The rise of Dow continues. The fight between the bulls and the bears has reached to a boiling point where either one must prevail later today or next Monday. This is because both the support and resistance are closing in quick. There is very little room to remain indecisive. (See chart below.) We have the Wedge pattern support line rising and the 200-day moving average falling. There is more. The Bollinger Band is forming a squeeze right at this same point. All these are suggesting that breakout is going to fast and aggressive.

At this point, I am still unable to tell which way the breakout will occur, though there is likely that it will be bullish, judging from the manner the Dow is behaving. As options trader, I have the fortunate mean to grasp the opportunity to profit for this uncertainty with Straddle! Therefore, I would not lose sleep on worrying about the direction. All I need is for the breakout to happen soon and move away fast to either direction.

Friday’s session is going to be interesting. Have a nice weekend.

The Nasdaq is worth mentioned here. Traditionally, the Nasdaq is always looked upon as the leading indicator of the financial markets. Since the Nasdaq is bullish, we can expect the Dow to follow suit soon. While the Dow has a good trade setup, the Nasdaq is not. It is too overbought for now. I would prefer to wait for a pullback before taking position on this index. Usually, I buy the stock options related to this Nasdaq. Stay cool and enjoy weekend.

STOCKS TO WATCH:
LEH – long

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