We are getting a bounce off the 100 day moving average today. Moving averages can be areas of support/resistance, but I’m not advising you trade solely off of this. The short term trend is still down. This is what I’m looking for:
Trade Indicator
We hit 11,696 for a low today. I mentioned earlier that 11,800 was the first area of support we could expect. If this area doesn’t hold we will be looking at the area of 11,300 which is the 38.2% retracement level.
DJI Weekly Chart
This is a weekly chart of the the Dow. I use the Dow because my indicators are less chatty than they are on the S&P or NASDAQ Comp.
I drew a fibonacci retracement off the lows of last June. If this short-term correction continues we can anticipate some support at ~11800 (23.6%). That will likely coincide with a rising 100-day moving average as well. It could take a couple weeks to get there though. And keep in mind that 11,800 is just an AREA of support. Round numbers are also logical areas of support (12,000 e.g.). We have some longer wicks on these last few bars. The market is testing these lower values.
I only look at the Dow to get market direction and then I make decisions on individual stocks from there. We are a week out from March expiration. I have no plans for any adjustments yet as none of my positions are in the money.
It always comes down much, much faster than it goes up.
DJI Weekly Chart
We finally rolled over on the Dow Jones weekly chart. Short term trend is down, but the long term trend is still most definitely up. Using history as a guide (the following chart) we can anticipate a possible correction with a duration of a couple weeks. I pointed out a few of the corrections in the past 2 years on the chart. Yellow line is 100 day moving average. As long as that line is ascending I have a bullish bias.
My L1 watch list keeps growing daily. It is still too soon to pull the trigger though. I’m still hoping to fill April inventory, but my last few trades have been June expiration. A 1-3 week correction will help my chances of getting some decent April premiums.
DJI Weekly Bars
I’m finding it very difficult to open any new short put positions. Puts are cheap right now. I’ve been increasing the expiration dates in order to get a decent premium.
Here is a weekly chart of the DJI to put it into a longer-term perspective. I would anticipate some selling here in the short-term, but what I anticipate doesn’t matter. This melt-up could continue.
DJI Weekly Chart
