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

To: Lost to Voodoo who wrote (5056)	9/17/2000 8:11:54 AM
From: Poet	Read Replies (1) \| Respond to of 10876

No diagnoses on this board, hon! I don't want to scare off the five regular posters. <gg> Here's a snippet from today's Option Investor newsletter, regarding the bounce in the Naz just prior to Friday's close: "The rebalancing of the S&P indexes on Friday created the third day this week where the volume on the NYSE exceeded one billion shares. Friday 1.23 bil shares traded and the Nasdaq volume at 1.75 billion was also very heavy. Advances lagged declines by almost 1:2 on both indexes. Without the strong buy on close orders due to the rebalancing both indexes would have closed on the lows of the day. The Dow closed below 11,000 for the first time since August 10th and is exactly where it was in May of 1999. The Nasdaq did manage to hold at 3800 again and closed at 3835. This is the same area we were breaking out of on August 14th. We have now given back all of the August gains and the index is down -9.8% from the September high of 4252 on Sept-1st. The Dow lost -293 for the week and the Nasdaq -143. The individual big cap stocks on the Nasdaq were looking pretty grim. The down trend for the week showed no letup. Intel fell to a new five month low of $57.50. Dell finished only fractionally above its low for the day of $35.25 and is only $.69 above a 52 week low. Microsoft traded as low as $63.31 and only $3 from a 52 week low. WCOM finally broke under $30. Oracle pulled a classic post earnings announcement drop losing -$6.63 to $78.31 even after posting blowout earnings and a 2:1 split. The bright spot on the Nasdaq was CSCO which gained +1.50 but don't start cheering yet. A rumor hit the market just before the bell that NTOP and CSCO were going to announce a joint venture and create a new company called ADIR Technology. Over 11 million shares of CSCO traded in the last 30 min and CSCO spiked +2.50 on the news. After the bell the story became clearer and it appears that NTOP will spin off the company and CSCO will only be a minority investor in the new effort. This brief rally could only be a spike as these same speculators bail out on Monday." and further: "The Nasdaq held twice last week right on ascending support at 3800. This support dates back to May-24th. There was no capitulation on Friday so we cannot accurately call this a bottom. It may be but we won't know until a week from now. The best scenario for Monday would be a huge downward spike with heavy selling in all the big caps. A rebound from that spike would be a buying opportunity. The volatility is normally higher on the Monday after a triple witch options expiration as traders square positions from option assignments. The most probable scenario will be continued weakness but no heavy selling. This may lead to a low volatility Nasdaq rally like we had in August. Steady gains with minor routine profit taking. The Nasdaq is on the verge of oversold and a trading rally by Tuesday is a good possibility. I do not expect any big rally before the October surprise but there is a lot of cash on the sidelines and the term "burning a hole in their pocket" certainly applies. This cash may trickle into the market as individual stocks start showing positive trends. I would suggest opening smaller positions than usual and wait to see what the market is going to give us. Cash is king for the next four weeks. Cash gives us options whenever there is a serious dip. (yes, a weak pun) If you are stuck in a losing position and the market dips you are more concerned about the loser and unable to profit from the dip."