Tuesday’s Levels
Tuesday Recap: In our
prediction for yesterday we said the market would start lower by testing support
and then we said we expected a bounce once initial support was tested. In fact
on Monday, the cash Dow started the day lower by testing support near 10100.
The market then bounced and moved to test resistance near 10150 and the 20-day
exponential moving average. The cash Dow then moved higher, then came back down
to successfully test the breakout point, before bouncing into the close at
10179, up close to 40 points on the day and ending above the 20-day EMA – all in
the face of terrorist concerns.
While the cash Dow cleared its 20-day EMA, the NASDAQ 100 couldn’t quite make it
above that level, ending just under resistance. We’ll watch that resistance
level tomorrow.
Another market we’ll watch on Tuesday is Oil. If
the black gold continues to move higher it could eventually have a negative
impact on stocks.
^next^
Prediction for Tuesday: Once again we will likely come down
and test support. If this holds we’ll see a bounce and a potential move into
new recent highs.
On the cash Dow we’ll watch the 20-day exponential moving average as well as
chart support near 10150-60. If this breaks and holds, we could head down
pretty hard and fast with buyers rearing their heads near 10100. If this
initial support holds, we’ll likely see a bounce to potentially the 200- and
50-day moving averages, both near 10230.
On the cash S+P watch for an initial test of support at the 20-day EMA near
1104.75. If this holds, we’re likely to see a move past the 200-day moving
average near 1107.30 and then the start of a move towards the 50-day moving
average near 1117.31 – and near this level is where the market could start to
stall.
Portfolio Strategy: Right now we’re close to delta neutral
with a slight negative bias. We’re likely to get a little more negative
potentially when the Dow approaches its 200-day moving average or more likely
when the S+P approaches its 50-day moving average. Right now I’m lot looking
to take a big position in either direction.
Previous Day’s Results and Current Portfolio Status:
Daily Profit: $40
10100 Sept. Mini Dow Call Options
Long 2
Yesterday these options closed at 234, up 4.
Profit yesterday on this position was $40.
These options expire September 17.
10300 Sept. Mini Dow Call Options
Short 4
7/29 we sold 4 Mini Dow Call Options at 120
Yesterday these options closed at 125, unchanged.
Loss yesterday with this position was $0.
These options expire September 17.
Charts from www.stockcharts.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.
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.