GOOD MORNING ALL....I WAS LOOKING FOR "SOMETHING OUT OF THE BLUE" TO TRIGGER A RALLY...NEVER IN MY WILDEST DREAMS COULD WE HAVE ENVISONED ANYTHING QUITE LIKE THIS...AS I LOOKED AT THE TV, INTO THE EYES OF ALL THOSE PEOPLE WITH PICTURES OF THEIR LOST LOVED ONES, TEARS WELLED UP AS OUR HEARTS WENT OUT TO THOSE WHO'S LIVES ARE FOREVER CHANGED...
NO THIS WILL "NOT" BE BUSINESS AS USUAL EVER AGAIN...NOT FOR ME ANYWAY...THE AMERICAN WAY OF LIFE HAS BEEN INTERUPTED, OUR VERY FREEDOMS HAVE BEEN ASSUALTED, AND CHANGED...THERE'S A CHINK IN OUR ARMOUR NOW, MORE LIKE A HOLE BLOWN RIGHT THRU IT....I DON'T LIKE IT EITHER...WE WERE SMUG AND COMPLACENT...IT WIPED THE SMILE OF OUR FACES FOREVER....NO WE'LL NEVER BE THE SAME AGAIN...
HERE'S MY NEWSLETTER FROM LAST SUNDAY AND WHAT I WAS LOOKING FOR THIS WEEK...BE ULTRA CAUTIOUS OUT THERE..I WOULD OPT FOR THOSE THAT ARE IN CASH TO STAY THERE NEXT WEEK...BEST OF LUCK TO YOU ALL...
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JERRY OLSON'S
"POINT" OF VIEW NEWSLETTER
DATED SEPT 9TH 2001
Hi everyone, hope your enjoying this fabulous weekend....
Well that technical bounce i was looking for hasn't happened just yet,,but it will shortly..and it should be a good one...
every single index and chart i'm looking at says tighten up your shorts, and get ready for Freddy...on the long side...
Some thing is going to trigger this pop from deeply over sold levels..we have really tested the April lows on almost all indexs...and i keep talking about that rubber band effect that i feel is going to explode this market up hard...
however..as we already know..Q4 looks terrible at best, and the earnings season and warnings season is upon us again???..sheesh it never stops huh<vbg>..
What we are witnessing is the systematic correcting of over valued stocks, and over bought sectors...but folks this is something that will run it's course sooner now than later...the risk reward is now skewed toward the reward side...not quite yet though..what i think is going to happen is this..
We will have this technical bear market rally, there will be another shorting opportunity there, as we head into earnings season, and the FOMC on OCT 2nd...i was thinking we would NOT see another rate cut..and that event would trigger a hugh negative selloff into Macro Cycle Lows this Oct, for ANOTHER test of the bottom...and might even break that bottom for the washout capitulation selloff i'm looking for....However...i think the FED is very wary of decelerating Global Economies along with our own current recession, and may just cut one more time...either way, those lows coming in Oct should be what the doctor ordered...
Now, whats our game plan...the way i see it is to short all rallies for now, sure play this technical bounce it could be nice for a quick pop up...maybe you can exit some stocks on this move...or write Covered Calls...because even though we bottom out here shortly..i fully expect that Nov/Dec will be base building time, not really a major relief rally type market...
This Market is now a 'SHOW ME MARKET"..meaning companies better beat the numbers and NOT warn going forward before the street will buy the stock...this is an urgent alert for you and me..we want to BUY those stocks that actually do that and say that...those stocks will be piled into heavily while others in the same sector will wilt on the vine...so be especially mindfull of the best of the best here..forget those dogs with fleas..remember there still dogs!!!!!
Let's talk about some things that i've been discussing with you over the last 3 months...I am only hoping that those subscribers that e-mailed me about their repective stock problems took my advice..by either selling the shares or writting deep in the money Covered Calls...i can say with a certainty your in better shape today IF you took that advice...if not??? don't know what to tell you...but here's one thought or better yet REPAIR IDEA that you may use for a last resort type end around play....
I've been talking about using LEAP Calls as way to recoup your losses when the time is right to enter these long side trades....If you take a momnet and head over to the CBOE.com site they will teach you about Options and LEAPS...Leaps are just LONGER term options for puts and calls...For those of you underwater big time holding stocks that are way down from where you bought them, here's ONE way to REPAIR that problem...
