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option plays?
dear option players, please only use 3-8% of your trading $ to play options, depending on how good you are, you must be almost famous to be sucessful in options, and have pristine mm technique and trading discipline.
the odds against long option players are like vegas odds against tourists.
QQQ message board link:
http://www.siliconinvestor.com/stocktalk/subject.gsp?subjectid=26037
imo
GLOBAL OUTLOOK 2001: US corporate downgrades set record in 2000, further declines expected:
http://www.moodys.com/cust/loadHighLight.asp?documentID=1500500000000702&original=1
imo
Was looking at BP today, didn't you have one of their calls listed here?
http://finance.yahoo.com/q?s=BP&d=1y
Looks pretty strong to me for a break out, one to put on watch for any possible Middle East problems with oil.
imo
INTEL & IBM REPORT THIS WEEK
http://cnnfn.cnn.com/2001/01/13/technology/tech_preview/
This is a great bullish read......
Top Market Timer Says, NASDAQ 5000 This Year
An InvestorLinks Exclusive Report
From the InvestorLinks.com News Desk
By: Peter Santini, January 11, 2001
Like a hot knife through butter, the NASDAQ should go through 5000 this year. That's what Don Wolanchuk says and he's one of Market Timer Digest's Top Market Timers, having won 17 annual timing awards since 1989. Some of his greatest timing calls were widely ignored by the investment community. Wolanchuk forecast the bull market rally following the 1987 crash and called for a DJIA above 10,000. When NASDAQ traded at 1800, he forecast a NASDAQ 5000. In 1999, at the bottom of the oil market, Wolanchuk called for $30/barrel oil. He was Market Timer of the Year in 1995, 1996, 1997 and 1999.
In the interview below, Wolanchuk calls for a "fast and furious" return to NASDAQ 5000. But, that's only the first level. He's calling for a NASDAQ 10,000 on its way "towards 20,000." He forecasts Intel (INTC, Chart, Boards) reaching as high as $75/share, Microsoft (MSFT, Chart, Boards) returning to $112/share, AT&T (T, Chart, Boards) reaching $60/share, and Procter and Gamble (PG, Chart, Boards) at $118/share.
Wolanchuk uses numerous historical comparisons in describing the current market conditions and helping explain why sentiment is as it is. In explaining why we should anticipate a major rally in the financial markets, he offers various technical measures, such as the VIX Index, the ARMS Index and the Advance/Decline lines. This may be the most important interview you will read this year.
Investors and curiosity seekers may wish to visit Don Wolanchuk's website for additional information about his market timing techniques at www.wolanchuk.com
INVESTORLINKS: How do you currently feel about the condition of the markets?
WOLANCHUK: When it becomes hopeless to everybody, which it appears to be now… In fact a few weeks ago, with the American Association of Individual Investors, you saw 51 percent bears and about 30 percent bulls. That's a flight. And rather amazing because the DOW is basically where it was a year, year and a half ago. NASDAQ the same way. The market's taken a time out with the DOW about 10,000. The same thing happened in 1991 - went side ways, drove everybody crazy. It's taken a great breather. Interestingly, we get all the bluebirds out and you've heard the words "crash" and "bubble" and every other thing from these bears.
INVESTORLINKS: The word "recession" has been mentioned more than a few times recently.
WOLANCHUK: Yes. After the crash of 1987, we had a recession and the market went straight up. Recession, fear of the stock market, everybody moving into money market funds and talk of bear markets is what bottoms are made out of. Proof of that is in the technical picture. While this has been going on, the base 52-week new highs have been steadily climbing for a year now - the stocks making new 52-week highs. Last week, there were over six hundred. The weekly Advance/Decline line just keeps climbing and climbing and climbing. Technically, we've got a fabulous situation in the moving averages of put/call ratios. We've got numbers that we haven't seen in years. We've got an ARMS index in the moving average - the last time that I saw 130. I can't remember seeing a ten day ARMS at 130. Even while the DOW has been going up here, recently, the five-day trend has been staying above eight hundred. That's incredible! The DOW, where is it? It's over 1000 out of the October low. In the mean time, we've got everybody being chased out of the stock market. It's absolutely a fabulous situation.
INVESTORLINKS: Is it fabulous enough that it's time for investors to rush back in?
WOLANCHUK: They're not going to do it no matter what I say. If I tell them to jump in here with both feet, they're not going to listen to me - just like they didn't listen to me after the crash of 1987.
INVESTORLINKS: For those that do listen to you, what should they expect?
WOLANCHUK: Every time that we have this situation, the stocks are served up on silver platter. The interesting thing is the wipeout in a lot of NASDAQ stocks is typical of an industry that attracted a lot of people - the Internet business. A horde of people went in there for fast and easy money. A lot of these companies, of course, are not going to make it and you had the initial shake out. You had all these troubles with financings that turned into death spirals.
INVESTORLINKS: Where do you see the NASDAQ heading?
WOLANCHUK: When the NASDAQ was at 1800, I said it was going to 5000. It's a perfect correction. I haven't seen anything in the wave structure to negate my idea that it's going to head - the potential is that the NASDAQ is going to start flying up past 10,000 towards 20,000.
