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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: RocketMan who wrote (6852)	4/23/2000 1:16:00 PM
From: Poet	Read Replies (2) \| Respond to of 8096

Hi RM, Happy Easter to you. It's another in a series of raw gray days here in Mudville and our dogs have just enjoyed their Easter lamb bone. My vegetarian daughter is "completely grossed out" and I'm hoping that means she'll have no appetite for all the chocolate we gave her this morning. Thanks so much for the link to the market sentiment histogram. It's helpful to me to see it set up that way. I think we're in a for another very rough week, culminating with Greenspan's speech on Thursday. I'm hoping to play along with the downward movement by using puts and cc's as a short term position trade. Here's some interesting editorial comments from today's Option Investor newsletter: The wall of worry is building and should provide a strong hurdle to a market rebound. The unemployment claims for the week announced on Thursday morning showed only 257,000 new claims for benefits. This was the lowest number since Dec-1st, 1973 and down -9,000 from the prior week. This again is not good news for the Fed. This news along with the stronger than expected CPI report last week will be combined with the Employment Cost Report and GDP numbers next week to determine rate policy for May. Worst case we could see a pre-meeting increase next week if either report is overly strong. I think the pre-meeting hike concept is gaining momentum. Greenspan does not want to tank the market with a stronger then expected +.50% hike at the May meeting but he may feel he can get away with a +.25% hike next week and then another +.25% at the May meeting. The market would react less with the two hike scenario than a single aggressive hike. While I was somewhat encouraged by the move off the lows by the Nasdaq on Thursday, it was still a down day only made better by the big Dow gains pulling it up. I struggled with my charting program trying to find a view that would make it look more positive (the optimist in me) but I could not make the outcome different. On the positive side of the ledger is the end of tax selling. Investors who needed to sell to raise tax money should have already sold and settled by now. The margin calls caused by the April tax selling are now over. Most investors are probably licking their wounds and not too anxious to rush back into battle just yet. On the negative side there is a slowing of money into retirement accounts and fund money still on the sidelines is waiting on the next retest before committing funds. The Nasdaq has resistance at 3900-4000 which will take a strong commitment by investors to penetrate. The Dow is entering a broad zone of resistance as well. We have negative economic events in our immediate future and the earnings currently powering the rally are now half over and many investors will be moving to the sidelines until the market stabilizes. This is not a pretty picture. On the other hand the Nasdaq is still terribly oversold and could benefit from traders who left for the holiday moving back into the market the first of next week. Unless somebody of importance goes on CNBC and says BOTTOM real loud we are doomed to suffer the "we have to retest eventually" mantra from every technical analyst that can find a microphone. This may be the equivalent of a self-fulfilling prophecy. This is only going to add to the wall of worry that the markets will have to climb. If John Q. Investor decides to buck the analyst and buy some of the recent high flyers while they are cheap then the Nasdaq could slowly build support and once a new trend is seen the institutional money may be forced to start chasing stocks as well which would create the beginnings of a nice rally. Enjoy. And I know what you mean about wanting to get out on the water.