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Strategies & Market Trends : Shorts waiting to happen
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To: Cadaver who wrote (394)8/3/1996 4:05:00 PM
From: Judy   of 852
 
Cadaver, re: " Time to buy calls and sell puts" ... maybe not

The market has been extremely rocky with tremendous intraday swings, deep plunges down and major swings up. My perspective for future market behavior is that it will continue to act in this oscillating manner, the waves attenuating in time as the picture becomes clear. Within this framework, I'd sell puts or buy calls on quality stocks only when the market is under severe pressure ... not now when the market has nearly recovered and the next wave down may be around the corner. Now might be the time to consider buying puts and selling calls instead.

Whatever one does, longer-term options are better plays since battered stocks take time to recover and stocks that have retraced take time to fall again. Investors are still shell-shocked and funds are taking their time.

Re-read the posts from about two weeks ago and note the strident confidence of the shorts. Let me quote myself ... "When shorting becomes too easy, we'll know the tide has turned." Money market funds are regarded as the place to be when the market is skidding. Investors removed $3.9 billion from money funds in the latest week - first outflow in six weeks.

Wait another few weeks and the tide may turn again. Let's see.
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