INVESTORLINKS: The NASDAQ?
WOLANCHUK: Yes, the NASDAQ. "Is anybody, who was on margin and who got wiped out, going to go near the margin department for probably months or years? Of course not."
INVESTORLINKS: From where to where?
WOLANCHUK: Past 5000 and a clean shot through 10,000 on it's way to 20,000.
INVESTORLINKS: You're going on record that the NASDAQ is going to 20,000.
WOLANCHUK: It's going to go beyond that eventually. There's going to be a lot of washouts in between. This is the best washout.
INVESTORLINKS: Do you think we're ever going to see an opportunity like this again?
WOLANCHUK: Just like we never saw an opportunity when it made it's low in 1998. Here we have a situation where everybody got notoriously bullish in the NASDAQ. The problem there was they were right being bullish, but they were wrong in the way that they executed it. That was by buying stock with borrowed funds on margin accounts. It wasn't anything else, but people were forced out of the market because of margin selling. Now look how clean this market is. Is anybody, who was on margin and who got wiped out, going to go near the margin department for probably months or years? Of course not. This market is very clean in that regard. So we don't have to worry about forced margin selling anymore. We don't have to worry too much about poor sentiment. After the crash of 1987 everybody thought, all through the next two years, that it was bear market rally. There's nobody going to be calling this a bull market for long time even though the weekly Advance/Decline line bottomed out a year ago.
INVESTORLINKS: Do you think we're still in a bull market?
WOLANCHUK: Absolutely. If there's nobody left to sell and everybody's bearish…I got the same thing in 1987. I feel a lot better about it now, because I'm in the minority. What's so funny is that the media said that the NASDAQ had its worst year in history. What they don't say is that, a year ago, the NASDAQ is where it is now. For the first six months it was the grandest six months in the history of the NASDAQ. Then, you had the worst six months and you ended up back where you started. That's exactly what the DOW did in 1987. All it did was go back to where it was in 1986 and the whole process started all over again. It is a hump in a chart that is continuing it's up climb. In the meantime, these stop clock bears who yet have to get religion… Can you imagine some of these stop clock bears who have been calling for the end of Western Civilization for the last fourteen years?
INVESTORLINKS: What about the bears?
WOLANCHUK: This market's not going to let them off the hook. Here we are above 10,000 pressing 11,000. If I'd told you 15 years ago, after the crash of the DOW, when everybody hated it, that they would hate it just as much above 10,000 you would have thought I was a nut. Here we are above 10,000 and everybody hates it. We are at a high level consolidation that's been stretching out for a year and a half or so in the DOW and the NASDAQ - a flawless ABC. What we call an ABC irregular flat correction in terms of Elliot where the B-Wave made the high at five thousand. Until proven other wise, anybody who says we're in a bear market - and at the end and we'll never see these highs again for years, which we've heard a lot of… You've got to remember where all this talk came from. It came from the people who missed the entire advance to begin with. They have really no credentials to be making those kinds of statements. In the meantime I never thought that I would be in the minority bullish camp once again with the DOW pressing eleven thousand. It's a rather fabulous situation. All these companies that have taken whacks like Intel (INTC, Chart, Boards), General Motors (GM, Chart, Boards). There's some of these DOW stocks actually are screaming new highs like the banking stocks. What we've had is a rotational exercise, which is typical of a high level consolidation in the primary market. While the secondary and most speculative market, as you know the NASDAQ, has gotten it's comeuppance because of the margin buying.
INVESTORLINKS: Where does that leave us?
WOLANCHUK: Now we've got a cleaned up market where nobody is going to go near the margin desk. We're set up for a resumption of the bull market. In certain sectors the bull markets been intact for quite awhile.
INVESTORLINKS: What about the market's short-term prospects?
WOLANCHUK: Actually, the markets have been rallying while the NASDAQ is re-testing its prior lows. The Wilshire Small Cap on a weekly basis has a great-looking chart pattern as far as I'm concerned. It's declined and held its 150-week moving average. It's a mile out of its hole made in 1998. It's a classic little consolidation. But, if you look at the NASDAQ it's only declined in three waves off the top. If you're an Elliot Wave Analyst and you're bearish, you've got to say to yourself, "If that's only three waves, and that's the second wave pull back, a third wave blast of historic proportion can absolutely be born out of that." Because of that potential, I'm certainly not going to miss it, if that's going to happen. The wave structure of the NASDAQ certainly allows for that. Here we are with a VIX Index (CBOE Market Volatility Index) still above 30 percent. It's been hovering above 30 percent since September. It's taken a stab to 37 percent during that time frame. This is a long period of high VIX readings without any solid detraction in a primary market. This is bullish. A market that looks ugly and doesn't go down is a market that you want to own.
INVESTORLINKS: What are your thoughts on the recovering telecom sector?
