Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: mishedlo who wrote (50963)	4/12/2002 10:03:02 PM
From: DebtBomb	Read Replies (2) \| Respond to of 99280

Here's what I think: Right now, there's too much uncertainty in the world. And, the market is sniffing double dip, IMHO. ECRI came in slightly down again. TXN and NVLS are going to be important, IMO. I'm just going to trade the channel, and right now, it's down. ;-)

To: mishedlo who wrote (50963)	4/12/2002 10:25:35 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 99280

Mish, a successful low retest should, in most case be above the prior low. Both the Naz and the DOW turned here at higher levels than the February lows. The same with SPX and Sox, only the NDX breached that low. The number of new lows today wa half that of yesterday, the number of new highs on the Naz at 248, nothing here that say we have a selling climax coming. Into a selling climax you get expansion of new lows despite the indices doing DCB here and there. I don't think this is a DCB, this is more like the post May 2001 high, another run, possibly to a lower high (thus my target at 1920/30.) Actually, during last summer/spring fluctuations, we saw contraction of new highs and expansion of new lows (of course, we still had many "walking dead"on the Naz, since delisted), thus,if new highs continue and expand during the coming rally, maybe even higher than 1930. One of my less likely models has an outside chance of a run to 2128 now, before any major decline, but I'll be happy with 1930 (g). It is interesting in some respects and has similarity to the change of scenario last July, when the then expected double bottom (August/October) was changed into a coalescing single bottom in September. In the same way the original scenario of a double top in April and May could be coalescing to a single and higher top. Unfortunately, I do not have enough support for that hypothesis yet, thus the grading of "less likely". Zeev

To: mishedlo who wrote (50963)	4/12/2002 10:33:29 PM
From: Win-Lose-Draw	Read Replies (1) \| Respond to of 99280

Here are the QQQ June option figures as of now Interesting that the Dow put pattern is almost completely unlike this. Although it does look a little odd: the peak puts are at strikes 1600 Dow points apart at 10k and 8.4k.

To: mishedlo who wrote (50963)	4/12/2002 11:03:10 PM
From: Math Junkie	Read Replies (1) \| Respond to of 99280

Mish, there are some things I don't understand about your analysis. First, the max pain for June puts at 35 is not inconsistent with the turnips' call for a June 28th bloodbath, because options expire on the 21st in June, and a lot can happen in a week. Zeev's 1920 corresponds to roughly QQQ 37, so 35 by the 21st could represent the market's being part way down the selloff into the 28th. Second, you haven't explained why QQQ 35 on June 21st implies weakness between now and then. I'm not saying Zeev is right and you're wrong - I'm just trying to understand the differences in your reasoning.

To: mishedlo who wrote (50963)	4/13/2002 1:48:50 AM
From: augieboo	Read Replies (2) \| Respond to of 99280

Mish, I think you and Zeev may BOTH be RIGHT about June! Preface: I just "discovered" (i.e., it was news to me) that not all companies which have options necessarily have options that expire in a given month. (Note: If this little "discovery" was in fact just a mistake on my part, please ignore the rest of this post!) Anyhoo, I was wondering about the June PUTs conundrum, so I printed out the list of all 100 stocks that make up QQQ from the NASDAQ site, and played with it. dynamic.nasdaq.com It seems that, of the entire QQQ, only a weighted 23.48% have options expiring in June. (see Appendix A, at bottom of this post, for the list of companies with options expiring in June, along with their weighted percentages of the QQQ.) Okay, here's my theory: In any given month, the degree to which the "Criminals" can manipulate the price of QQQ is limited by the weighted percentage of QQQ components which have options expiring that month. I'm probably making this sound much too mathematical, and there are probably lots of other factors as well. Let me give a couple extreme examples to illustrate what I'm trying to say. Scenario 1: Each and every component of the QQQ has options expiring, and they each have exactly equal numbers of puts and calls at each strike price, and the number and value of options for each stock at max pain is proportional to that stock's weighted percentage representation in the QQQ. In this situation, the Crims would have to manipulate each and every stock to within inches of its own max pain number, both so that the aggregate would equal max pain on the QQQ, and so as to avoid having a whole lot of options finish in the money. In other words, they couldn't just manipulate a few of the bigger stocks to bring QQQ to max pain, because that would mean that a lot of options in those individual stocks would finish in the money. Scenario 2: Not a single QQQ component has any options expiring whatsoever, but the QQQ does. In this case, the Crims could do whatever they wanted. That is, they could let most of the QQQ components run wherever the market wished to take them, and just manipulate a few of the larger stocks in order to bring QQQ to max pain, without risking that their actions would cause other options to finish in the money. Here's my point. It seems to me that the situation in June is much closer to my Scenario 2 than it is to Scenario 1. Criminal Methodology All the crims would have to do is take $$$ out of small caps and stuff enough of it into a carefully selected hand full of the large-cap QQQ components which do not have any options expiring, and they can kill off all those extra puts Mish is concerned about, while allowing the COMPQ to tank as Zeev predicts. Does this make sense? If anybody'd care to comment, (or check my math), I'd be most grateful. (: augieboo Appendix A Symbol: % of Adjusted Index: ===================================== ALTR 1.17 ADRX 0.27 BEAS 0.41 BGEN 0.86 CTXS 0.33 CEFT 1.97 DISH 0.71 ERTS 0.84 FISV 1.04 IMNX 2.26 JDSU 0.74 KLAC 1.51 MEDI 0.94 NTAP 0.58 NVLS 0.73 NVDA 0.60 ORCL 2.61 PAYX 1.48 SPLS 0.69 SNPS 0.27 TLAB 0.22 TMPW 0.38 VRSN 0.55 WCOM 0.53 XLNX 1.79 ======================== TOTAL 23.48 Appendix B The following major QQQ components have no options expiring in June: MSFT 10.66% INTC 7.08 CSCO 4.07 QCOM 3.34 AMGN 2.91 DELL 2.63 MXIM 2.5 AMAT 2.23 LLTC 1.78 BBBY 1.41 VRTS 1.41 SBUX 1.38 SEBL 1.33 USAI 1.3 CMCSK 1.28 CHIR 1.25 GENZ 1.17 SUNW 1.14 EBAY 1.08 COST 1.04 =========== That's 50.99% of the weighted average contained in just 20 stocks.