I'm not sure exactly what to make of this three-day "correction" in the Nasdaq. It was very steep, but not too deep.
I'm sure like many folks, I just drag out the prior year's daily Nasdaq chart when I want to know what's going to happen. They look so much alike I often have to check what year I'm looking at. Last year we had a couple of short selloffs: Jan 12th - 14th, and 20th to 22nd. Seems like a very similar situation to this year; we just got our (first?) 3 day selloff a week early. I think folks are feeling the same jitters again because of the big runups from mid Oct to the end of December of both years. But we're just on the front edge of a strong earnings period, so I expect a choppy move up. Unless we get a clear indication of a slowing economy (and wage inflation) I think February will also copy last year, i.e., down the whole month.
On covered calls, I would never attempt them with either JDSU or QCOM. Waaaaay too volatile and too much potential for big moves up. You think you've found a top, sell some calls, and it moves up 20 points the next day. With a quadrupling of my stock in the 5 months, I can't take the chance of losing the shares (and paying the taxes) just for a couple of points. I already spend enough time staring at the ceiling at 4:00 am. Since I'm looking out 2-3 years, I don't feel a need to protect against the 45 point drops; it's just noise to me. Doesn't mean I don't try to pick up a few calls at the bottom though. I did last week on Wed-Thurs and sold them at the close on Friday. Swore I wouldn't sell them til earnings (or after), but couldn't resist the runup. I'm sure I'll regret it next week, i.e., in the first 2 minutes tomorrow.
Just my 1ó½. |
