If You Missed This Move Up, Here’s The Point You Might Want To Buy

Tuesday, March 30

We had a good day Monday with a profit of $340.

In our pre-open prediction for Monday, we said the cash Dow would move
higher.  That occurred.  Importantly, we said the Dow along with the other major
indices would break their respective 20-day exponential moving averages (EMA).
That occurred.  Further, we identified 10325 on the cash Dow as significant
chart resistance.  That proved an important point, as the cash Dow started the
day higher, moving to challenge the 20 day EMA in no time flat.  The Dow briefly
paused at this level, then moved higher and broke then 10325 level.  After this,
the Dow essentially traded in a range from 10325-50 for the balance of the day. 
Toward the end of the trading day the Dow broke lower, touching the 10300
level.  However, during this break the time/price opportunities were very
positive and buyers quickly slapped sellers into line, pushing the Dow to close
at 10329, just above the 10325 level. 

Importantly, technology once again led the market.  That’s good for market
bulls.  You can see this in the Dow, with Hewlett Packard taking the leadership
position much in the same way when a healthy Chicago Cubs Mark Prior takes
control of the lovable loser’s pitching staff.  As we predicted a few days ago,
the NASDAQ in fact moved past resistance before the other major averages and
provided clues as to overall market direction.  However, in the next few days
the NAS will approach 2000, and that could provide sellers a reason to get
excited — temporarily. 

Prediction for Tuesday: You’ll
recall that in my Monday prediction I said the markets would stair-step higher
from resistance to resistance.  After Monday’s big run-up, I expect that we’ll
take a little breather and create one of those stairs a little lower, testing
support.  And in fact, if you wanted to get long this market, here is a good
point to do it:

On the downside we’ll watch the 10325 level, then the 10300 level.  After
that, we could easily see a test of the 20 day EMA.  If the market reaches the
20 day EMA, that might be a good point to get long.  However, if the major
indices break this level, we might start to question this up move, but we won’t
be sellers until the cash Dow breaks and holds the 10220 level. 

On the upside, we’ll keep an eye on the 10350 level.  This might not get
broken on Tuesday, but ultimately the odds are it will likely get broken.  After
that, we’ll watch the 50 day moving average.  That’s where the real test is
going to occur.  If the markets can break and hold this level, many of the
mainstream market talking heads will jump on the bandwagon – a bandwagon we
identified near Dow 10,000. 

The market may have reached a critical point when the NAS touched it’s 200
day moving average.  We’ll have to wait and see, but that is potentially where
the market really turned around – and likely put in a significant bottom. 

Daily Profit: $320

 

10500 April Mini Dow Put Options: We are short one put option. Yesterday this
option closed at 232, down 108 points from the previous close of 340 (each point
is worth $5). Profit yesterday with this position was $540.

10000 April Mini Dow Put Options: We are short 4, put options. Yesterday this
option closed at 35, down 40 points from the previous close of 75. Profit
yesterday with this position was $800.

 

10400 April Mini Dow Call Options: On 3/16/04 we sold 2 mini Dow call options
for 94. Yesterday this option closed at 77, up 32 points from the previous close
at 45. Loss yesterday with this position was $320.

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, down 20. Loss on the day with this
position was $200.

Mini Dow Futures: On 3/29/04 bought 2 mini Dow futures at 10293.  The Dow
future closed at 10311. Loss yesterday on this position was $480. We are long
one mini Dow future.

 

Charts from
www.stockcharts.com