You Should Pay Attention To These Fib Levels
Friday Recap: We had a good day
Friday with a $75 profit and finished the week with a small profit.
Charts from www.stockcharts.com
In our prediction posted
Friday morning, we
said the market could bounce to 9850 but ultimately would touch both sides of
the flat line with an attempt to firm. In fact on Friday, the cash Dow started
higher by testing the 9850 level, then played ping-pong for most of the morning,
with 9850 providing stiff resistance and support just above 9800 serving as
support. Late in the afternoon support broke, and in fact near the close the
cash Dow made a lower low and it looked like they were going to take it lower
into the close. However, buyers came in at the last minute, propelling the
market’s measure to end up some 10 points on the day, ending at 9825.
We’ll have to watch oil this week again. We
could see a little bit of a pause on the march to $50 per barrel, and this might
provide help to the stock market. So the question for stocks is: have the
markets found at least temporary support, or are we headed lower. To answer
this question, let’s take a look at some Fibonacci retrace numbers in today’s
prediction.
Prediction for Monday: We could
touch higher levels on Monday, and start a move higher that we originally
predicted in our Wednesday, August 11 report where we said next week we could
see a bleed higher. I made that prediction in part because I see the markets
approaching some important support.
You will note that the market leading NASDAQ is
moving to test its 61.8% Fib level on the weekly chart. Further, we’re moving
to test chart support that starts near the 1750 level. At a minimum we could
see an oversold bounce this week at least to the 1775 level. However, if we do
break and hold under current support levels, which might happen on a negative
surprise, this level could lead to a move to Fib and some chart support levels
at 1629.48, and then again 1505.61.
On the weekly S+P, we’ve come down and we are
currently testing Fib support at the 50% retracement level, as well as chart
support. I’m going to watch for a bounce to 1075, and I’ll additionally want to
keep an eye on the weekly MACD as well to provide clues as to the longer term
trend of the market.
Portfolio Strategy: Right now we
are close to neutral with a slight positive bias. We’re going to potentially
get additionally positive this morning.
Previous Day’s Results and Current Portfolio Status:
Daily Profit: $75
10100 Sept. Mini Dow Call Options
Long 3.
Yesterday these options closed at 71, down 3.
Loss yesterday on this position was $45.
These options expire September 17.
10300 Sept. Mini Dow Call Options
Short 6.
Yesterday these options closed at 25, down 4.
Loss yesterday with this position was $120.
These options expire September 17.
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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.
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