WOLANCHUK: There's no doubt about it, but the telecom sector has gotten awfully oversold, even more oversold than the NASDAQ. A lot of these wire houses couldn't stand it so I think they put out a big buy on AT&T (T, Chart, Boards). Here's a stock that technically appears like it's going to go all the way back to $60/share because of the gap situation. When a futures contract, or a stock, declines or advances leaving lots of gaps in the chart, all of those gaps eventually get filled. Intel (INTC, Chart, Boards) in my view is a prime candidate for that. INTC left all these huge gaps all the way down and Intel has got $75/share written all over it because of these gaps. The same thing with Microsoft (MSFT, Chart, Boards). I'm seeing Microsoft going back to$112, $115 or higher. It's the gap rule. The only reason that the NASDAQ declined in the first place was to fill all the gaps it left, when it initially thrust out of the hole over a year ago. There were three large gaps. They went down and filled them all. We had the S&P 500 futures bottom over a week ago at 1288. The next day it opened on a huge gap.
INVESTORLINKS: How soon should we expect these strong moves?
WOLANCHUK: We've been through some speedy moves here. We've had a bull market and a bear market - people going from extraordinarily bullish to extraordinarily bearish, all within a number of months. These things are moving really fast. Look at the volatility we've seen in the last number of weeks. We went through this 1991. While this is going on, sentiment is improving. It's just like 1991 all over again. It went up and down, drove everybody crazy for over a year. Not much has changed.
INVESTORLINKS: Are you pretty much saying that we should expect more volatility.
WOLANCHUK: I think we've had the bulk of it. My only concern is the cycles. We've got a four-year cycle due in 2002.
INVESTORLINKS: What does that mean?
"What everybody is anticipating, in my view, could prove to be something similar to what we saw in 1987: The market going crazy."
WOLANCHUK: That means it's going to be marked by something. Let me give you an example. We had a four-year cycle low due in 1986. Everybody prepared themselves for it in early 1986 as measured by the daily Advance/Decline line. It topped out and started declining, declining, declining as everybody bailed out in anticipation of a four year cycle that was due in 1986. In September 1986, we got some sort of hammering job, but in December of 1986, the daily A/D line was making twelve-month lows while the DOW was virtually at historic highs. That got everybody really bearish. Then, the market exploded to the August 1987 peak. There were all kinds of technical problems there. The 1986 four-year cycle low basically was met in 1987. The next four year cycle low if you count forward four years was 1990. Remember how ugly that was? Then, four years later was 1994. Remember how ugly that was? Four years later was 1998. So here we are, four years later from 1998, we have 2002. Somewhere between here and there, it appears that everybody is preparing for this four-year cycle, by bailing out of the stock market in anticipation of it. What everybody is anticipating, in my view, could prove to be something similar to what we saw in 1987: The market going crazy.
INVESTORLINKS: Can you clarify how the NASDAQ fits into this?
WOLANCHUK: Basically from the 1998 low, the NASDAQ has retraced exactly 75 percent of that entire advance in a clean three-wave fashion, which is exactly what the DOW did in 1987. It went back to the area of the prior consolidation. It was a consolidation in 1999. All through that year was choppy. It went up very slowly. I'm saying that the NASDAQ is set up, until the wave structure says other wise, to go through 5000 like a hot knife through butter - to go through 10,000 and a move towards 20,000.
INVESTORLINKS: Over what period of time? Five years?
WOLANCHUK: No, the percentage. Remember it is based on percentages. If I'm right, the third wave is going to be a lot faster than the move that NASDAQ made from the 1998 low to this past high (March 2000). It should probably take half the time that it took on that last big move. If I'm right, we'll go through 5000 inside this year sometime.
INVESTORLINKS: Inside this year? Are you serious?
WOLANCHUK: It did it before. It went from 1200 to 5000 in a space of a year (and some). We've had a three-wave decline. If indeed that's a second wave pull back. It still counts that way. A third wave is going to be kind of fast and furious. Because of that potential, I'm certainly not going to say it's not going to happen. I'm going to be prepared for it if it does.
INVESTORLINKS: Could you explain how this works?
WOLANCHUK: At the end of a second wave pull back, a second wave pull back is … they've got a lot of things going for them. People have got to be convinced that they will never see the highs again. People have to be convinced that they don't want any part of it. We're seeing a lot of this. After the markets crashed in 1987, one of the prominent bears said that the chance of the DOW getting above 2700 was 10 percent. Here we are above 10,000. By the way, that bear is still bearish. It is very tough being bullish because the market makes it easy to be bearish.
INVESTORLINKS: So which sectors are going to be hot?
WOLANCHUK: The sectors that everybody hates.
INVESTORLINKS: Such as tech stocks?
WOLANCHUK: Take the technology sector - completely sold out as far as I'm concerned. Retail? Everybody loves to hate retail. In the meantime, we see Home Depot (HD, Chart, Boards) has already gone from $35/share to $52/share over the last number of weeks. Intel has got the kind of formations that I'm just drooling over because of all the gaps left open above the market. I'm rather excited about what I see.
INVESTORLINKS: Do you think the markets will struggle this year?
WOLANCHUK: It's going to be a mental struggle. I don't know about the price struggle. I don't think there is going to be a price struggle. I think there is going to be a mental struggle. People are going to struggle with price.