THE HYPOTHETICAL SET UP IS AS FOLLOWS...YOU BOUGHT XYZ STOCK AT SAY $70.00 BUCKS AND IT'S NOW $30.00...YOU OWN 1000 SHARES..SO YOUR HEAVILY UNDERWATER $40,000 BUCKS...NOT REAL PRETTY THERE..."IF" YOU DECIDE TO HOLD THIS STOCK...AND WAIT FOR IT TO GO BACK TO 70...ALL YOUR GOING TO DO IS BREAK EVEN...OF COURSE YOU'LL GET YOUR MONEY BACK..BUT YOU'LL MISS THAT BIG MOVE BACK UP...
SO...1ST..SELL THAT STOCK OUTRIGHT...COLLECT $30,000 CASH..AND HAVE A $40,000 LOSS UNDER YOUR BELT...TAKE THE $30,000 AND BUY LEAP CALLS OF THE 2003 DEC 35 STRIKE...AND HERE'S WHY THIS TYPE OF LEVERAGE WILL MAKE YOU MONEY AS OPPOSED TO BREAKING EVEN...AND HERE'S WHY..YOU ARE USING THE CASH AND THE LEAPS AS HEAVY LEVERAGE LIKE THIS..
YOU BUY THE XYZ LEAPS OF SAY DEC 2003 STRIKE 35, AT A COST OF $7.00 PER CONTRACT...YOUR STOCK WAS AT 30..YOU CASHED OUT FOR $30k...SO YOU CAN USE ALL THAT CASH TO BUY 40 CONTRACTS FOR THE XYA DEC 35 LEAP CALL...40 X 7 =$28,000 CASH...NO MARGIN HERE FOLKS...NOW LET'S TALK ABOUT THE POSSIBILITIES OF THIS TYPE OF REPAIR TRADE...YOU HAVE TILL DEC 2003 TO EXCERCISE YOUR CALLS..YOU CAN SELL THEM ANY TIME PRIOR TO THAT DATE....
THE STOCK XYZ HAS TO MOVE TO 42 FOR YOUR TRADE TO BREAKEVEN...THE STRIKE PRICE OF 35 PLUS THE PREMIUM PAID OF $7.00 = 42...YOUR STOCK IS SITTING AT 30 RIGHT NOW...THATS ON PAPER FOLKS..BECAUSE IT DEPENDS ON WHEN THAT STOCK MOVES UP AS TOO HOW MUCH PREMIUM YOU CONTINUE TO CAPTURE..MEANING...AT 42 BUCKS YOUR OPTIONS MAY BE WORTH 10..NOT 7..IF THERE'S STILL "TIME" PREMIUM IN THE TRADE...BUT NO MATTER, FOR ALL INTENTS AND PURPOSES I AM GOING TO USE BREAKEVEN NUMBERS ALL THE WAY OUT ASSUMING THAT BY DEC 2003 THE STOCK MOVES BACK YO TO YOUR ORIGNAL BUY PRICE OF 70...
SO IF IT DOES THAT, SINCE YOU OWN THE LEAPS AT THE 35 STRIKE...THE STOCK HAS TAKEN 2 YEARS ALMOST TO GET BACK TO THE BUY IN PRICE OF 70, YOU ARE NOW "IN THE MONEY" 35 POINTS...!!!!!!!!!!!!..YOU PAID 7 BUCKS...SO YOUR MAKING 28 POINTS PROFIT ON THAT TRADE...YOU WILL SEE YOUR OPTION IS NOW TRADING AT 35..35 X 40 CONTRACTS = $140,000.00 MINUS YOUR ORIGNAL COST BASIS OF $28,000..YOU NOW MADE A GROSS PROFIT OF $112,000.00..LESS YOUR ORIGINAL COST OF $70.000 AND THE FINAL TOTAL PROFIT $42,000...AND YOU STILL HAVE THAT $40,000 LOSS TO DEDUCT FROM YOUR LONG TERM CAPITAL GAINS..NOT A BAD DEAL ALL THE WAY AROUND...
