We May Test Resistance – Here’s Why

  • September 23, 2004
  • Mark Melin


Wednesday Recap:
You will recall in yesterday’s
report we said that the markets were at a fork in the road, having moved just
under significant resistance.  We highlighted a powerful downtrend channel and
pegged resistance near 1130 on the S+P.  That resistance has held and the market
headed lower, with the S+P down some 15 points on the day. 


The second chart we
highlighted yesterday was that of the NASDAQ 100, which had just tested
significant resistance at the 200-day moving average.  You will notice that the
tech index has moved to test chart support we identified along with touching —
but not breaking — the mid-point of its trading range.

Prediction for
Thursday:  I expect a short-term move higher on Thursday with a
potential attempt to test resistance.  On the S+P I’ll carefully watch the 1120
level.  My expectation is that we make a move towards this level but that
sellers will ultimately take control.  If this happens, we could roll over and
test lower levels on all markets over the near term. 

On the cash Dow I expect to
see a bounce off the lower Bollingerband, which could lead to a test of the
10200 level.  If this resistance holds and sellers take control at this level or
before, we would then roll over and potentially head lower over the next few
days. 

Portfolio Status:
Right now we are delta positive.  On a move near 10200 we might shade the
portfolio to negative. 

Delta: +22.39

Theta: 63.51

Maintenance margin required: $8,851