Monday’s Levels
Monday, June 7
Friday Recap: We had a good day
Friday with a profit of $95 and a good week with a profit of $165.
On Friday the unemployment number was released,
and while the jobs creation number was slightly north of expectations, the key
was that the number wasn’t so strong to scare the bond market. On the back of
the strong – but not too strong – jobs number, the markets moved significantly
higher, first breaking 10250 and then consolidating in that range before
touching 10300 predicted resistance, and then backing off into the close to end
near 10250 resistance, finishing at 10242, up some 47 points on the day.Â
One component helping stocks on Friday was the
fact that oil moved down to trade near the 36 level. You’ll recall that in our
May 27 report we noted that we said the market could move to this level.Â
^next^
Prediction for Monday:Â On
Friday afternoon we told members that, even though the stock market was selling
off late in the day it still looked strong and in fact we issued a buy
recommendation. That strength is likely to carry through to Monday. The
question is, where will the markets find resistance?
On the Dow, we’ll watch the 10330-30 level. We
may not clear that level today, but ultimately I think we will. When we clear
that level the Dow could challange 10400 and then again much more significant
resistance near 10500.Â
On a longer-term basis I expect stocks to move
higher going into the June 30 D-day event of handing over partial control of
Iraq and the Fed’s likely move on interest rates. I think at this point, the
market will be oversold on a daily and weekly basis. Further, at that time I
expect volatility to reach yearly low levels — and this will issue major sell
signals for the stock market.Â
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On the S+P I expect an early test of 1129.Â
Ultimately I expect a move to the 1150 level in the S+P before the end of the
month.Â
Portfolio Strategy:Â Right now
we are delta positive. We are likely to get additionally delta positive today
if the market presents a buying opportunity.Â
Previous Day’s Results and Current
Portfolio Status:Â Â
Daily Profit: $95
Â
10100 June Mini Dow Put Option: We are short one put option. Yesterday it
closed at 50, down 30. Profit yesterday with this position was $150.
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9700 June Mini Dow Put Options: On 5/24/04 we sold one put option for 70.Â
Yesterday it closed at 10, down 7. Profit yesterday with this position was $35.
10600 June Mini Dow Call Option: We are short one call option. Yesterday it
closed at 5, down 7. Profit yesterday with this position was $35.
Mini Dow Futures: We came into the day flat the mini Dow future. We sold one
mini Dow at 10242 and bought a future at 10261. Loss with this position was
$95.  The mini-Dow closed at 10250. We are now flat the mini Dow.Â
Trading Method:Â 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.