INSTEAD OF WAITING TO BREAKEVEN IF THAT STOCK RALLIED ALL THE WAY BACK UP TO 70...SO YOU USE THE LEVERAGE OF THAT CASH, BUY ALL THE LEAP CALLS WITH THAT MONEY..AND IF WE'RE RIGHT ABOUT THE MARKETS NEXT BEST MOVE...2 YEARS FROM NOW, YOU GET ALL YOUR MONEY BACK PLUS A SWEET PROFIT OF $42k...AND ALL THAT WOULD HAVE TO HAPPEN IS THE STOCK GOES BACK TO THE ORIGINAL PRICE...ANYTHING OVER THAT NUMBER WOULD BE BIG TIME GRAVY...
NOW WHATS THE DOWNSIDE RISK>>>..THE STOCK MARKET DOES NOT MOVE UP OVER THE NEXT 2 YEARS..YOUR STOCK FLOUNDERS AT THE LOWS HERE AT 30...AND YOUR OPTIONS ERODE IN VALUE VERY VERY SLOWLY...YOU COULD LOSE "ALL" YOUR MONEY DOING THIS TRADE...IF THE STOCK OR MARKETS NEVER RALLY UP...AND IF YOU CAN GET "SOME" MONEY BACK NEAR BREAKEVEN, AND WISH TO TAKE SOME OF IT "OFF" THE TABLE..THEN YOU COULD ELECT TO SELL 1/2 YOUR OPTIONS, SAY 20 CALLS, AND KEEP THE REST..OR 30 CALLS OR WHATEVER...
THERE ARE "NO" GUARANTEES OBVIOUSLY HERE FOLKS...ASSUMPTIONS ARE MADE BASED ON PAST HISTORICAL EVENTS...WHEN THE MARKETS LOOK THEIR WORST, WHEN THE CARNAGE IS OVER..WE WILL RALLY, WE WILL GO TO MUCH HIGHER LEVELS...AND THE MANIA WILL BE BACK FOR DAMN SURE...MY GUESS IT WILL BE THE BIO TECHS THIS TIME<G>...SO THERE'S AT LEAST ONE WAY TO HELP YOUR CURRENT SITUATION...TALK TO YOUR BROKER...YOUR ADVISORS...THINK THIS OUT YOU HAVE THE TIME RIGHT HERE AND RIGHT NOW...DON'T WAIT FOR THE LAST MINUTE YOU'LL NEVER DO IT...YOU'LL MISS OUT ON THE BEST BUYING OPPORTUNITY IN YEARS...THIS OF COURSE IS WHAT I THINK IS GOING TO HAPPEN...WHEN THE MARKETS ARE AT THEIR WORST, THATS WHEN WE BUY THEM..WHEN NO ONE WANTS THEM ANYMORE...PUKE CITY IS OUR MANTRA...
OK LET'S LOOK AT THE INDEXS AND THE STOCK WE LOVE TO TRADE...
DJIA---AT THE BOTTOM OF THE 10 WEEK TRADING BAND NEAR 9500..WITHOUT A BOUNCE...9750 1ST 3 BOX REVERSAL UP...
NAZ/COMPX---APRIL LOWS AT 1650 AND A DOUBLE BOTTOM..1850 THE 3 BOX REVERSAL UP..
NDX---TESTED THE APRIL LOWS...1500 3 BOX REVERSAL UP...
SPX---SAME CHART AS ALL OF THE ABOVE...NEAR THE APR LOWS AND THE BOTTOM OF THE 10 WEEK TRADING BAND..
SOX---WELL IT FINALLY BROKE DOWN LAST WEEK AS IT TOOK OUT 540 THEN 520...IT'S NOT DONE CORRECTING EITHER..ANY RALLY BACK UP IT'S A SHORT..USE THE SMH AS A PROXY FOR THIS INDEX...MY ULTIMNATE DOWNSIDE TARGET IS 460...
VIX---A PREFECT BREAKOUT AT 29, RALLIED UP TO ALMOST 35..37 IS THE TOP OF THE TRADING BAND HERE...AND THERE'S A BIG PULLBACK COMING IN THIS INDEX....IT BROKE A QUADRUPLE TOP AND IS NOW ON A HIGH POLE...IT WILL CORRECT, BET ON IT!!!!..1ST PULLBACK AREA IS THE BREAKOUT AT 28/29ISH....AND GUESS WHAT..IF THIS INDEX FALLS TO THE OLD LOW?? AT 22??..WE'LL BE UP 1000 POINTS FAST<VBG>...NOT SURE ABOUT THAT THO..HAHAHAHAHA..
