A Bounce (Sell It!)

In Europe, the FTSE 100 is currently up 98.60 points, or 1.46%, the DAX is
higher by 70.94, or 2.35%, and the CAC 40 is up 16.92 points, or .58%. In Asia,
the Nikkei dropped 188.54 points, or 1.95%, and the Hang Seng fell 99.57 points,
or 1.06%. Currently, DJI futures are 52.0 better, the S&P futures are 7.80
higher, and the Nasdaq 100 futures are 11.50 higher. Interest rate futures are
lower, the dollar is higher, and crude oil is roughly unchanged, as is gold.

With that in mind, and given the explosion back up in the various volatility
indicators, we are preparing to gradually take some profits, please see the
recommendations below. Although some of our bearish positions are just now
making some money (I was too early, as usual), we have to be ready with profit
targets because as you may remember from late July, when redemptions occur, they
are violent and quick, and we must have our orders in the market ahead of time.

Watch for easing chatter to surface ahead of next Tuesday’s FOMC meeting. Also,
keep your eyes open for intervention. As long as we are imitating Japan, we
might as well go all the way and begin manipulating stock prices. Expiration is
the best time to do it. The best way to detect intervention is by watching the
currency and bond markets. If you see the dollar suddenly strengthening, or
interest rate futures suddenly collapsing, there is probably some sort of government-sponsored
program about to be launched.

Volatility

Well, I might be made a liar on my prediction that we have seen the
highs for this year in volatility. Yesterday the VIX exploded up to 46.16, a
5.27 point gain, the VXN rose 3.43 to 62.76, and the QQV was up 2.64 to 53.63.
These are new highs for the month of September, and we are set to inspect the
August highs.

Update: (09/19/02)

Nothing today.

New Recommendations

(
AMGN |
Quote |
Chart |
News |
PowerRating) — Sell half of the January 30/40 put spread at $5.00.

(
CCU |
Quote |
Chart |
News |
PowerRating) — Bid $1.50 for another 25% of the January 40 calls.

(
WAG |
Quote |
Chart |
News |
PowerRating) — Sell the January 35 puts at $4.00.

Working Orders (Old Recommendations)

(
AHC |
Quote |
Chart |
News |
PowerRating) — Liquidate the October 65/70 put spread at $3.00, and use a
$71.00 closing only stop.

(
BP |
Quote |
Chart |
News |
PowerRating) — Buy the January/October 40 put calendar spread (buy the January 40
put, sell the October 40 put) for $1.15 (25%).

(
MMM |
Quote |
Chart |
News |
PowerRating) — Still working a $5.00 offer on another 25% of our October 110/120
put spreads, now use a $122.50 closing only stop.

Buy-writes

(
HAL |
Quote |
Chart |
News |
PowerRating) — Long the January 15 buy-write at $12.05 (100%).

Proxy buy-writes

(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15 calls at $3.20 — left over from proxy
buy-write (50%). Left for dead.

Complex Strategies

(
IBM |
Quote |
Chart |
News |
PowerRating) — Long the January 50/60 put spread at $2.00 (50%).

(
KSS |
Quote |
Chart |
News |
PowerRating) — Long the January 60/70 put spread at $3.00 (25%).

(
S |
Quote |
Chart |
News |
PowerRating) — Long the January 35/45 put spread at $3.00 (25%).

(
TGT |
Quote |
Chart |
News |
PowerRating) — Long the January 35 puts at $2.50 (25%).

(
CCU |
Quote |
Chart |
News |
PowerRating) (2) — Long the January 40 calls at $2.50 (25%).

Call Spread Positions

DJX — Long the September 86/90 1:2 ratio call spread at $.50 (50%).

(
QQQ |
Quote |
Chart |
News |
PowerRating) — Long the September 23/26 1:2 ratio call spread at $.50 (50%).

Put Positions

None.

Spread Positions

(
AHC |
Quote |
Chart |
News |
PowerRating) — Long the October 65/70 put spread at $1.50 (25%).

(
C |
Quote |
Chart |
News |
PowerRating) — Long the December/September 30 put calendar spread at $.975 (50%). Sold
half at $2.20 on 9/16/02.

C — Long the January/September 30 put calendar spread at $1.20 (50%). Sold
half at $2.45 on 9/16/02.