could see a potential move to fill the gap.

The
ten year note traded in a wide price range on Monday, but ended in the vicinity
of where it started at 112.12. In
similar fashion to the stock indices breaking resistance, when support is broken
on the ten year note we could see it fall to 110.

Prediction
for Tuesday: I’m going to watch
for a potential move to the 10250-10300 level on Tuesday, and this will be a
significant buying opportunity at a test of the previous breakout point.
This could be where bulls will gather courage to take the index break and
hold above the 10400 level. Once we
break that 10400 level and hold that level, we could then see the market move to
the 10500-50 level rather quickly.

Portfolio
Strategy: We’re still delta
negative, yet I’m going to once again look for the opportunity to get
additionally delta positive as well as potentially set up a straddle in the ten
year note if the right opportunity presents itself.