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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: sylvester80 who wrote (17475)	1/1/2002 6:19:06 PM
From: Joe Lyddon	Respond to of 99280

Fixed Font overides autowrap: Questions, etc. Here are the questions (with wordwrap): = = = = = = = = = = = = = = = = = = = = = = = = = = = = First let's ask some questions. Q. Are we in a strong uptrend or dowtrend where max pain would likely be useless. A. No, unless something amazing happens we simply are not in a strong trend nor is there any reason to expect one here Q. Is it possible we already had the Jan Effect rally. A. Why not. Q. Will institutions who sold off this garbage for window dressing want to buy it back in Jan, be happy at prices 50-100% higher on some of this stuff? A. I do not think so. I have not followed the JE rally in the past, but if it normally occurs in the first few weeks of the month but instead occured in December of this year then perhaps institutions will try and mark some of this stuff down before they buy it back. Q. Could it be that too many people are now aware of the JE so that it will not work at all this year, or only moderately so. A. Why not. Everyone was counting on an up Dec 31'st as well. (Well almost everyone - ggg). Back to options analysis. 40, 41, and 42 are huge resistance but no resistance after 42 until 45. If 42 is taken out on volume we could head all the way to 45 easily, but will stop there most assuredly. On the downside resistance at 39, 38, and 36 by my measurement. We break 38 on volume and I would say a reasonable chance to fall to 36. Now the question is are we headed up, down or either? Market sentiment is so strong up, as are QQQ calls compared to puts, that down is more likely. OTOH money itiching to find a home suggests up. Finally, I come back to the JE that so many seem to be counting on (on small caps). My theory says it could already be over (at least much of it) as people positioned for it starting Dec 1st rather than the end of Dec or beginning of Jan. Perhaps funds may want to buy the garbage they sold off for window dressing and tax purposes at lower prices, and will "cause" a correction to be able to do so. A break of 42, however and we are likely doing a moonshot and a breach of 38 says it could really get nasty. That puts us in a rather wide range of 36-45, however, and totally useless. Taking a step back and throwing out the extremes, however, I arrive at a QQQ range of 36-42. 36 being firm support for a very nice bounce. 36-38 in a couple days followed by a chop higher into expiry to close at 40, would be max pain all around I believe. An alternate scenario says we rally to 44 and fall back to 40. That fallback would be harder to accomplish later rather than earlier with all the dip buying going on and is just too consistent with JE players as well as extreme bullish sentiment that I sense right now. Thus: I keep coming back to down then up, but with more of an explanation this time. At any rate, it looks like a jan expiry close at or close to 40 (to me anyway). I will guess a tight range of 39 1/2 to 40 1/2, with expectation of 39.98 if you make me name a specific price. If that is the case, Larry can sit comfortably on the sidelines and watch us make predictions and more than likely make fools out of us all. M