A Chilling post from the Crystal Ball-by Larry1--
************************WE ARE THERE*************************
My analysis suggests that this monday will be the day that everyone FINALLY realizes we are in a bear market. It will happen at a time when the DOW Jones Composite is only 3% from the highest high it has made since May 1999. That leaves a long
way to go down.
When the S&P 500 breaks it's most recent lows, and joins the NASDAQ, there will only be a few that will still hold out HOPE for the DOW to hold it's critical support of 10290. Once that level gives way, which I expect it will do on Monday, then it will be the realization BY ALL that it is time to sell.
**Just who in the hell do they think they are going to sell to.**
Considering that the size of the congestion area for the DOW for the last 4 1/2 months is 11000 and 10300, that is 700 points wide. Taking the width of that congestion area and subtracting it from 10300 gives 9600. That just happens to be the area where the long term support and the Oct 2000 low are. Since the S&P 500 has been sitting on its 200 week moving average since Feb 23rd, it is quite interesting that the 200 week moving average
on the DOW is at 9615.
The NTSE has very solid support at the 575 area, and that happens to correspond to the 9600-9660 area on the DOW. That level is the final stand for the bulls. The S&P 500 support is in the area of 1140 to 1165, with the best target coming in at the 1155 to 1160 area. There may be some temporary support at the 1185 to 1190 area, which is the 9975 to 11040 on the DOW and 597 to 604 on the NYSE. That should't hold if reached on Monday as I think it will be.
The big question in my mind is if the major support that I mentioned at the 9600 area on the DOW, could break on Monday.
It is possible, but I really do not know.
I mentioned to add on to put positions last week near the high of the S&P 500 rally. I said to buy the March 1200s and that we were loading the boat. That is just what we did.
The way I plan to play it is to graduall sell out the 1200 puts at the support levels I mentioned. I am not going to sell any crash puts at the 1185 level. When we approach the 1155 level on the S&P 500 and the 9650 level On the DOW, I will sell all of our 1200's, 1175s, and 1150s. Be careful of the markets closing if the DOW reaches 10% down by a certain time. If it does, then they will close the market temporarily, only to reopen it later.
If it doesn't reach the 10% down level by 1:30 CST, ( I believe that is correct ) then the 10% limit is no longer in effect. At that time the 20% limit needs to be your biggest concern.
*********DO NOT LET THE MARKET CLOSE DOWN 20% WITHOUT HAVIG SOLD
YOUR PUTS*******************
I am not positive if this is going to happen, but if it does, it sure won't hurt to be prepared. We will be buying March calls to protect our puts when we approach the 1155 level. At that time, I could care less which way and by how much the market intends to go. It will not sit still. I will be in the position to profit greatly either way.
I do not expect the rally to go past Wednesday, and will be loading up with March OEX puts or others that do not expire until the close of business on Friday.
A problem exists with the S&P 500 puts as they will expire as of the close on Thursday. If we are in the 1155 level on Monday, you might want to sell some of them, buy some calls, and roll some of the puts to the OEX for March. I would still hang on to some of the crash puts at that time, as they would also serve as protection for my calls, and that it would be possible that the market may very well trade down Monday and *MAYBE* part of the day Tuesday, and even possibly Wednesday to the area of 1000 on the S&P 500.
As far as some saying that the market may have a huge rally from here, it is my opinion that that will only happen if we CRASH first. The I do not see anyway in the world for the DOW once it breaks the 10000 area to ever rally above the 10300 level. Those buyers that purchased there, will only be too happy to try and get even. IT WILL BE MAJOR RESISTANCE.
These are my plans and if the CRASH occurs, then I will be doing just what I have said. I would also blow out some of the bond calls if the bond market were to explode. The T-bond Trader says that above 106 20/32s on the June bond there is little in the way of the 108 to the 109 area. You may want to check out his morning comment. ( tbondtrader.com )
Well I'm either going to be classified as an idiot by some or as genius. To me, all I have continued to do, is to make you aware of the DANGEROUS TIME FRAME THAT WE ARE IN RIGHT NOW.
I want to wish everyone the best of luck, and hope that those of you that do have March puts, added on a little last week as I said. REMEMBER, I said over and over again NOT TO OVER-COMMIT !!
The purchase of even a few of the March 1200s could really make a difference |
