Friday, June 4, 2010

Dow 10K Creates Psychological Support

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I almost never look at the DJIA because of the nature of how it works (market cap weighted), and the stocks inside of it - the broader S&P 500 is what I live by. However, I now see why S&P 500 level 1070 has been support the past few weeks; it tends to coincide with Dow 10,000. Dow 10k means nothing - other than a human psychological support level - but I did sell 1/3rd of my SPY puts on that dip just below this level for a quick tidy profit.



As I type they've already bounced it back to Dow 10K. If this level breaks, I expect some fireworks at the end of the day. The type where you are inside the building with the fireworks ... i.e. the bad kind. This is the range where the intraday bottom has been 5 of the past 7 sessions (including today). I'll probably buy some of those puts back if S&P 1167 or so is broken to the downside, to be sold in the closing moments of the day.

Most importantly this allows us to bring back our hats, born in 1999.


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