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Strategies & Market Trends : January Effect 2003 -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (318)	4/9/2003 4:05:12 PM
From: Londo	Respond to of 666

Do you trade the DOW? Personally, I think the DOW futures are an absolute waste of time, simply because a price-weighted index of 30 companies leads to excessive price risk on MMM, IBM and PG. I'm absolutely amazed that the mini-DOW contract trades as much as it does. I think it attracts small traders just because of the $5 MPV...

To: RockyBalboa who wrote (318)	4/10/2003 5:47:12 AM
From: Londo	Respond to of 666

Hang Seng down 11 points (so effectively unchanged), but it's a slight bullish signal that it managed to close up from the opening gap down. The gap down was a mere 40 points so it was not dramatic. I'm betting there will be correlation between today's S&P action and the Hang Seng tomorrow. Assuming the S&P closes lower (which is my operational scenario), all things equal, the Hang Seng should trade lower tomorrow as well, which should provide a liquidation point. Otherwise, I'll be stopping myself out of the April futures at 8600 and securing profit. Again, my excuse will be that I don't want to hold during the weekend.

To: RockyBalboa who wrote (318)	4/10/2003 10:29:35 PM
From: Londo	Read Replies (1) \| Respond to of 666

After posting 10,000 messages yesterday, Thursday's market action was rather dull so I never posted anything. The S&P made quite the comeback (albeit small), but as the implied volatility continues to crash down, it makes me suspect that long investors are getting complacent. I'm not sure whether the volatility can get as low as 25% or whether it will pop up after 29%? This one is difficult to call. Since I don't know, I must liquidate my existing positions. My gut instinct tells me that we're going to see implieds head down to the 20-25% range, which will make another "top" in the market. We might see S&P 900 once again? (double top?) I'm very unsure of the future now. I was expecting a continued slide down (10-15 points!) on the S&P. This could be delayed one or two days. Again, not sure. It all depends on the retail sales report coming out Friday - this report will dictate Friday's action - good sales will result in the S&P going up 20 points in a massive short squeeze, while a poor report will result in the S&P trailing down 10 points or so. As the zero point on the S&P futures is roughly 872, I factor that a buy-stop at 876 and a sell-stop at 868 should result in a profitable position by the end of the day. (adjust the numbers for the actual S&P futures value at 8:25am EST to ensure that both positions don't get executed overnight!). I'm inclined to go long actually - it was too easy to go short this week. I made too much. TBonds showed minor strength as the day went along... this concerns me. I'm going to try to cover at 112 (stop 111 16/32). There is residual risk in the retail sales report, a good report will slam bonds, while a poor report will boost bonds. I don't want correlation with the S&P on this particular report, so I will seek the liquidate before the report is due (hopefully European traders will goose up the 30-Year along with the Euro). If not, I'll liquidate at a reasonable price before 8:30am EST. I covered my Hang Seng shorts at an average of 8610 (EDIT: 60 points too high, sigh...). Made some coin, not as much as I wanted, but enough to buy many many large pizzas. I didn't want to hold onto this one over the weekend - I hear the headlines "SARS news gets worse", but I don't see the index trade down, this is disturbing. I won't be able to participate in an after-effect of a 2-3% slam on the S&P if it happens Friday though, but I don't think the risk is worth it. In fact, I'd be inclined to go long the index over the weekend (war news could be better, a lot of negativity about looters out there). I'm also going to cover the Euro bet, it'll get sold at 1.0765 (stop 1.0727), 1.0805 (stop 1.0702) for a decent profit - but not as high as what I was originally looking for. Again, my hopes are that European traders can boost up the Euro before the retail sales report. All in all, this has been a very active week for me, with a lot of leverage that went in the right direction. I want to close all positions (with the exception of one S&P future) for the weekend.