Thursday’s Levels

portfolio to delta positive. Considering we had the transaction costs of

establishing a new options position, we had an acceptable day Wednesday

with a profit of $90, coming off a good day yesterday with a $415 profit.

In our prediction for Wednesday, we said the cash Dow would touch both

sides of the flat line. That occurred. Further, we said the cash Dow

would likely first test Dow 10,000 before we got a bounce. In fact on

Wednesday, the cash Dow started the day moving back and forth on both

sides of the flat line before moving down to hard touch 10,000. Once the

Dow touched 10,000 it quickly bounced, distancing itself from this support

as quickly as Richard Clarke pushed aside President Bush. The Dow then

moved into our predicted resistance region near 10100, where sellers

quickly took control. The Dow then stair-stepped lower, with one quick

fall to 10025, before an equally quick bounce to once again close in the

consolidative region, this time ending at 10048, down some 15 points on

the day.

On Wednesday we saw a rotation from the energy sector to the technology

sector. On the day the NASDAQ composite was up some 7.68 points while the

other major indices flailed about. This rotation is evident in the

advance decline line, which on the NASDAQ was positive but on the big

board was negative. For a technical standpoint the NASDAQ 100 formed what

looked like a double bottom and moved back above it’s 200 day moving

average. For its part the NAS composite is holding support at 1900. Now

is a logical time for piles of institutional cash the sidelines to move

into this sector – and there are piles of it taking a rest waiting for the

right opportunity. While the rotation into tech is long-term positive for

the market, a move away from energy might initially hold down the

industrials to an extent. This is some of what we witnessed on Wednesday.

The S+P is somewhat similar to that of the Dow. Both indicies made lower

lows and lower highs on the day, but ultimately held support. The question

is, can we build a base and move higher?

Prediction for Thursday: Yesterday we
positioned our portfolio delta

positive, which should provide clues to how we feel the market will

perform on Thursday. There is a good chance we’ve put in an important

bottom. Yesterday the Dow needed to test 10,000 again before it got legs,

and that occurred. The market is likely going higher today, however,

we’ll be watching what happens at these points:

On the upside I expect the Dow to move higher and initially test the

10100-25 region. There is a 70% chance this resistance is broken and

we’ll move to 10180-10200. After that keep an eye on 10250 and then 10300

and importantly 10320. I don’t think the market is getting past these

higher levels today, but if we clear resistance those are the numbers to

watch longer term. Now, if the Dow can’t muster past resistance today –

with some decent momentum behind it – we could see some downside pressure.

We’ll first watch the consolidative region near 10050 and then again much

more significant support near 10,000. A break and hold under 10,000 would

turn us negative real quick. Keep an eye on the NASDAQ 100 and the NAS

composite. If the 100 dips below its 200 day and the composite moves

below its 200 day, watch out below!

Portfolio Strategy: We may have put in a bottom here, and we’ll
likely

stay delta positive until we reach our upside target or until the Dow

breaks 10,000 and we get stopped out. However, if we break 10,000 we’re

going negative pretty quick.

New Trade Recommendation: On a stop order,
sell 2 June mini Dow 9954 stop.

Daily Profit: $90

10500 April Mini Dow Put Options: We are short one put option. Yesterday

this option closed at 480, down 10. Profit yesterday with this position

was $50.

10000 April Mini Dow Put Options: On 3/16/04 we sold 2 mini Dow put

options for 137 points (each point is worth $5). On 3/24 we sold 2 mini

Dow put options for 151. Yesterday this option closed at 145, down 20.

Profit yesterday with this position was $260.

10400 April Mini Dow Call Options: On 3/16/04 we sold 2 mini Dow call

options for 94 points (each point is worth $5). Yesterday this option

closed at 30, down 2. Profit yesterday with this position was $10.

10100 April Mini Dow Put Options: On 3/19/04 we bought one mini Dow put

option for 155. Yesterday this option closed at 190, down 20. Loss

yesterday with this position was $100.

9700 April Mini Dow Put Options: On 3/24/04 we bought 2 9700 mini Dow put

options for 75. Yesterday they closed at 70, down 5. Loss on the day with

this position was $50.

Mini Dow Futures: On 3/24/04 we bought one mini Dow option for 10043. We

are now flat the Dow future. Loss yesterday with this position was $80

Good trading,

Mark

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