Thursday’s Levels
Technical Analysis and Trading Strategy
By Mark Melin, technical analyst
Wednesday
Recap: We had a good day Wednesday with a profit of $300.
Â
In our prediction posted Tuesday morning before
the open of the cash market, we said we could see the market touch moving
average resistance. That’s pretty much what happened on the cash Dow, but it
didn’t always look like that would be the outcome. The market started the day
lower, initially testing then breaking 10050 support. The market then moved
lower to test the lower end of the support line we drew in yesterday’s intraday
one minute Dow chart and then proceeded to bounce higher to ultimately test the
20-day exponential moving average near 10147.  Â
Â
For its part the S+P climbed above resistance on an intraday basis but couldn’t
close above the level we identified on Wednesday. Let’s call that neutral.Â
Likewise, the NASDAQ climbed over initial resistance at 1865 but couldn’t hold
that level. That’s a little concerning, and we’ll have to watch the tech index
today for signs of overall market strength.Â
Â
One factor keeping a lid on stocks today was oil. The black gold increased in
value by $1.06, moving over resistance on concerns of Russian oil supply
instability. If this continues we could see a resulting fall in stock prices.
Prediction for Thursday:Â There
is a pretty good chance that we’ll see a continuation move higher on Thursday,
with further tests of moving average resistance. Additionally, I’m going to
look for the Nas and S+P to outperform the Dow. On the cash Dow that means
we’ll first watch for a test of the 20-day EMA, currently located at 10147
level, then a more significant and telling test near the 200- and 50-day moving
averages near the 10217-22 level. On the S+P that means watching the 20-day EMA
at 1105.31, the 200-day at 110641 and the 50-day at 1116.42.
Portfolio Strategy:Â Right now we are delta positive, but today
we might start to leg into our spread and take profits as we reach our moving
average target area.Â
Previous Day’s Results and Current Portfolio Status:Â Â
Daily Profit: $300
10100 Sept. Mini Dow Call Options
Long 3
Yesterday the closed at 225, up 20.
Profit yesterday on this position was 300.
These options expire September 17.
Charts from
www.stockcharts.com
For questions e-mail,
subscriptions@dowoptionstrader.com