INVESTORLINKS: Do you mean that investors are going to be looking at an up market and won't believe that it could go higher?
WOLANCHUK: They did that in 1987 after the crash. If you got caught and got wiped out, you're not going to go near the stock market. Investors will listen to high profile bearish gurus who will be telling them it's a bear market rally. We had a prime example of that happening after 1987. Now I'm even more bullish because of the recent correction.
INVESTORLINKS: Is there anything that would change your mind?
WOLANCHUK: Yes, if the American Association of Individual Investors got up to 75 percent bulls and we got euphoric all over again. That's going to come.
INVESTORLINKS: How soon?
"There's going to be a lot of people that will start chasing - if I'm right and we've finished up a second wave correction in NASDAQ and it starts to melt up."
WOLANCHUK: At the top of the next third wave blast. There's going to be a lot of people that will start chasing - if I'm right and we've finished up a second wave correction in NASDAQ and it starts to melt up. There are no sellers left because everybody's bailed out of the stock market. People are going to be chasing stocks. Not everybody is just going to stand around and call it a bear market rally forever. When you chase stocks in a sold out market, you see the net results. It goes absolutely hairy. Look at what the NASDAQ did coming out of the 1998 hole. It was so doom and gloom in the 1998 low. It went from 1200 and it doubled in price vertically in a matter of weeks.
INVESTORLINKS: Which stocks should investors consider at this point?
WOLANCHUK: You just spread it around. Qualcomm (QCOM, Chart, Boards), in my view, is a great situation, Some of the blue chips, like SBC Communications (SBC, Chart, Boards). It wouldn't surprise me to see General Motors (GM, Chart, Boards) take off. Disney (DIS, Chart, Boards) is another. Procter and Gamble (PG, Chart, Boards) is another great looking situation. It got whacked and it came back nicely. It's consolidating. There's huge gaps just above the market all the way up to $85/share. It should take out $118/share or $120/share. It's been there before.
INVESTORLINKS: Should we expect optimism over the coming year?
WOLANCHUK: No. I don't want optimism. I want rising prices against the background of pessimism. Something like we saw through 1988 and 1989.
INVESTORLINKS: Is that the bull market climbing the wall of worry?
WOLANCHUK: Of course that's what we want and that's what we're going to get. You know how we're going to get the wall of worry? It goes up slow. It could be fast. There's two ways of leaving the world behind. The market goes up super fast, catches everybody. Or the markets go up slow with lots of correction. Everybody hates it all the way up because of that. It takes nothing to move this DOW two hundred, three, four, five hundred points anymore. When we see the epicenter of Primary Wave Three, there is going to be a thousand-point up day in the DOW. It's coming.
INVESTORLINKS: Could the NASDAQ make a thousand-point gain in one day?
WOLANCHUK: Absolutely. You can't have the epicenter Primary Wave Three of Three to the upside unless it is broad-based. All sectors going up in unison. That is a broad move. The last time we saw a broad move like that was coming out of the 1982 low.
INVESTORLINKS: Any advice to investors who sold short this market or selling it short?
WOLANCHUK: I hope they stay short.
INVESTORLINKS: Thank you very much!
imo
Playing Options - From Yahoo GX Board
by: luvlizclamanssquawkbox (31/Louisiana)
Msg: 146240 of 146259
During the last 4 years, I lost quite a bit of money on several stocks that I could easily have prevented if I had learned to buy puts. If you don't know how, I strongly encourage you to learn. I learned from, of all people, a waiter at one of my favorite restaurants, who was a broker for Merrill Lynch for five years. He has saved me tons of money. Even better, it's incredibly easy and affordable to protect your stocks with puts.
For example, say GX was selling for 40. I'm estimating here, but you could probably one put (which gives you control over 100 shares), with a $25 strike price,for about $25 or so. So let's say you own 100 shares, now selling for $40. That's a $4,000 investment. For a mere $75, you could own 3 puts, or 300 shares. If the market crashes, or just GX crashes, you will make $300 for every dollar GX drops below $25, minimum (actually, probably more). Thus, if GX falls down to $15 a share, you make a profit on your puts of at least $3,000.00, which offsets the $2,500 loss on the stock you own. Of course, you have to be sure to repurchase the puts before they expire, if necessary. But on a large holding, it's a worthwhile insurance policy.
I'm not real good at puts, but get lucky sometimes. Back in October, I owned a mere 50 shares of JNIC that I had purchased at $40 a share and watched soar to $121. At the time, almost every sector had been killed except storage (JNIC is in same biz as EMC). I figured storage would be taken out next by the big boys, since I believe that a whole lot of collusion was behind the meltdown since Labor Day. So, I bot 3 puts on JNIC with a strike price of around $65. Cost me only around a hundred bucks. When JNIC started to fall, I sold my stock in the 70s, so I only lost some profits, not real money. But I ended up making $3500 on the puts, or $35 for each buck I invested in them. Since then, I have made very nice money buying puts on stocks I stupidly bot way too high, such as YHOO at $165. I managed to recoup almost all my losses on YHOO thru buying puts. I currently own 300 shares of GX, and I bot $15 February puts for a very low price. Probably threw away that money (less than a hundred bucks), but I sure sleep better than I used to before a waiter taught me how to buy puts.
