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To: OX who wrote (813)	8/17/2000 8:25:51 PM
From: Didi	Read Replies (1) of 1115

Hi OX, Great article, my friend. Thanks much. You're always resourceful. Don't you love cautious stances by Richard Shapiro, an Ernst & Young securities tax partner? Unlikely headaches for his clients down the road. Saw the Option Strategist - Updater Newsletter, 8/15/00? Attached below just in case. Have a good one, OX. di ;) ---------------------------------------------------------- >>> ===================================================== 2. Up To The Minute Market Commentary From Lawrence McMillan ===================================================== Some Warning Signs On The Horizon There are two main indicators that we follow that are giving warning of a market downturn. One is the implied volatility of the CBOE's $OEX options the Volatility Index ($VIX). When $VIX gets "too low", that's a sign that traders are complacent. They are not worried about the market being volatile, and in particular they aren't worried much about the downside possibilities of the market. Any readers familiar with contrary theory know that complacency is usually followed by a smack in the face (or the pocketbook). $VIX (see accompanying chart) is now down to levels that we haven't seen since last fall. The one fact that is most often associated with a low $VIX reading is that the market quickly follows with a volatile move. Often that move is on the downside but not always. Another distressing indicator is market breadth. It has been so good that it's overbought -- and has hence generated a sell signal from our proprietary oscillator based on advances and declines. This indicator has given three previous sell signals this year and they have all proved to be tradable declines in the stock market. On a more positive note, broad market put-call ratios (which also measure sentiment) are not particularly bearish right now. So that might indicate that any declines would be rather short -term in nature. However, history has proven that even a short-term decline can pack a real wallop because prices tend to fall a lot faster than they rise.<<<

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