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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (2456)	3/16/2000 4:55:00 PM
From: Paul Berliner	Respond to of 3536

From Dow Jones Newswires: One of the biggest options traders on Wall Street, whose very large portfolio heavily favors technology, is almost cheerful about the Nasdaq's decline. He views the Nasdaq's weakness as an opportunity to buy discounted call options on technology stocks. The trader is quick to cut down the talk about the old and new economies. "It's (absurd). I think it's a big unwind of a macro-trade that was long Nasdaq/short S&P, that worked in a big, big way. So what is being done is buying S&P and selling Nasdaq. Once that is done, I think it will be back to the races again," said the trader, who speaks on the condition that he and his firm aren't identified. In simpler terms, the trader said all that happened this week in the market is that a few major hedge funds took profits on huge technology positions following Nasdaq's record close. At the same time, the traders closed an equally vast number of short Standard & Poor's 500 securities that were sold to buy the Nasdaq positions.. The trader, whose clients include some of the biggest hedge funds in America, said word spread on Wall Street that these major funds were closing the long Nasdaq/short S&P trade. As word spread, other traders tried to ride the big hedge fund's coat tails. "Other hedge funds, and then regular, plain mutual funds jumped in. They don't want to miss the bounce in the old-economy value stocks that have been so depressed," the trader said. "Keep in mind only a few sectors can accept so much money: drugs, banks - you can't buy cyclicals. If all the money shifted out of tech, you couldn't buy enough cyclicals."