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

To: RockyBalboa who wrote (348)	4/17/2003 4:54:59 AM
From: Londo	Respond to of 666

I've been watching the Euro flirt with the gap (look at $XEU on stockcharts.com) - I don't think the gap will be filled until the US equity markets have topped out. I think this is about two weeks away. I'm going to be taking a minor bet that the Euro has topped temporarily at 1.0925, with a stop at 1.0950 and profit taking at 1.0825. So far, not filled.

To: RockyBalboa who wrote (348)	4/17/2003 1:37:41 PM
From: Londo	Read Replies (1) \| Respond to of 666

@#$@! (fill that in with your favourite swear word). Euro made it up to 1.0922 and then subseuqently cratered to 1.0850 as I speak right now. Missed by 0.0003! Have a nice weekend. S&P up a bit, VIX down another 3/4. I think we're headed to the low 20's before we'll make a good short.

To: RockyBalboa who wrote (348)	4/19/2003 4:54:44 PM
From: Londo	Respond to of 666

Analysis for the following week: I think the short squeeze is going to continue. Typically when you see the first mentions about "low VIX = sell" the markets typically head up to sucker in those that actually use the VIX as a one-factor reason to go short. Then when these shorts see the markets still climbing, they go into dismay, thinking that the VIX metric is now garbage. They begin to cover their positions (which has a tendency to increase the VIX). Then the REAL decline occurs. Textbook example: Q1-2002. The problem is that I don't know how much 'juice' is in the markets. I could conceivably see over the next three weeks traders taking it up to 915 easily (70%), but 940 is less probability (25%), and 960 is even less probability (5%). If it did get to 960, and volatility was still low, I'd buy those index puts dated 6 months out with a strike price that's about 5-10% out of the money (basically I'd hit the asks on anybody that's offering on the put side to save the spread).

To: RockyBalboa who wrote (348)	4/21/2003 10:41:37 PM
From: Londo	Respond to of 666

OK, I'm going to bet that 915-920 will be the top, but not much more. In the meantime, I'm going to make a small long bet on the Hang Seng, I'm trying to get an April future at 8440-8450. Not a lot of volume is being traded on it on the first day after the weekend. SARS looks like it's done. Or at least it's well anticipated in the market in terms of whatever effects it has out there. Influenza still kills more people than SARS. It also looks like that the end of April might signal the end of the S&P. My operational scenario is that we see 915-920 and then the market starts dropping sometime between the beginning of May and May expiration. I might believe more in a time-determined entry into a short position on the S&P compared to a price-determined entry. Things are tricky, but the next couple months should be a tremendous time to profit from the marketplace. Bonds I'm a little more puzzled about - we might see a 5.00% yield again, but my bias would be to purchase them especially as index volatility drops over time.