Futures Better As Payroll Numbers Come In Bullish

Currently, DJI futures are 92.0 better, the S&P futures are 8.00 better, and
the Nasdaq 100 futures are 15.00 better on the bid. The dollar is sharply higher
against the major foreign currencies, interest rate futures are lower (although
not as much as one would think they would be in response to the payroll figures
— hmm…), crude is once again knocking on the $30.00 door with the October
futures up $.82 to $29.80 on the back of a massive attack on air defenses
in Western Iraq (in case you are wondering when the war on Iraq will begin, I
think it was about last March), and gold futures (basis October) are up $1.00 to $319.70.

In Europe, stocks are well-bid with the FTSE 100 showing a gain of 90.50 points,
or 1.76%, the DAX is up 69.32 points, or 2.07%, and the CAC 40 is up 49.19
points, or 1.57%. In Asia, the Nikkei fell 93.05 points, or 1.01%, and the Hang
Seng dropped 5.17 points, or .05%. The Bovespa is up sharply at the moment,
gaining 119.95 points, or 1.23%.

Today will be a great day to monitor market psychology. I always love to see how
the market will respond to very good news or very bad news because it gives you
a good look at the “guts” of the market. Today we have had very good
news. If the market trades weakly, or gaps higher and reverses, it would
indicate that we are in for a beating on the downside quite soon. If it holds,
then we need more information. The thing to look for today is weakness, both in
individual stocks and in sectors.

One other note, we have been monitoring oil stocks for a possible short, and
they should all gap higher this morning. I will be out with a list mid-morning
of stocks and suggested levels. One last thing: Rosh Hashanah begins tonight at
sundown, so the afternoon might get choppy and volatile — be careful!

Volatility

Volatility should get pounded this morning. If it does not, look for an
afternoon reversal.

Update (09/05/02)

W were filled on both our ratio call spread orders, buying the DJX
September 86/90 1:2 call spread at $.50 (50%), and the QQQ September 23/26 1:2
call spread at $.50 (50%). I wish I hadn’t done the QQQ…

New Actions (New Recommendations)

(
MMM |
Quote |
Chart |
News |
PowerRating) — Begin placing orders to scale sell our October 110/120 put spreads
(long from $2.65, 100%). Sell 25% at $4.00, 25% at $5.00.

Working Orders (Old Recommendations)

(
QQQ |
Quote |
Chart |
News |
PowerRating) — Buy the September 23/26 1:2 (buy one September 23 call, sell two September
26 calls) for $.50 (50%). Filled today!

DJX — Buy the September 86/90 1:2 (buy one September 86 call, sell two
September 90 calls) for $.50. (50%).Filled today!

Retailer Shorts (not in the ballpark yet)

Kohl’s
(
KSS |
Quote |
Chart |
News |
PowerRating): On an approach to the 70.00 area, buy the January
60/70 put spread for $3.00 or less (25%).

Sears
(
S |
Quote |
Chart |
News |
PowerRating): On an approach to the 47.00 area, buy the January 35/45 put spread
for $3.00 or less (25%).

Walgreen’s
(
WAG |
Quote |
Chart |
News |
PowerRating): On a rally into the 35 -37 area, buy the January 25 puts
outright, beginning at the $2.50 level or less (25%).

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

None.

Call Spread Positions

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

None.

Spread Positions

(
C |
Quote |
Chart |
News |
PowerRating) — Long the December/September 30 put calendar spread at $.975 (50%).

C — Long the January/September 30 put calendar spread at $1.20 (50%).