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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (9981)	7/29/2004 3:11:37 PM
From: Haim R. Branisteanu	Respond to of 116555

With GOD willing it will not be soon in the US <GGG>

To: mishedlo who wrote (9981)	7/29/2004 3:45:52 PM
From: Crimson Ghost	Respond to of 116555

Top stock market timer sees big drop within a few weeks. How to Prepare For the Plunge Rick Ackerman Jul 29, 2004 Excerpt from the current Rick's Picks (website). You can subscribe here. The broad averages have been moving steadily lower since around mid-February --roughly 110 trading days. If you'd been a buyer of near-month, at-the-money puts the whole way down, you'd have felt the exhilarating rush of easy profits on no more than four or five of them. And if your timing and risk management had been absolutely perfect on those four or five days, your total gains might have offset losses from time decay on the other 100+ days by, oh, 40 percent. I know guys who have been losing money at the race track for most of their adult lives who have done better than that. The legendary "Willie D," for one, an erstwhile dealer in Persian rugs who wouldn't know stock option from a bowl of chow mein. If, on the other hand, you'd simply sold naked at-the-money calls all along, you'd have made money on perhaps 70 of those days, most of it in nickels and dimes at the end of each day. But you'd have gotten blown to smithereens by the explosive rally in late May, then chopped, sliced and diced by the somewhat less dramatic uptrend that went from late May till early June. With skillful money management and good timing, you'd have done better than the put-buyer, but probably not by enough to celebrate the good life for a little while. Still Defying Gravity All of which will serve to explain why, even if I have been itching to load up on QQQ or DIA puts for the last month, I am hesitant to suggest that you pile on with me. There is little doubt in my mind that the market is within a few weeks of a major decline. Even now, it continues to defy gravity by scuddling sideways in the face of rising interest rates. Quite honestly, I don't know why anyone would buy stocks at these levels. But it is not share buyers who have helped sustain the broad averages in recent months, but rather the complete absence of enthused sellers - other, that is, than corporate insiders. Generally speaking, they have not fallen for the buy-and-hold mantra that seems to hold Joe Sixpack in thrall. So how do we tap into the potential of the stock market's next big move? And what specific strategy will ensure that we extract the maximum possible gain from a 60-day bear cycle that will be 3-4 hours of avalanche and another 350 of untradable, tectonic grinding? There are two answers that come to mind. The first will be most suitable for those of you who favor tightly controlled risk and dirt-cheap leverage. Very simply, we'll try to leg into put calendar spreads as the averages move higher over the next week or two, as I expect. For those who are looking for a bigger pop, I'm going to suggest shorting multiple e-mini S&P contracts with tight stops - and to do so as many times as it takes to nail the actual top. This will entail theoretical risk of $100 to $200 per trade, but it will be in the pursuit of a ride that could produce outsize gains. Stay tuned! Rick Ackerman *** Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents ©2004, Rick Ackerman. All Rights Reserved. You can subscribe here.