Better On The Open

The tech sector sustained heavy technical damage yesterday, as trendlines that
were successfully defended Monday were taken out. Although many indices are
resting near support and a bounce is not unlikely, any first bounce up to these
trendlines should be used as a selling opportunity. In the COMP, the trendline
connecting the September and February lows comes in at approximately 1781 today,
and the COMP is resting on top of  the 50% retracement level of the
September-to-January rally (1742.9). This should be decent support for the
moment, but the real line in the sand is the Feb. 22 low of 1696.5.

The
(
QQQ |
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PowerRating)s have been beaten back to within spitting distance of their
February lows and are hanging just above the 61.8% retracement level of their
September-to-December rally (33.33). Again, this should provide near-term
support, and any rally up to the old trendline support of 34.85 should be sold.
In fact, the market profile of the QQQs indicates that anywhere between 34.50
and 34.90 would be an excellent selling zone. We will be buying puts in these
areas should we see them.

One of the big reasons the Nasdaq indices have been so weak is the fact that the
mighty
(
$SOX.X |
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is beginning to crack. The trendline connecting the September and February lows
in the SOX index comes in at approximately 550 tomorrow (the SOX closed at
557.65). Monitor this level closely, if it gets breeched decisively, it could
open the floodgates.

As you know, the SOX options are illiquid, and we are forced to use the SMH
options as their proxy. $45.00 is now an excellent resistance area in the SMH
and should be used as a put buying zone (use the May options now). We will
continue to offer our April 45 puts at $2.50 as the expiration clock is ticking.

Volatility

The volatility indices had a strong day yesterday, especially the
Nasdaq-related indices (QQV, VXN). The VIX closed up 31 at 21.05, the VXN gained
2.18 to 42.46, and the QQV gained 1.54 to 36.85. However, they did not take out
yesterday’s highs, which indicates there still may be some hope for this
market.

Trade Updates (4/09/02)

(
BAC |
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PowerRating) — STILL nothing done on the BAC spread.
Working.

(
DIS |
Quote |
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PowerRating) — Per the intraday Alert, we bought the DIS April 22.5 puts to close
for $.30. This closes the short put portion of our DIS April 22.5/25 reverse
collar. Since we initiated the position for a $1.15 credit, closing the put side
leaves us long the April 25 calls at an effective $.85 credit. We will now shift
the position to the "Long Calls" category.

(
SMH |
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PowerRating) — Nothing done on the order working to sell the SMH April 45 puts at
$2.50. We will reenter tomorrow.

(
WMT |
Quote |
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PowerRating) — We bought another 25% of the WMT June 60 puts at $2.50. This leaves
us with a 50% position at an average price of $2.75.

Working Orders (Old Recommendations)

(
BAC |
Quote |
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PowerRating) — Buy the August/May 65 put calendar spread (buy the August 65 puts
and sell the May 65 puts) for $1.50 or better (50%).

(
ORCL |
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PowerRating) — Traders may begin making scale-down purchases of the June 12.5
calls, looking to slowly build a long position at an average price of $1.25 or
less. We are looking to add another 20% at $0.80

(
WMT |
Quote |
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PowerRating) — Buy an additional 25% of the WMT June 60 puts on at $2.00 as
WMT challenges its recent gap.

Rolls/Adjustments

Chiron
(
CHIR |
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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.

We will be buying QQQ puts and SMH puts on bounces into resistance.

(
DIS |
Quote |
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PowerRating) — April 25/22.5 reverse collar (long the April 25 calls, short the
April 22.5 puts) at a $1.15 credit (75%). Closed the put side at $.30 on 4/9/02.

Buy-writes

Put Positions