‘Show Me’ Week

This is a "show me" week for the market. Traders and investors will be
looking for ANY sign of life. I have oversold indicators up the wazoo, but I am
not buying anything until this market proves itself. As a matter of fact, I will
be looking to add put positions in the
(
BBH |
Quote |
Chart |
News |
PowerRating)S, DJI,
(
SMH |
Quote |
Chart |
News |
PowerRating)s, and possibly
the Russell 2000 on strength. Perhaps the best we can expect of a
"bounce" phase in a bear market is sideways…

The best case for a reversal/bounce might be made by volatility.
Volatility spiked monstrously higher Friday morning before settling back down as
the market rallied, precisely as it did Wednesday. As I have mentioned before,
this type of behavior usually precedes a bounce, but this is a powerful bear
market, and I would not bet my last dollar on it. The VIX visited 30.00 Friday
(near the February highs), hitting 29.94 before settling at 26.65, down .81 on
the day. The VXN hit levels not seen since last November, hitting a high of
53.46 before settling at 52.24, a gain of 2.48 on the day. The QQV took out its
May highs, hitting 47.32 before settling at 45.52, up 1.49 on the day.

Trade Updates (6/07/02)

(
MER |
Quote |
Chart |
News |
PowerRating) — We bought a 25% allocation of the MER July 37.5 puts at
$1.40.

(
SMH |
Quote |
Chart |
News |
PowerRating) — We sold our 25% position in the July 37.5 puts at $5.00.

New Actions (New Recommendations)

(
TGT |
Quote |
Chart |
News |
PowerRating) — Sell the remaining June 40 puts at $3.00.

Working Orders (Old Recommendations)

(
CHIR |
Quote |
Chart |
News |
PowerRating) — Sell all CHIR July 50 calls at $1.00 to close.

Rolls/Adjustments

(
DYN |
Quote |
Chart |
News |
PowerRating) – Holders of the DYN January 15 call/June 20 call proxy
buy-write (long the January 15 calls, short the June 20 calls at $3.20),
buy the June 15 calls (to open) and sell the September 17.5 calls (to open)
for $1.00 credit (to you).

Buy-writes

Proxy buy-writes

(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15/June 20 proxy buy-write at $3.20 (50%).

(
CHIR |
Quote |
Chart |
News |
PowerRating) — Long the July 50 calls at $3.30 (50%).

Call Spread Positions

None.

Put Positions

(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the August 65 puts at $1.50 (50%).

(
MER |
Quote |
Chart |
News |
PowerRating) (1) — Long the July 40 puts at $1.50 (25%).

(
MER |
Quote |
Chart |
News |
PowerRating) (2) — Long the July 37.5 puts at $1.40 (25%).

(
SMH |
Quote |
Chart |
News |
PowerRating) — Long the July 37.5 puts at $2.50 (25%). Sold at $5.00 on
6/7/02.

(
TGT |
Quote |
Chart |
News |
PowerRating) — Long the June 40 puts at $.85 (75%). Sold half at
$1.70 on 6/04/02 and 6/6/02, offering the balance at $3.00.

Spread Positions

(
MER |
Quote |
Chart |
News |
PowerRating) — Long the June/July 40 put calendar at $.50 (50%).