Month-End Garbage Time –Â Stay Out
The futures markets are looking mildly better
this morning as are most overseas markets. DJI futures are up 19.0 points, the
S&P futures are up 1.50 points and Nasdaq 100 futures are up 5.00. In Europe,
the FTSE 100 is up 28.10 points or .71%, the DAX is higher by 32.34 points or
1.07%, and the CAC 40 is up 66.59 points or 2.25%. Interest rate futures are
lower, the dollar is stronger against most major foreign currencies, crude
futures are a bit better, and gold futures are about $1.00 lower.
There is no economic news today, and it looks to be a slow one. Yesterday’s
rally out of the hole was probably a harbinger of the month-end gymnastics about
to take place, and it is probably a good time to sit one out. On the upgrade/downgrade front, Gillette
(
G |
Quote |
Chart |
News |
PowerRating) gets moved from underweight to overweight by
Morgan Stanley, BP is moved up to outperform by Bear Stearns, Goldman
(
GS |
Quote |
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News |
PowerRating) is
downgraded by Wachovia from buy to hold (whatever that means), and Goldman
downgrades Wal-Mart
(
WMT |
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News |
PowerRating) to "market perform."
Even though they were lifted by yesterday’s magical rally, the retailers are not
acting well, and we may be feathering in some more shorts in this sector,
particularly on strength (KSS between 60 -62 looks like a good short to me). We
still have the eyeball on oil and oil service, but there is nothing stimulating
in those charts at the present time. Telecom still looks like a good buy on a
pullback.
Volatility
The poor Consumer Confidence report and the market’s weakness brought
volatility back to life yesterday with the VIX gaining 1.12 to 36.79, the VXN
rose .95 to 52.47, and the QQV was up 1.46 to 46.00. We expect volatility to
hold until the payroll numbers Friday, then get pounded.
Update: (10/29/02)
Nothing done.
New Recommendations
WAG — For those long the January 35 puts ($2.50, 50%), sell an equal
number of the January 30 puts at $1.50 to flip into the January 30/35 put spread
at $1.00.
Working Orders (Old Recommendations)
BGEN — Those who bought the January 40 calls at $2.10 (25%), sell an
equal amount of the January 45 calls at $1.10 to flip into the January 40/45
call spread at $1.00.
QQQ — Those who sold the January 23/26 call spread at $1.50, bid $1.80 for the
January 20/23 call spread (somewhere near $23.00 should get you done).
Recap of open trades
Long-term
Reverse Collars
CIEN — Long the January 2.5/5 reverse collar at
$.40 (25%).
Buy-writes
HAL — Long the January 15 buy-write at $12.05 (100%).
Proxy buy-writes
DYN — Long the January 15 calls at $3.20 – left over from proxy buy-write
(50%). Left for dead.
Complex Strategies
None.
Directional Positions
None.
Short-term
Call Positions
BGEN — Long the January 40 calls at $2.10 (25%).
CCU — Long the January 40 calls at $2.00 (25%). Sold half at $4.00 on
10/21/02.
Call Spread Positions
QQQ — Short the January 23/26 call spread at $1.50 (25%).
Put Positions
WAG — Long the January 35 puts at $2.50 (50%).
Spread Positions
Stops
None.
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is not suitable for all Investors. - Also note that spread strategies involve
multiple commissions and are not risk-free. Most spreads must be done in a
margin account.
- Because of the importance of tax
considerations to all options transactions, the investor considering options
should consult with a tax advisor as to how taxes may affect the outcome of
contemplated options transactions.
- Supporting documentation for claims,
comparisons, recommendations, statistics or other technical data will be
furnished upon request. One or more of the contributors to these
commentaries may have a position in one or more of the securities mentioned.
- It is important to note that the options
strategies discussed herein are not suitable to all investors. Options are
complex investment tools and involve substantial risk. Moreover spreading
strategies do not eliminate risk and involve multiple commissions.
- Note: All individuals must have read the ODD
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