Big Up — Pass On It!

Better-than-expected sales over the Thanksgiving weekend and an upgrade
of a key tech stock has stock futures bid up the wazoo this morning. Intel,
which carries a lot of weight in several different indices, gets upgraded by Dan
Niles over at Lehman to "overweight" from "equal weight," and AMD is also raise
to "equal weight" at the same shop. INTC is currently up about $1.00 on the
news. There are plenty of downgrades to go around as well, CSCO and
EMC downgraded by RBC Capital Markets, Computer Sciences (CSC) and EDS by J.P.
Morgan, but they are attracting no attention this morning as we step into the
time machine and dial it back to 1999.

Hopefully everyone out there recognizes this for what it is. Two straight months
of rally in the market — not unusual at this time of year — and now the "upgrades"
start to roll in in the big-cap tech names. Get it? They want you to take it off
their hands — don’t.

Currently DJI futures are up $155, S&P futures are higher by 13.10, and Nasdaq
100 futures are up 28.00. In Europe, the FTSE 100 is up 47.90 points or 1.15%,
the DAX is up 148.13 points or 4.46%, and the CAC40 is higher by 62.99 points or
1.89%. In Asia, the Nikkei lost 41.09 points or .45%, and the Hang Seng rose
135.29 points or 1.34%. Interest rate futures are sharply lower (yields higher),
the dollar is sharply higher, gold futures are $1.00 lower, and crude futures
are unchanged.


Friday was a continuation from Wednesday afternoon. The VIX gained .24
to 31.08, the VXN rose 2.06 to 49.48, and the QQV gained 1.51 to 42.58. The
other volatility indices have jumped as traders spread off risk from Wednesday’s
large purchases, and fears of terrorist acts over the weekend. If implied
volatility continues to rise this week, I would start to worry about it, but for
right now, it still looks like a bit of an anomaly.

Update: (11/29/02)

HAL — Sold the January 15 buy-write at $14.55
when Halliburton jumped on the asbestos news. We recommended selling it at
$14.50, so we will mark it out there.

New Recommendations

QQQ — If Tuesday’s lows ($26.90) are not taken out by next Friday, we
will cover the short January 23/26 call spreads.

Working Orders (Old Recommendations)

HAL — Sell the Halliburton January 15 buy-write at $14.50 to close.
Filled at $14.55 today.

QQQ — Subscribers short the January 23 /26 call spread at $1.50 (25%), leave an
order in the market to purchase the spread at $1.50 to close the trade.

Recap of open trades


Reverse Collars



HAL — Long the January 15  buy-write at $12.05 (100%). Sold at $14.50

Proxy buy-writes

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

Complex Strategies


Directional Positions



Call Positions

GILD — Long the January 40 calls at an average price of $1.60 (50%).

Call Spread Positions

BGEN — Long the January 40/45 call spread at $1.25 (25%). Closed
out at $3.00 11/27/02.

CIEN — Long the January 5/7.5 call spread at $.05 (25%).

DIA — Long the December 80/84/86/90 call condor at $1.20 (25%).

QQQ — Short the January 23/26 call spread at $1.50 (25%).

Put Positions


Put Spread Positions

BAC — Long the January 60/70 put spread at $2.90 (25%).

KSS — Long the January 50/60 put spread at $2.475 (50%).

WAG — Long the January 30/35 put spread at $1.00 (25%). Closed out at
$4.00 11/27/02.


GILD — $34.50 closing only.

KSS — Two consecutive closes over $74.00

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