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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Nancy who wrote (31144)	12/14/1997 10:25:00 PM
From: Tom Trader	Read Replies (3) \| Respond to of 58727

Hi Nancy---well, since market prognostications are in vogue -- here are mine:) The downside in the market is limited in the short-term -- oversold market, excessive bearishness and seasonal factors all support a rally. Unless the market breadth during this rally is exceptionally good -- which I don't expect--the rally will fail and then we will see another sell-off and the weakest sectors will continue to decline -- there is too much downward momentum in the weakest sectors for us to have seen the lows at this point. The next decisive market related turning point should be the next set of earnings reports/earning warnings which may set the stage for another severe sell-off which if it occurs with sufficiently negative sentiment will then possibly set the stage for an intermediate term bottom. I will use any rally to buy puts on the stocks that I want to own -- buying puts 4 to 6 months out -- for example, I'd buy AMAT puts strike price 20 or 22 1/2 (assuming that they are available), since I am looking to go long the stock and my entry point for my initial position is around 22. I view the puts as insurance and really look on it as an increase in my cost basis -- so if I buy AMAT at 22, my cost basis will be 22+ the cost of the puts. I have identified approximately 27 stocks that I am interested in as investments, with entry to be established in three stages -- basically a dollar cost averaging approach with each level of entry to be effected only if they get low enough -- which they may not unless this sell-off becomes really severe--which I think is entirely possible if the Asian problems are perceived as spreading beyond the confines of the nations that it has currently affected. Also, as I have stated there is major cycle bottom that is due to occur in mid 1998. Rather than list the stocks that I am interested in, I will post as and when I establish long positions. I do not expect all of the stocks that I am interested in to reach the levels that I have targeted. I am immensely excited by the opportunities that this market offers -- I have no illusions about the problems in Asia being significant enough that we could see quite a bit of additional down-side -- but I do believe that within a year or two there is the potential for significant appreciation. These sort of major market events present fantastic opportunities -- one needs to be willing to step up to the plate and take positions when such opportunities occur. Anyway, that is the way that I am going to play this, absent some other event that causes me to feel that we are headed for some type of global catastrophe--but I shall be substantially protected on the downside with the approach that I am adopting. Finally, a reiteration--this are investments, medium to long term-- and I know that I am taking positions against the trend -- which I would never do if I were trading. My regards