Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who wrote (731)	11/17/2000 2:02:21 PM
From: Warren Gates	of 74559

I am of the opinion that even in this bear market, there is an opportunity to go play the long side as long as one is mindful of the areas of overhead resistance and will be willing to take 10% gains. A well defined downtrend line is starting to emerge on the Nasdaq index with 5100 being the starting point, 4200 in August being the 2nd point, and what I believe would be 3500 as the 3rd point sometime in the next few weeks. The difference between this bear market and past bears are the willingness of traders to play this market on the short side. This has provided plenty of buying power during the strong counter-trend rallies. Since I don't really like to daytrade, and I don't want to commit more than 20% to tech stocks, a strategy I strongly recommend in this kind of market is to buy in the money calls instead of stocks. 10-15 pts in the money for a $100 stock affords one the ability to profit from rallies but protects from those devastating overnight plunges. This also allows the remaining cash to earn some interest. This should be balanced out with some naked calls against the QQQ. In my opinion, trading in this kind of market is the only way to go.

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