Found out will be gone all day monday in Seattle, so am cashing out early the QQQ Put at 4 1/2, good 20% gain, will hold put in GX put though till lower.
-----------------------------------------------------------------
Stockmarket.com's link: Says bottom in process of forming on the Naz.
http://stockcharts.com/commentary/richardr/richardr20010105.html
imo
Candlestick, I'll call it, it's a
Harami Cross:
How to Identify it
A long white day occurs
The second day is a doji that is within the range of the previous day’s real body
What it Means
After a long white day at the high end of an uptrend, the market opens lower than the previous day’s close. Trading is typically light and the day ends with a close at the same price as the open and within body of the first day; an even stronger signal than the basic Harami pattern that the current uptrend is losing strength.
The Harami pattern is also the first two days of the Three Inside patterns. What we want to see for confirmation: The third day is a black day with a lower close than the second day.
imo
By: mckinney2227 $$$
Reply To: None Thursday, 4 Jan 2001 at 9:47 PM EST
Post # of 126317
Overhead Call Interest Bearish
Reprinted from Schaeffer Research
(Note- the open Call interese is now greater than at the publication of this article !)
QQQ Open Interest Worrisome For Bulls
12/27/2000 12:08:00 PM
We've been kicking around the possible implications of the current Nasdaq-100 Trust (QQQ –60-7/8) open interest configuration. For the most part, the implications are not bullish for technology investors.
The current open interest configuration for QQQ exemplifies the very definition of overhead call open interest (see the chart below). Particular strikes of note are the January 70 and 75 calls, which are home to open interest of 46,783 and 45,216 contracts, respectively. There are also nearly 70,000 contracts of open interest overhead at the January 65 and 67 strikes. Needless to say, this is some significant overhead call resistance for the Nasdaq to overcome.
(No graph available here)
Chart courtesy of Schaeffer's Daily Sentiment
What are the implications of overhead call open interest during the most recent Nasdaq decline? We have compiled data regarding total call open interest on the QQQ. Total call open interest at the most recent Nasdaq peak on September 1 stood at 173,333 contracts. Total call open interest today, with the Nasdaq 41 percent lower than it was on September 1, is 806,273 contracts. This is a 365-percent increase in total call open interest, despite the terrible price action. Option speculators have actually become more bullish as the Nasdaq crumbles. From our contrarian viewpoint, this data has decidedly bearish implications.
- By Ron Taylor
imo
OK, am holding a put right now on the QQQ, at march @55, so you are saying to buy a call at the same time? I did do really well with the march call @65.
Cashed out today on GX long calls, first bagger with options, whoo hoo, nearly a two bagger.
imo
Knot+ JJ - try opening up spreads on resistance levels of Nasdaq or individual stocks. Knot and I have talked about this in the past and can be a great hedged option play. Good luck.
ROFL, look at these hammers of shorts covering:
http://www.askresearch.com/cgi-bin/intraday?index=%24COMPX&intraday=symbol&symbol=JNPR&exchange=USA&size=640x480&frequency=1+minute&type=Candle&color=Graph+Paper&scale=Logarithmic&moving1=50+minute&moving2=None&moving3=None&moving=bollinger&bollinger=20+minute&ind_vol=on&ind_sto=on&sto=15-5-5&wpr=12&ind_rsi=on&rsi=8&ind_macd=on&macd=12-25-9&roc=16-8&ind_mfi=on&mfi=13&refresh=180&x=16&y=11
JNPR would be good for a call right here... perhaps.
imo
Out QUE CM at 5 1/4, can't complain! Still holding GX's WWZ AD, up another 50% today, da' money!
imo
How's the Chili? GX news is out, good way to start the New Year. Out PALM and LNUX, a wash combined.
In March65 calls for QQQ, QUE CM at 2 3/4
imo
Futures closed a little bit up in after hours, could test 2000 tomorrow though!
imo
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The possibility of trading on low margins and receiving tight dealing spreads around the clock is any active trader's optimal scenario. The high level of gearing provides the opportunity for large intra-day gains, but of course also the risk of very substantial losses, so Forex trading is strictly for aggressive investors and only risk capital should be applied.
The Forex markets are open 24 hours a day, leaving no non-tradeable gaps from Monday morning till Friday night, and Forex is uniquely suited to technical trading due to the constant availability of deep liquidity.
http://www.cboe.com/tools/symbols/currency.htm
I would buy calls on the ECU presently, trading at $94 against the dollar, I'd bet this moves to around an average of about $1.05 a year out. I think you have to trade in $Million blocks though...
imo
Overall, things are bullish, but as is often the case there are some "holes" in the bullish argument..
I would agree with that, what really needs to occur is a lot of the bears to cover and go long.
