This Could Be Resistance On The Dow

  • September 13, 2004
  • Mark Melin

Friday Recap:  We
had a good day Friday with a profit of $260.

In
our prediction posted Friday morning before the cash open we said:
 “We could have a
significant day Friday, one that could define the trend of the market for some
time to come.  In particular I’m
going to watch the tech indices to see if they not only hold their moving
average support, but also if they can break into new highs.” 
That’s pretty much what happened Friday, as the market-leading NASDAQ
broke into new highs and ended the day up some 24 points. 



While
the markets ended higher, it didn’t look that way in the morning, as all the
major indices started significantly lower. 
The weakest index was the Dow.  For
its part the market’s measure broke moving average support intraday and tested
SAR trend support.  It found SAR
support, and then took off to the upside, ending the day up some 24 points to
end at 10313. 

Prediction
for Monday:  The market is likely to
start the day higher, but we could run into some resistance. 
Ultimately I’m looking for the Dow to outperform the NASDAQ. 
On the Dow we’re going to watch for a test of the recent highs near
10360 — which could be the highs for the day. If that breaks we could see a
touch of 10400.  On the downside,
we’ll watch support at the 200-day moving average and then again the SAR. 
On the upside for the NASDAQ we’ll watch for a quick test of 1900. 
If this breaks and holds all the markets could run higher. 



Portfolio
Strategy:  We might trim our delta
positive position on a move higher today, remaining positive but pulling it a
little closer to neutral.

Previous Day’s
Results and Current Portfolio Status: 

Daily Profit: $260

10100 Sept. Mini Dow Call Options

Long 5. 

Yesterday these options settled at 212, up 13. 

Profit yesterday on this position was $325.

These options expire September 17.

10300 Oct. Mini Dow Call
Options

Short 5. 

Yesterday these options settled at 142, up 2.

Loss yesterday with this position was $50

These options expire October 15

10400 Oct Mini Dow Call
Options

Short 1. 

Yesterday these options settled at 95, up 3

Loss yesterday with this position was $15

These options expire October 15

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