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To: yard_man who wrote (41701)	11/29/2000 8:12:14 AM
From: Monty Lenard	Read Replies (1) \| Respond to of 436258

wallstreetcity.com No newsflash here - buying puts has been a very profitable venture for the past three months. And it may promise to be just as good an approach for a few more ahead as well. Current market action reminds us of that from late 1998 until March 2000. How you ask? Simple. Just flip your charts upside-down and overlay the two. Market action moved straight up those charts back then with the occasional weak dip making buy & hold call options a simple strategy. Today we see the mirror reverse. Continual selling for twelve weeks with the occasional weak rally to sell into makes buy & hold put options a simple strategy as well. The difference has been strictly mental perception. It's easy to accept the "fact" that markets can remain grossly oversold as prices soar to unlimited heights. It was easier to visualize QCOM at $1,000 than $100 not long ago. We will more readily believe the myth that trees can grow to the sky than the fact that fire can reduce them to ash much faster. The painful truth of reality was exhibited this year in our precious western forests ravaged by historical fires, and likewise equity markets in metaphorical fashion. Market Sentiment has trudged a return back to the bear cave once again. We are well aware how anxious market bulls are for any glimmer of hope that a powerful rally will ensue, and that can never be ruled out. However, odds weigh heavily in favor of further downside to come as explained below: 1. Pressure on all markets is based on weak earnings, high valuations and uncertainty ahead. Everything else including the election fiasco is just noise. Fear of a hard landing has grown and signs do point to this being a concern. 2. Warning season ahead. Any market bell-weathers that prewarn will confirm nervous market fears and send us down to new lows post-haste. The advent of equal disclosure would intensify this as institutions flock to dump shares along with retail. 3. Weakening dollar. Daily chart signals show bearish divergence on the dollar as pointed out to us by Molly Evans. Bonds and gold alike are gaining strength as a flight to quality by foreign money may have begun. 4. Oil prices won't fall until the first or second quarter of next year at the earliest. Cold weather in the U.S. will create considerable economic pressure immediately from here. 5. Fed meeting euphoria. We expect the markets to rally strong into the Fed meeting mid-December in anticipation of a change in sentiment at the least. Will Greenspan give equity markets the green light so soon after a lengthy campaign to slow things down? What happens to trader sentiment if the Fed doesn't ease their stance? Lest you think Market Sentiment is alone in viewing this market beneath a thick fur coat & claws, the latest COT report shows that SP00S commercials INCREASED their historical 10+ year net-short holdings by almost 10% more than what they were already short. This is a huge red flag. These market behemoths scaled into their short contracts in the CME commodity pits at levels far above where we trade today and are hold substantial profits. Not only haven't they begun scaling out to capture huge gains, they shorted even more! Market mavens of soon-to-be tested fame can tout "SPX 1575 levels by year's end" every day until then but that will not manufacture reality. Market Sentiment chooses to follow the big boys trading $Billions in the "belly of the beast" and will continue to successfully trade in their direction as we have for more than a decade. We expect tradable rallies ahead and look for the next to emerge anytime from here. This does not change the fact that all markets are creating another multi-year bottom to base from and begin the next long-term rally. That bottom does not seem to be here yet and could lie below a considerable distance away. Trade with caution and in both directions for sure. When in doubt, consider foregoing calls to buy puts in this environment. It has worked for twelve-plus weeks now and could continue for quite some time as well. Profits are the focus, regardless of direction!

To: yard_man who wrote (41701)	11/29/2000 8:30:48 AM
From: Lucretius	Read Replies (1) \| Respond to of 436258

LU is a huge risk play... and there will be no bounce.