Guess we are still waiting on the VIX though. Looks to me that if it gets back under 30.0, that seems to correlate with when the naz was above 2700, recent support level before this latest dip.
imo
GX--I took a look at the technicals last night, a couple of things made a reversal look like it's happening, specifically, OBV higher this dip after its rise to 20 then the previous dip, also, the second price dip doesn't go quite as low (double bottom), and the accumulatation/distribution is moving up. All three good signs toward a trend reversal.
http://www.equis.com/java/
Take a look at the MA crossover. If this can break over 17.5, the 20 would go above the 50 day, at any rate, they are within a week or so of convergence, which would forcast a breakout in one direction or the other. IF you extend the timeline out a year, you'll see it's way oversold, given the previouls tightness of the MA indicators.
Also, at a years length, look at bollinger bands, often, the key st reversal is just after the price rises or goes below the bands-- pretty good when to sell and when to buy indicator here for this stock.
Right now we are in the midrange, about to see convergence of the MA lines, so dips are good for accumulation, as a st breakout is imminent.
imo
According Larry McMillan, all option indicators are pointing to a rally. Check it out:
Stock Market - December 29, 2000
The equity-only put-call ratios finally gave simultaneous buy signals last week. These were confirmed by buy signals in the $OEX weighted and NASDAQ-100 ($NDX) weighted put-call ratios. The breakdown of the equity-only ratio into its NYSE and NASD components shows that both of those are on buy signals as well. All of the above ratios have shown a slight "blip" upward in the last day or two, but at this time it isn't enough to cancel out the recent buy signals.
Meanwhile breadth has been terrifically positive, and that in turn has given us the highest oscillator reading since October, 1998. Does that date ring a bell? That was the previous most oversold state that we've seen in years, and when the market finally started to rally out of that condition, a massive overbought situation occurred then (the oscillator actually went to +400). Overbought conditions at the beginning of strong rallies are to be expected (even welcomed). Back in 1998, the Dow rallied another 700 points from the time the oscillator first rose above +200 until some cooling off occurred. Thus, while I rue having waited for confirmation from the $VIX before buying "the market" (a confirmation which, by the way, was not forthcoming until five days after the put-call ratios gave buy signals), our interim hotline update recommendation to buy $DJX calls was activated on Thursday morning (we bought the Jan 106 calls, DJVAB).
Index option implied volatility, as represented by the CBOE's Volatility Index ($VIX), has not declined much. Usually, when a good, sustainable, bullish move gets underway, $VIX drops precipitously from its spike highs. This time, $VIX has grudgingly retreated from the highs registered last week. Overall, things are bullish, but as is often the case there are some "holes" in the bullish argument. For now, though, we will remain bullish unless the put-call ratios retrace themselves and register new highs.
McMillan on Options
by Lawrence G. McMillan
http://www.amazon.com/exec/obidos/ASIN/0471119601/qid=946231...
BOUGHT MORE GX OPTIONS!
Got 28 more contracts of WWZ AD @ $3.50 Jan 2002!
Picked up the LNUX call at Aug 5--NUUHA-- for $4.50 today. Should move nicely.
imo
VERT & GX UP NICE!
Both starting to move UP NICE!
Nice call on those VERT's, up again today, 20%. NAZ might be able and test getting back above 2700, which was its previous support level.
imo
Probably, But...
Look at that(AGCX)SPREAD!!! YIKES!!!
AGCX would move alongside GX i think;
http://biz.yahoo.com/p/a/agcx.html
imo
Ideally, am looking at getting a 7.5 LNUX call once the price dips below it, this week, if possible. LNUX has a beautiful down gap to fill of $10! from their $30 to $20 drop in November. Having been at a high of $208, it's been under heavy tax selling, and I think will begin recovery in Jan.
Here's what I'm watching and choosing from:
FEB
.NUUBU-7.5
.NUUBB-10
.NUUBV-12.5
MAY
.NUUEU-7.5
.NUUEB-10
.NUUEV-12.5
AUG
.NUUHU-7.5
Will be waiting to see if it breaks $8.5 support tomorrow, if it does, we could be in the $6's soon. This stock can move fast, 8 trading days ago it hit $15, off the IBM news.
Jerome,
Thanks,Out of that Group, I like LNUX the best. They have better Financials, Here's the Option;
NUU EV - Strike Price $12.50 - Expiration Date: May 2000,
I would wait and Buy on a Dip though. knot
Check this out, good news for the sector:
http://www.upside.com/Open_Season/3a392cbb12_yahoo.html
CALD, LNUX, RHAT.... all double bottoms, the second a little higher, looks good:
http://finance.yahoo.com/q?s=cald+lnux+rhat&d=1y
imo
Possible PLAYS out there, ATHM, on the road to the pennies.
Thursday spiked from $4 to nearly $6:
http://finance.yahoo.com/q?s=athm&d=5d
With a gain of nearly 50% though it may have put potential. Here's why the spike:
http://public.wsj.com/sn/y/SB977437142372194090.html
...At Home, for its part, says it would like to retain Cox and Comcast as investors. Some analysts worry that Cox and Comcast might have less interest in carrying the At Home service if they don't have an equity stake in the company.
Both Cox and Comcast have indicated they plan to honor their exclusive contracts with At Home. Once exclusivity ends, each has indicated it plans to carry other Internet-service providers in addition to At Home.
