Subject: "IDEA OF THE DAY"-Trading in&out for profits.
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To: +Patricia L. Scott (2387 )
From: +IQBAL LATIF
Jul 13 1997 12:00PM EST
Reply #2393 of 2409
Patye- Where are we heading towards? A policy on your strategy!
I tell you, I have been trying to find reasons all day long to give a short
recommendation, what to do whereever I see thru my crude analysis I get very
very positive signals, there is some thing seriously wrong somewhere, for all intent
and purposes I want to go little defensive although I have bullish signals all around
me. Look at one of my very basic tool of market sentiment Bull/Bear ratio
standing at 2.8 this damn thing at these levels has signalled buy and not sell, the
last time we had this big run in tech at we saw 302 Bull/Bear ratio was 10.2( by
the way Bull/Bear is plotted against Tech stocks 120 and it is alogrimithic ).
By the way we never had this kind of a breakout peak with such a low Bull/Bear, I
needed to do some more research to see when breakouts happen with negative or
low market expectations does standard contrarian logic stand the test. From purely
contrarian logic market seems to have more steam and some way to go. I will be
working on this and come back to you. It is also a question on charts.
I draw your attention to that steep hill on S&P and DOW around 770 on S&P ,
look at the snap and the run, my friend shorted 6 S&P contracts there he added
some more shorts to average out he is under water for nearly 500,000 grand, now
as a wittness of this debacle I can easily say this is good time to say good buy to
the market and lets go home and sleep, on my modest portfolio I am already up
42% since Jan 1st 1997, but that's not I am in the market for I will need to put the
trade that convinces me that direction of the trade is right, so far I remain in the
market and plan to cover my down side with aggressive S&P contracts. I am
working very hard to get the new supports and levels right which I am going to
post very soon. By the way SOXx journey to 339 is a far tedious journey of pain,
sweat, and tears and I see no steep hills, but I do see a possiblity of a breakout....
Just evaluate CPQ beating market expectations at these lofty levels, if CPQ has
sold some boxes well beyond market imagination, what I fail to rationalise where
did the CPU's or software in this boxes came from, one thing I am sure its not
from Vinod Dham or Taqi Raza Indian and Pakistani guys running AMD, if it is
not from AMD someone is selling something to CPQ and DELL and atleast one
thing is now determined no thast the talks of PC slowdown are well out of
context.
INTC is now being touted as failing market consensus coming somewhere near
1.76 but I doubt it I think there is 3% improvement from weaker $ in INTC
numbers, Groove said a shortfall of 5-10% ,I expect INTC to come with a short
fall of not more than 5% somewhere around 1.95-1.96, but I am not a hard core
professional neither do I have any access to special info, but based on what I said
and discussed above I will expect up side surprise for INTC IBM MSFT. The
levels of SOXx is not a hand out, there is a sea change in business and market
expectations and INTC IBM MSFT under these conditions should only
compliment the sentiment which anyway would not be there without fundamental
demand of semis and networkers.
My advise would be that Techs are in a breakout pattern but I see some severe
resistance at 340, and that will only be taken out once INTC IBM are satisfactorly
out of way, if Soloman says INTC will come short of expectations for my trade I
need to negate that basis and so far I am positive that I need to go in numbers
long, I will clearly warn that risk/reward is highly skewed and if you are sitting on
deep in the money calls cash them and buy out of the money calls to play in this
runaway market.
Since my calls of IBM last quarter I just took them out on Friday as I had initiated
some very aggressive longs, but I agree with Lisa we need to be careful and I
would recommend booking your profits on deep in the money's. If I can do it there
is no reason others should not, this market is not about ego or winning, once it
grinds it grinds very fine, Monday will be a good day to review and plan ahead for
some decent returns, I have so far assumed major moral responsiblity to indicate a
positve note and it is still so but I have not seen some thing like this ever in my
life, I am pretty sure what it is may be unfoldment of my so called 'big picture',
however I am modest enough to realise that as a small fish in the market I have no
chance and would recommend unwinding long calls replacing them by out of
money like IBM100 or INTC 165 August, this is going to be the real leverage, as
exected if market reacjes 360 you with your out of money's will be a very much
part of it.
I am going to write a commentary on ATML INTC IBM and some others if I finish
my on going love affair with beautiful French cuisine, just imagine I will not stop
although hours are spent on efforts to shed added pounds.
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