On The Nasdaq, We’re Likely To Test This Level

  • August 18, 2004
  • Mark Melin

Tuesday Recap: We had a good day
yesterday with a profit of $125.

In our prediction posted yesterday before the open of the cash market, I said
the market would likely start by gapping higher.  That was an easy
prediction given our pre-market indicators.  What was a little more
difficult was the predication that said the market would likely come down and
fill that gap, testing the 9950 level.  That’s what happened on Tuesday,
with the cash Dow starting the morning gap higher, breaking the 10,000 level. 
When this couldn’t hold, the market’s measure moved lower, then consolidated for
the balance of the afternoon, testing the 9950 level on several occasions before
settling at 9972, up some 18 points on the day.

Prediction for Wednesday:  We’re likely to start the day
lower and test support.  If we successfully test support, we’re definitely
likely to head higher – and potentially get some legs either Wednesday or
Thursday. 

Taking a look at the NASDAQ, I think over the
next few days we’re likely to test the 1800 and 1850 level.  Depending on
when these levels are touched and cleared, we might test the 1900 level over the
near term.

Portfolio Strategy: Yesterday we moved the portfolio
additionally delta positive.  We’re likely to remain that way until Tuesday
or Wednesday of next week, or the cash Dow touches the 10200 level, or if the
market breaks support.

Previous Day’s Results and Current Portfolio Status: 

Daily Profit: $125

10100 Sept. Mini Dow Call Options

Long 3.  On Tuesday we bought an additional call at 103, now long 4.

Yesterday these options closed at 102, up 3. 

Profit yesterday on this position was $40.

These options expire September 17.

10300 Sept. Mini Dow Call Options

Short 6.  On Tuesday we sold an additional call at 35, now short 7

Yesterday these options closed at 36, down 3. 

Profit yesterday with this position was $85.

These options expire September 17.

Charts from www.stockcharts.com

For questions e-mail, subscriptions@dowoptionstrader.com

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.