---------------------------------------------------------------
Motorola and Nokia, gotta think these wireless giants will return with a run, especially MOT, with a 20's P/E:
http://finance.yahoo.com/q?s=mot+nok&d=1y
...Motorola has warned on its first-quarter earnings, partly due to its handset segment, while Ericsson has said its handset unit will continue to report losses in the first half of 2001.
Compared with Nokia's market capitalization of around $220 billion, Motorola has a market capitalization $42 billion and Ericsson $94 billion.
http://dailynews.yahoo.com/h/nm/20001222/tc/mobiles_dc_1.html
Maybe wait for another downturn dip to get a call here.
FM,
Thanks! Appreciate the thoughts...knot!
knot,
wow, helluva job on the iBox to the thread...
Best of Luck with the NEW thread!
FM
See FG's latest post on his thread, looks tome not like a recession, but just an economy consolidation, with mixed indicators, the economy taking the internet-tech hits of medicine before it emerges, and the beaten gems come out to play:
http://www.investorshub.com/beta/read_msg.asp?message_id=29811
imo
From this morning's NY Times:
December 23, 2000 Single-Page Format
Nasdaq Soars to End Brutal Week, but
Weakness Remains
By JONATHAN FUERBRINGER
The Nasdaq composite index jumped 7.6 percent yesterday as bargain-hunting investors snapped up technology stocks that
had dropped sharply in recent weeks.
It was the Nasdaq's fifth-best daily percentage gain ever. But because of the hard hit that technology stocks took earlier in the week, including a 7.1 percent loss Wednesday, the Nasdaq was still down 5.1 percent for the week.
Cisco Systems, which plunged 12.6 percent on Wednesday after it was downgraded by Merrill Lynch, rose for a second day, climbing $2.63, to $41.50. Qualcomm, which had fallen 11.3 percent since Monday, rose $9.19, to $85. Microsoft, which had dropped 28.5 percent in the last week and a half, jumped $3, to $46.44. And I.B.M., which was off 14.1 percent in the last week and a half, jumped $7.44, to $89.
Among other technology stocks helping lift the three major indexes were Hewlett-Packard, Sun Microsystems and Oracle.
The Dow Jones industrial average rose 148.27 points, or 1.4 percent, to 10,635.56. The technology-heavy Nasdaq surged 176.90 points, to 2,517.02. The Standard & Poor's 500-stock index climbed 31.11 points, or 2.4 percent, to 1,305.97. The gains came in relatively heavy volume for the last trading day before Christmas, with 1.09 billion shares changing hands on the New York Stock Exchange.
I.B.M. rose after a Salomon Smith Barney analyst said speculation that the computer company would miss its sales or profit forecasts was off the mark. But the Ford Motor Company dropped $1.38, to $22.81, after it said Thursday that its fourth-quarter profit would come in about 10 cents below forecasts of 74 cents a share because of slowing economic growth and consumer spending.
Yesterday's rebound, however, cannot be read as a signal that the stock market has finally hit bottom. That still depends on how much more the economy slows and how quickly the Federal Reserve moves to stimulate growth by cutting its short-term interest rate target.
"I don't believe that we have seen the bottom," said Thomas McManus, equity strategist at Banc of America Securities."The news on earnings is still very negative, surprisingly negative for an earnings bear, which I have been for eight months. My numbers are probably too high."
Mr. McManus also said that President-elect George W. Bush's
comments about the possibility of a recession and disagreement from the Clinton White House are not helpful for consumers or stocks. "It is not encouraging to see politicians arguing over the state of the economy," he said.
In addition, investors still have to get through another week or so of fourth-quarter earnings preannouncements in the first part of January. If the negative tone of this month's announcements continues, stocks could be pushed lower.
For the week, the Dow was up 1.9 percent, and the S.& P. 500 index fell 0.5 percent. With just four more trading days to go in the year, the Dow is down 7.5 percent, which would be its worst performance since 1981. The Nasdaq is down 38.2 percent, on the way to its worst performance in its history. And the S.& P. 500-stock index is off 11.1 percent, its worst year since 1977.
While Fed policy makers unexpectedly shifted their bias to cutting interest rates from raising them at their Tuesday meeting, they have not yet cut their benchmark federal funds rate from 6.5 percent. The sell-off in the stock market on Tuesday after the Fed said that it would not change the rate and again on Wednesday indicated that many investors were hungering for a cut.
Given the recent signs of the economy's slowing, more economists and analysts are saying the Fed will cut interest rates when policy makers meet at the end of January.
But Mr. McManus said there was talk in the stock and bond markets now that the Fed would reduce rates before its scheduled session at the end of January, given the rapidity of the economic slowdown. The Fed rarely moves on interest rates between formal policy-making meetings. But it has done so, most recently in the fall of 1998, during the Russian financial crisis.
"I think the market will definitely be extremely disappointed if the Fed does not cut rates by Groundhog Day," Mr. McManus said.
Several government reports yesterday added to the portrait of an economy that has slowed sharply from the 5 percent growth pace of 1999 and the first half of this year. Orders for durable goods rose 2.3 percent in November, after a 6.5 percent drop in October. Although the increase was a little larger than the 1.5 percent expected, it still reflects how wary consumers have become.