SP01U..THE S*P FUTURES...GET THIS...IT'S DIRECTLY INVERSE TO THE VIX HERE...IN A STRAIGHT DOWN COLUMN OF O'S..18 OF THEM TO BE EXACT...THIS IS A "LOW" POLE HERE...AND I EXPECT A SERIOUS BOUNCE FOR THIS INDEX...1ST TARGET IS 1124/28 AREA THE BREAKDOWN...LIKE IN..BACKSIDE BOUNCE????
IF YOU WISH TO TRADE THIS MOVE YOU MIGHT USE THE SPY...TRADES JUST LIKE A STOCK..LIKE THE DIA..OEX..SPX..ETC....IT'S RIGHT AT A QUADRUPLE BOTTOM HERE AT 110...THE APRIL LOWS...IF IT CAN MOVE UP HERE...107 3/4 WOULD BE YOUR STOP...MOVES SLOWLY THO..BUT IT;S LIKE THE SMH OR BBH..ETC...
US01U..THE BONDS..RALLIED BACK UP INTO HEAVY R HERE AT 106.50...ANY MOVE DOWN TO 105.50 I WOULD BE SHORT THE BONDS...
HERE'S THE STOCKS WE FOLLOW...
GSPT---TAKE A PEEK AT THE DAILY CANDLE CHART..THE STOCK BREAKS OUT AT 9--91/2 BUCKS...RALLIES STRAIGHT UP TO 19ISH...MAKES A DOJI TOP THERE...PULLSBACK TO THE 40EMA DAILY AND HAMMERS THERE..I CATCH THAT NEXT STICK UP AT 14.70 AND SELL IT AT 16 75...BUT RIGHT AT THAT BUY POINT, IT IS MY FAVORITE 3 STICK PATTERN I CONTINUE TO ALERT YOU ON...A BEARISH BAR...HAMMER..BULLISH BAR...BADA BING BADA BANG..WORKS EVERYTIME...ALMOST... THE STOCKS IN A TRIANGLE HERE...BUY TRIGGER IS AT 16 1/2 AND IT MUST BREAK 17 1/2 HERE TO TEST 19 AGAIN...THE SS TRIGGER IS 15...14 TAKES IT DOWN TO 12ISH FAST...IT COULD GO EITHER WAY..
KLAC---BROKE DOWN AS DID ALL THE SEMIS WHEN THE SOX BROKE...IT'S RALLIED BACK UP 3 BOXES AND TRADES VERY WELL INTRADAY...POSSIBLY A GOOD PATTERN ON THE DAILY HERE..NOT PERFECT..BUT COULD BE OK...45 1/2 THE BUY TRIGGER...47 KEEPS YOU IN THIS LONG...43 1/4 THE SHORT SALE(SS) TRIGGER....42 KEEPS YOU SHORT..
NVLS---WEAKER LOOKING CHART BUT DUE FOR A BOUNCE...39 3/4 THE BUY TRIGGER...42 THE 3 BOX REVERSAL BACK UP...37 1/4 THE SS....
TQNT---PIERCING PATTERN HERE ON THE DAILY...RE AFFIRMED GUIDENCE TWICE LAST WEEK...18 3/4 THE BUY TRIGGER LONG...POTENTIAL RUN UP TO 20 OR SO...16 IS A BIG SS THERE...
MCHP---LOOKS OK FOR A BOUNCE HERE...35 1/4 THE BUY TRIGGER LONG...HEAVY R AT 37...33 THE SS TRIGGER..
AMAT---ANOTHER WEAKER LOOKING CHART..AT A DOUBLE BOTTOM HERE...41 1/2 THE BUY TRIGGER...43 THE 3 BOX REVERSAL UP KEEPS YOU IN THE TRADE LONG...39 1/4 IS A GREAT SS TRIGGER...37 WOULD BE A LOCK BET THERE...
