Watch This Sector Closely Today

Currently, DJI futures are down 25.0, S&P futures are lower by 3.60, and
Nasdaq 100 futures are down 2.00. In Europe, in extremely light trade, the FTSE
100 is down 51.30 points or 1.30%, the DAX is off 56.03 points or 1.87%, and the
CAC 40 is down 34.49 points or 1.12%. In Asia, the Nikkei rose 13.95 points,
while the Hang Seng fell 116.37 points or 1.22%. Interest rate futures are
higher, the dollar is mostly unchanged, and crude and gold futures are slightly
lower (but they all feel like they are coiling for a surge higher later today).

With idiots like the North Koreans running around threatening to make nukes and
use them (some reports say it would take as little as 30 days), way
out-of-the-money puts as catastrophic insurance might be in order for portfolio
protection.

Don’t Watch What They Say, Watch What They Do…

News of poor holiday sales from the various retail chains continues to rain on
the markets. Yesterday the WSJ ran with: “Retailers Fear Weakest Sales In
Decades as Final Rush Fades,” and most retailers rallied. Watch this sector
closely today.

Volatility

Yesterday’s action generated a little pop in vol, but nothing mind
blowing. It is not worth messing with either from the long or short side at the
moment. The VIX gained 1.07 to 31.08, the VXN rose .23 to 45.36, and the QQV
fell .21 to 38.38.

Update: (12/26/02)

Nothing.

New Recommendations

BAC — Use a $71.50 close only (meaning it has to close above
$71.50) stop on the entire position.

HD — We are using a $23.00 close only (meaning it has to close below $23.00)
stop on the entire position.

KSS — We took partial profits on our position here, so we are effectively in
for free on the balance, but we don’t want to let money slip through our
fingers. Use a $57.25 stop on the remainder of the position.

QQQ — Use a $26.30 close only (meaning it has to close above $26.30) stop
on the short 23/26 call spreads.

Working Orders (Old Recommendations):

KSS — Sell the remaining January 50/60 put spreads at $7.00 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.

Buy-writes

None.

Proxy buy-writes

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

Complex Strategies

HD — Long the January 25 calls at $1.45 (75%).

Call Spread Positions

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 (25%). Sold half at
$5.00, 12/23/02. 

PG — Long the April 75/85 put spread at $2.50 (25%).

HD — We are using a $23.00 close only (meaning it has to close below $23.00)
stop on the entire position.

KSS — We took partial profits on our position here, so we are effectively in
for free on the balance, but we don’t want to let money slip through our
fingers. Use a $57.25 stop on the remainder of the position.