Opening Better; Christmas Crawl Beginning Already?
The market is set to open better this morning, although I don’t see any news to
explain why, except for possibly strength in Europe. This is going to be a slow
week on the economic front and the earnings front, so the market will have to
"do its own thing." As I commented Friday, this is beginning to feel a lot like
last year when the market went into a relentless drift-up mode into the end of
the year while the usual suspects hyped the heck out of it. The first thing you
want to do if you are in the "bear market rally" camp is ratchet back on your
aggressiveness and spend more time watching than anything else. It is very easy,
especially at this time of year, to end up in the "Betty Ford Put Clinic," where
I have my own wing.
Currently, the DJI futures are up 64.0 points, S&P futures are up 8.60 points,
and Nasdaq 100 futures are up 11.50 points. In Europe, the FTSE 100 is up 55.50
points or 1.36%, the DAX is up 66.45 points or 2.08%, and the CAC 40 is up 69.54
points or 2.20%. In Asia, another bad day for the Nikkei as it fell 157.58
points or 1.85%. The Nikkei is on multi-year lows and seems to be accelerating
lower. The Hang Seng gained 54.44 points or .55%. Keep an eye on that Nikkei
folks, nobody in the "financial press" seems to have anything to say about it,
but if you’re looking for a trouble trigger, that could be it.
Interest rate futures are unchanged, the dollar is slightly higher, and December
crude futures are up $.23 while December gold futures are $2.30 lower. As I
mentioned above, no real economic news today, so we’ll probably see a rather
technical trade. It is beginning to look as thought the recent rate cut has
reignited speculation in the tech sector. It is clearly the strength of this
market, but remember if you are going to run with the bulls in that sector to
keep one eye on the fire escape!
Volatility
Friday, volatility continued to get stomped, and if you think it is
getting cheap, I would urge you to study last year’s charts. Today the VIX lost
1.77 to 30.83, finally coming back to its 200 day moving average (currently
31.22), which it last visited June 13th! Last December it approached 20.00, so
don’t go out and fill up your boots just yet. The VXN lost 2.72 to 49.68, also
ripping through its 200 day moving average (51.34). Last December the VXN traded
as low as 45.00, but remember it hit 36.00 later in the spring, so no, not yet.
The QQV was destroyed today, losing 3.67 to 40.84, also penetrating its 200 day
moving average (44.15). Last December the QQV traded as low as 38.00 before
touching 30.00 in the spring. Not time yet there either.
Update: (11/15/02)
BGEN — We bought another 25% of the January 40 calls at $3.00.
DIA — We sold our remaining November 80/84/85/89 call condors at $3.50 to close.
KSS — We bought another 25% of the January 50/60 put spread at $2.00.
New Recommendations
DIA — Buy the January 80/84/88/92 call condor at $1.20 or better.
Working Orders (Old Recommendations)
CIEN — Buy the January 2.5 puts at $.05 to close.
WAG — Sell half the January 30/35 put spread at $3.00, half at $4.00 to
close.
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
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 $3.00 (25%).
Call Spread Positions
BGEN — Long the January 40/45 call spread at $1.00 (25%).
DIA — Long the November 80/84/85/89 call condor at $1.50 (25%). Sold
half at $3.10, 11/14/02. Sold remainder at $3.50, 11/15/02.
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
None.
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 (50%).
Stops
KSS — Two consecutive closes over
$74.00
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