ELNT---CHECK OUT THAT REAL NICE DOJI ABOUT 8 STICKS AGO...NICE SHORT THERE OFF THAT NEXT BEARISH BAR...IT HAS GOOD SUPPORT AT THE BSL LINE AT AROUND 30/31...IT'S A VERY GOOD TRADER, BUT THIN FLOAT...34 1/2 THE BUY TRIGGER LONG 35 KEEPS YOU IN THE LONG SIDE TRADE...32 1/4 THE SS...30 IS THE QUICK TRIP...ON THE 15 MINUTE CHART IT MAY BE SETTING UP FOR AN INVERTED HEAD AND SHOULDERS HERE ON THAT BUY TRIGGER...
QCOM---ONE OF THE BEST SHORT TRIGGERS AS IT CRACKED THE TRIPLE BOTTOM AT 60, AND HAS NOT REVERSED UP YET SINCE THAT BREAK...A PERFECT 18 O'S HERE AND A GOOD BOUNCE CANDIDATE...50 1/4 THE BUY TRIGGER LONG...51 KEEPS YOU IN THE TRADE...AND ME TOO<G>...THE SS TRIGGER IS BELOW FRIDAYS LOW..AT 47 1/4...I WOULD WAIT FOR THIS...IT'S DEEPLY OVERSOLD HERE...THAT WOULD BREAK THE LITTLE HAMMER ON THE 15 MINUTE CHART...
EBAY---ONE OF MY FAV'S...SINCE IT ROLLED OVER HERE...IT'S CASCADING LOWER AND LOWER GETTING NEAR A BOTTOM SOON...53 3/4 THE BUY TRIGGER LONG...55 STAY LONG...51 IS THE SS TRIGGER...COULD GET IT TO 49 ISH..THE APRIL LOWS..
NVDA---MY ULTIMATE DOWNSIDE TARGET IS 67..BUT IT'S PLAYING TOUGHIE HERE...RIGHT AT MINOR S...79 1/2 THE BUY TRIGGER... LONG RIGHT INTO OVERHEAD R AT 81/82...76 3/4 THE SS TRIGGER...WITH A BREAK OF 75 A GREAT CONTINUATION SS...
SMH---I LIKE TRADING THIS VERY NICE PROXY FOR THE SOX..BOITH LONG AND SHORT..VERY NICE...THE INDEX CLEARLY HAS BROKEN SOLID SUPPORT JUST LIKE THE SOX--INTC--AMAT ETC...41 THE BUY TRIGGER LONG...43 YOU'LL STAY IN THE TRADE..USING TRAILING STOPS...38 3/4 THE SS ...MIGHT SEE 35...AND WE WILL SEE 35 AT SOME POINT..
DELL--NEARING SOLID SUPPORT HERE AT 19 1/2...SELLERS HAVE BEEN THERE AT THE 20 EMA DAILY THO...IT'S, BATTLE FOR SURE...TRADING IN A TIGHT RANGE SO FAR...22 1/2 THE BUY TRIGGER LONG 24 KEEPS YOU IN THIS TRADE...20 THE BIG SS TRIGGER..WITH ANY BREAK OF 19 1/2 TROUBLE...
MU---MAJOR LEAGUE SS AT A BREAK OF 35, I TOOK THAT...33 3/4 THE LONG SIDE TRIGGER 36 WOULD BE A 3 BOX REVERSAL BACK UP INTO R...31 3/4 SS TRIGGER..29 A CERTAINTY IF THAT HAPPENS...
NSM---BOUNCED RIGHT OFF THE BSL LINE LAST WEEK...32 1/2 THE LONG SIDE TRIGGER 33 STAY LONG...30 THE SS TRIGGER...28 A BIG BREAKDOWN THERE..
RFMD---STOCK IS RIGHT AT THE BSL LINE...GUESS WHERE THE APRIL LOWS ARE???..HAHAHAHAHAHA...YOU CHECK IT..ANYWAY..I'VE BEEN TRADING THIS ONE...23 1/4 THE BUY TRIGGER LONG...24 STAY LONG...21 IS THE SS TRIGGER...A BREAK OF 20 IS NOT REAL GOOD..19 IS SOLID NEAR TERM S...18 1/2 IS DEATH AND DESTRUCTION...
