Springtime And It’s Raining QQQs

Technicals

Stiff resistance continues to contain the market. 10,680 in the DJI
(last July’s high) and 1177 in the S&P cash (December, January highs) are
still holding. Monitor these levels closely as any penetration of these levels
could trigger substantial short-covering.

Volatility

Volatility held steady to lower yesterday. The VIX closed slightly lower at
20.35, the VXN closed up .24 at 38.99, and the QQV closed down .36 at 32.54
(once again, new multi-year lows). Although volatility may be undergoing
a structural change, we still consider volatility this low to be a red flag.

Trade Updates (3/19/02)

Exxon Mobil
(
XOM |
Quote |
Chart |
News |
PowerRating) — Per the intraday Alert, we sold our 25% position in the
July 40 calls (long at $3.00) at $4.50 for a $1.50 profit.

No other trades were executed yesterday.

Current Recommendations/Working Orders

Qualcomm
(
QCOM |
Quote |
Chart |
News |
PowerRating) — Per the 3/19/02 Alert, sell another 25% of the April
40/50 call spread at $4.50, reducing our position to 50%.

Rolls/Adjustments

Calpine
(
CPN |
Quote |
Chart |
News |
PowerRating) — Investors long the April 12.5 calls at $1.20 (50%)
may execute the following roll: Buy the May 15 calls (to open) and sell the
April 12.5 calls (to close) for an $.80 credit. This takes 2/3 of your money off
the table and rolls you out to May.

Chiron
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Investors long the July 50 calls at $3.30 (50%) may sell
the July 60 calls against their positions at $1.00. This will roll us into the
July 50/60 call spread at $2.30.

Disney
(
DIS |
Quote |
Chart |
News |
PowerRating) — Investors long the April 22.5/25 reverse collar (long the
April 25 calls, short the April 22.5 puts) at a $1.15 credit (75%) may want to
consider the following roll:  Buy the Disney April 22.5 put/April 27.5
collar (buy the April 22.5 puts, sell the April 27.5 calls) for zero. This will
“roll” you into the DIS April 25/27.5 bull call spread at a $1.15
credit.

DIS — April 25/22.5 reverse collar (long the April 25 calls, short the April
22.5 puts) at a $1.15 credit (75%).

Buy-writes

(
HAL |
Quote |
Chart |
News |
PowerRating) — long the July 20 buy-write at $15.00 (50%).

HAL — Long the July 17.5 buy-write at $14.50 (50%).

(
APC |
Quote |
Chart |
News |
PowerRating) — Long the May 60 calls at $1.75 (50%).

(
CHIR |
Quote |
Chart |
News |
PowerRating) — Long the July 50 calls at $3.30 (50%).

(
CPN |
Quote |
Chart |
News |
PowerRating) — Long the April 12.5 calls at $1.20 (50%).

(
MLNM |
Quote |
Chart |
News |
PowerRating) — Long the May 25 calls at $2.40 (50%).

(
XOM |
Quote |
Chart |
News |
PowerRating) — Long the July 40 calls at $3.00 (25%). Liquidated 3/19/02 at $4.50.

Call Spread Positions

(
QCOM |
Quote |
Chart |
News |
PowerRating) — Long the April 40/50 call spread at $2.50 (75%), sold 25% at
$4.50 on 3/18/02.

Put Positions

Put Spread Positions