Monday’s Levels

Early in the week last week the market prediction was calling for a test of
moving average resistance.  Likewise we got delta positive early in the week and
got close to delta neutral on Friday.  This week many indexes in fact touched
their first level of moving average resistance, including the cash Dow.  On
Friday the cash Dow started the day by testing both sides of the flat line,
trading in a coil fashion from our predicted support level near 10100 and
predicted resistance.  A late afternoon buying binge had the cash Dow closing
just under its 20-day MA, with the Dow closing at 10140, up some 10 points on
the day.

 

Like the cash Dow, the NASDAQ 100 spent the week moving higher and testing
moving average resistance on Friday.  This moving average resistance is a good
place for the market to take a pause before potentially re-grouping.

^next^

Prediction for Monday:  We’re going to start the day lower on
terrorist-induced selling.  The real question is how low will this market go? 
On the cash Dow let’s watch for initial support near 10100-10090.  If this
breaks and holds, we’ll likely get a move to 10050, and then potentially
10,000.  However, I wouldn’t be surprised to see a test of this initial support
and then a potential bounce with half gap fill, and then a more significant test
of support. 

 

Portfolio Strategy:  On Friday we got the portfolio close to
delta neutral.  We are going to watch the market’s reaction at support levels
and may have a trade today or tomorrow. 

Previous Day’s Results and Current Portfolio Status:  

Daily Loss: $250

10100 Sept. Mini Dow Call Options

Long 3

We sold one at 217, for a loss of 8. 

Yesterday these options closed at 230, up 5. 

Profit yesterday on this position was $10.

These options expire September 17.

 

Short 4

7/29 we sold 4 Mini Dow Call Options at 120

Yesterday these options closed at 125, up 13. 

Loss yesterday with this position was $260.

Charts from www.stockcharts.com

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Trading Method:  Mark Melin strategically short sells options and then
directionally trades within this short options portfolio, always hedging one
position against another to generate consistent profits.

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Past performance is not necessarily indicative of future results.

There is a substantial risk of loss in commodity futures and options

trading. It is not suitable for all investors.  Only you can determine

whether this trading suits your particular needs and risk tolerance.

All profit and loss representations are hypothetical and based on the real

time signals generated by The Dow Trader.  The results have not been

adjusted to reflect slippage or commission charges.  No representation is

being made that any account will or is likely to achieve profits or losses

similar to those shown.