BTK---JUST HANGING ON HERE..ANY BREAK OF NEAR TERM SUPPORT AT 470 TAKES THIS INDEX AND ALL OUR FAV';S WITH IT TO 400 ISH AREA...WOO HOO...530 A 3 BOX REVERSAL UP
MYGN---KEEPS MAKING LOWER LOWS HERE GIVING SELL SIGNALS...42 3/4 THE BUY TRIGGER...44 THE 3 BOX REVERSAL UP..BUT IT'S A SHORT THERE AT THE BRL LINE...40 IS THE SS TRIGGER...
HGSI--CONTINUES TO BREAKDOWN ON ALL RALLIES...MAKING LOWER LOWS...41 3/4 THE BUY TRIGGER LONG..44 THE 3 BOX REVERSAL...39 3/4 THE VERY GOOD SS TRIGGER THERE..
PDLI---BROKE DOWN AT 57, SO FAR...NEEDS TO REVERSE UP HERE...55 1/4 THE BUY TRIGGER...53 THE SS TRIGGER..
IDPH---ROLLED OVER TOO LIKE ALL THE BIOS...AT SOME SUPPORT ON THE DAILY CANDLE CHART...58 1/2 THE BUY TRIGGER...59 STAY LONG 62 THE TRIPLE TOP...56 1/4 THE SS...
GENZ---AT SOME SUPPORT HERE...52 1/2 THE BUY TRIGGER LONG....COULD RUN BACK UP TO 56/57 AREA...50 1/4 THE SS TRIGGER...48 IS A BIG BREAKDOWN TOO..
IMNX---HIT THE DOUBLE TOP AT 18 1/2...IT WOULD BE OK TO TAKE THE 18 1/2 AS A BUY TRIGGER LOOKING FOR THE BREAKOUT THERE AT 19...I'LL PROBABLY DO THAT TRADE...THERE'S WIDE OPEN SPACES ABOVE 19..WIDE OPEN...16 3/4 THE SS TRIGGER..
IMCL---THIS CHART IS VERY BULLISH..IN THE SCHEME OF THINGS IT COULD REALLY RUN ON A BOUNCE HERE...54 1/4 THE BUY TRIGGER LONG...55 THE BREAKOUT PLAY, WITH SOME R AT 56...52 THE SS TRIGGER...
PMCS--AT THE BOTTOM HERE SO FAR..NEAR TERM S...27 THE BUY TRIGGER LONG..WAIT FOR IT...COULD RUN BACK TOWARD 29/30...24 1/4 THE SS TRIGGER...ANY BREAK OF 23 IS REAL BIG TROUBLE..STAY SS THERE..
BRCM---EITHER IT BOIUNCES RIGHT HERE AND RIGHT NOW..OR IT'S CURTAINS<G>...32 1/2 THE BUY TRIGGER LONG...33/34 SOME R THERE...30 1/4 THE SS TRIGGER...29 BYE BYE CITY...
VRSN---ON A DCB HERE...39 1/2 THE BUY TRIGGER LONG...37 1/4 THE SS..
CHKP---IN A PROTRACTED DOWN TREND...31 3/4 THE BUY TRIGGER...29 THE SS...
OK THATS IT FOR TODAY..GOING TO GET READY FOR THE EAGLES SEASON OPENER...
LOOK..TAKE IT EASY HERE..LET'S ALLOW THE MARKET TO SHOW US THE MONEY...I THINK VOLUME WILL BE THE KEY AS THE BIG BOYS ARE BACK IN TOWN NOW...
I WANTED TO THANK EVERYONE THAT RENEWED THIS MONTH..I AM HOPING THAT I'M HELPING YOU CLEAR YOUR MIND FROM ALL THE CLUTTER OUT THERE..SAVING YOU SOME MONEY, AND TEACHING YOU SOME SERIOUS TRADING TECHNIQUES..PLEASE USE HARD STOPS...NOT KIDDING HERE..MENTAL STOPS HERE ARE LIKE SUICIDE...SO YOU GET STOPPED OUT??? BIG DEAL...SURE BEATS GETTING MURDERED FOR LARGE LOSSES..THINK HERE PLEASE...
BEST OF LUCK THIS WEEK..MY WARMEST REGARDS TO YOU AND THE FAMILY..
JERRY |
