Thursday’s Levels

Like the Dow, the cash S+P bottomed just above 1115 and then moved to take
out resistance.  Unlike the Dow, the S+P closed up close to 6 points on the
day.  After a big down move, this was a typical retracement.  We’ll talk more
about each of these points in today’s prediction.

The NASDAQ was a strong performer on Wednesday, up some 17 points compared to
the Dow’s lackluster decline.  However, the NAS continues to make lower lows and
is approaching resistance near 50 on the RSI line. 

Prediction for Thursday: In Wednesday’s prediction, we said
we thought the markets would ultimately move lower.  I think that is still the
case. 

On the cash Dow, we’re going to watch the 10330 level again.  A break and
hold of this level would lead us to question our bearish thoughts.  If that
level breaks, watch the 20-day EMA currently located at B on the chart at the
top of this report.  If this is broken to the upside it could lead to a test of
the 50-day MA.  When the Dow is testing 10330 its RSI line will likely be
testing resistance near 50.  I think there is
approximately a 65%
chance that 10330 and 50 RSI will hold and that we will then explore the
downside.  If this happens, watch the 10250 level (point A on the chart at the
top of this report).  If this breaks, we’re heading lower to touch the Bollinger
band and/or 10,000 chart support (point D).

On the cash S+P, let’s watch the 1125 level then resistance near 1130, which
I think will hold. If we move to the downside, lets keep an eye on the double
bottom we identified in the chart above.  If that breaks, watch for a test of
the lower Bollinger band and chart support near C on the chart above. 

Portfolio Strategy: We are delta negative and we will remain
with a negative bias.  However, if the cash Dow closes above 10330 and then
again above the 20 day EMA we may look to change our delta at each level. 

Portfolio Status and Yesterday’s Results:

Daily Loss: $150

 

9900 May Mini Dow Put Options:
We are long 2 put options.  Yesterday this option settled at 47, down 18.  Loss
yesterday on this position was $180. 

 

10100 May Mini Dow Put
Options: On 4/19/04 we sold 2 Mini Dow Put Options, one at 70 and the other at
66.  Yesterday this option settled at 85, down 22.  Profit yesterday with this
position was $220. 

 

10600 May Mini Dow Call
Options: On 4/19/04 we sold 2 Mini Dow Call Options at 66.  Yesterday this
option settled at 35, unchanged.  Profit yesterday with this position was $350. 

 

10600 June Mini Dow Call
Option: On 4/21/04 we sold 1 Mini Dow Call Option at 97.  Yesterday it closed at
103.  Loss yesterday with this position was $30

 

Mini Dow Futures: We are short
one mini Dow future.  Today it closed at 10300, up 32.  Loss yesterday with this
position was $160.  We are long one mini Dow future.

 

Mark Melin

 

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

 

DISCLAIMER:

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.