The Commerce Department also reported yesterday that consumer
spending rose 0.3 percent in November. But much of the increase went to pay for higher utility bills, which analysts say have been cutting into spending for household and other goods and holiday gifts.
The Commerce Department reported Thursday that economic growth in the third quarter slipped to 2.2 percent at an annual rate, the weakest quarterly growth in four years.
The slowing growth and the prospect of a Fed rate cut before the end of January helped drive Treasury interest rates lower in a trading session shortened by a holiday. The yield on the Treasury's 10-year note rose 732, to 1052132, as the yield, which moves in the opposite direction, slipped to 5 percent, from 5.03 percent on Thursday. That is its lowest yield since February 1999, when longer-term interest rates were rising after reaching 30-year lows in October 1998. The yield on the 30-year bond fell to 5.39 percent, from 5.41 percent on Thursday.
Clearer signs of a slowdown in the United States and the sharp decline in the stock market also helped the euro to rise against the dollar. From the inception of the euro in January 1999 until last month, the currency had fallen as investors preferred to put their money into the United States.
But now the euro has jumped almost 12 percent against the dollar since its record low in October, including an increase yesterday to 92.52 cents from 91.43 cents on Thursday. At this level, the euro is already as high as some forecasters predicted it would rise in 2001.
On the January effect, a snippet from today's Barron's:
So, how will the S&P 500 fare in 2001? That's impossible to say. But with a new Congress coming in, along with a new President, the probability is high that the key index's performance next month will tell the tale for the remainder of the year.
Based on the Barometer's track record, a January stumble on Wall Street would be particularly ominous. If the S&P, which, by the middle of last week, was down almost 14% this year, is off next month and then has a decline equal to the 9.9% average downturn seen in the February-December stretches of the seven years mentioned above, the index would slide below 1221.97. That would mark a 20% decline from the high of 1527.46 reached last March. Then, undoubtedly, we'd be in a full-blown bear market.
Great start here, excellent resources.
For contrarians, which the options market is heavily populated with, low readings on the VIX are bearish, while high readings are bullish.
Makes total sense then, when the VIX pops off the top, go for the bull. We could be as late as feb in having this move, if the interest rates are not lowered in jan, which is a possibility. That would give time enough for the consolidation to occur from now till then, in the low naz 2000's range.
imo
Options Indicators Say Capitulation, Bottom, Are Still to Come
By Brian Louis
Staff Reporter
12/20/00 3:28 PM ET
Investors hoping for signs of capitulation and a market bottom won't get them from the indicators that options market pros are watching.
And because they're not showing signs of capitulation (where investors give up, dump stock in a panic and push prices horrifically lower), the market probably hasn't put in a bottom yet. To avoid a false rally, options and stock market pros like to see a total market washout before stepping up big on the long side.
"If you're looking for climactic readings, you're not getting it," said Jay Shartsis, options strategist at R.F. Lafferty in New York.
Analyst downgrades this morning, profit warnings, worries about earnings and chagrin with the Federal Open Market Committee's decision not to lower interest rates Tuesday conspired to hammer stocks again today as the Nasdaq 100, or NDX, for example, continues with its awful downdraft that has lasted several sessions.
Yesterday the FOMC left the federal funds rate at 6.5% and in its statement said it "believes that the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future." Traders are expecting the Fed to start lowering rates beginning early next year.
The market could rally considering how much selling there's been lately, but hedge fund manager Jordan Kahn of Kahn Asset Management said, "I'd be selling into it or reinitiating short" positions if that happens.
"I don't think we've seen that capitulation," Kahn added.
He listed a few options-market indicators that can point to a market capitulation, but haven't. The Chicago Board Options Exchange Volatility Index, or VIX, hasn't been sky-high lately, though it has climbed lately. When the VIX surges dramatically, it's seen as a sign that the market may be nearing a bottom. The VIX is used by stock and options traders to gauge the market's anxiety level. Generally, the VIX rises when put option buying increases on options on the S&P 100, or OEX. A put option gives the purchaser the right but not the obligation to sell a security for a specified price at a certain time. For contrarians, which the options market is heavily populated with, low readings on the VIX are bearish, while high readings are bullish.
Kahn also watches the overall CBOE put/call ratio, an indicator that includes equity and index options, which is also suggesting people aren't particularly afraid. This afternoon, the overall CBOE put/call ratio was at 0.72, a high reading but still not one that shouts panic.
To protect himself, Kahn has some hedges on long positions in stocks he owns. Traders hedge to counterbalance risk in a position they have, such as buying puts to offset a long position. One of those long positions he has hedged is in optical-networking equipment maker Ciena (CIEN:Nasdaq - news). The stock has had a rough go of it lately, to say the least. What he's done is "roll down" his put positions. Today he sold his January 105 puts in Ciena, taking a profit there and closing out the position and then buying some February 85 Ciena puts to keep the hedge on. Ciena was off $4.63 to $68.56, and about a mile off of its 52-week intraday high of $151.
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