Option Investor
Market Wrap

If you like this country and this market find a veteran and hug them.

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        11-10-98         High     Low     Volume   Advances Decline
DOW     8863.98 - 33.98 8928.35  8854.71  248,274k  1,241   1,779
Nasdaq  1865.62 +  4.57 1875.25  1849.52  913,274k  1,834   2,266 
S&P-100  553.40 -  0.22  557.27   550.86   Totals   3,075   4,045
S&P-500 1128.26 -  1.94 1135.37  1122.80            43.2%   56.8%
$RUT     396.86 -  1.57  398.53   395.59
$TRAN   2864.79 - 44.85 2909.98  2859.96
VIX       25.92 +   .04   27.55    25.06
Put/Call Ratio      .75

If you like this country and this market find a veteran and hug them.

Just don't blame the last two days on them. The market is doing what it should to blow off steam. You knew it was coming so don't complain. The profit taking will go away soon. Maybe tomorrow.

The market opened down this morning and crawled back into positive territory by afternoon but could not make any headway over 8920. Every time it pierced that number there was an immediate sell off.

After spending the day fighting back from the low of -43 points (8854) to the session high of 8928 at 3:40 the last 20 min of the day was a steep sell off back down to almost the low of the day. We gave back all the days gains in the last 20 min!! -65 points!!

For day traders this day was a bust. If you owned Internet or some tech stocks you did okay. Financial stocks and airlines filled out the bottom losers position.

This was also a slow news day. Over and over we heard from analysts, "the Fed will/won't ease." (pick one) The actual statistics per CNBC look like this. Of 31 analysts surveyed 26 said yes they will ease in November. Four said maybe Nov or Dec and one said not until next year. Now we all know their opinions are not worth the electrons (or ink) this is printed with when the Fed meets next Tuesday BUT their sentiment is what will drive the market between now and then. (that and Intel) Nothing is happening globally that is market shaking. Brazil is about done with their IMF party and itching to get their hands on the cash but that is already factored into the market. Except for the Intel announcement (later) the market would have been range bound or worse until the actual Fed meeting and rate cut confirmation. Probably even after the meeting the market would have been listless without any substantial news to keep it moving. After saying all this you can now stand up and face Santa Clara, California and cheer.

After the close today Intel pre-announced another earnings increase. If you remember Intel guided analysts higher when they announced earnings last month. While many analysts tried to point out all the competition and explain away the guidance, (by the way, where are you Tom Kurlackspan?) others simply raised their estimates and tried hard to believe it. Intel made the spectacular announcement today that not only were they going to exceed current estimates by 8-10% but profit margins were also going to be +2-3% higher than the already high 53% from last quarter. Business is good, very good, extremely good. (Bill Fleckenstein, are you listening?)

After hours all the techs trade up. Intel +$2, Dell +1.25 !! Dell had already set a new all time high today!

So do we think this will carry over into tomorrow's trading? Does S&P futures up +5.00 at 9:PM give you a clue?? Remember the Dow was down yesterday and today. Down hard at the close. Normally direction at the close equals direction at the open. WRONG !!

Of course, something overseas tonight could always nip it in the bud but it would have to be major. I don't see it yet. Keep your fingers crossed!

Remember also that the Fed meeting is Tuesday so any rally can still run out of steam Friday/Monday as traders move to the sidelines just in case disaster strikes and the Fed does not ease.

I really hate to do this but on Sunday I said I was going to bow to the requests of some readers and start listing my positions every day. OUCH !! I got buried with email begging (threatening) me not to do it. Sorry guys, I did not realize how many felt like I did, that it could be a bad thing and impact option prices. I printed some of the nicer letters below. So this is the first and last time for the position list. PLEASE DON'T SEND ME ANY MORE HATE MAIL ON THIS TOPIC! I give up.

We offer many plays that do very well every week. Use our plays as a starting point to begin your own research and make your own trading decisions. Don't get greedy. Take profits whenever they are available. Above all SELL if the trade goes against you and you will do well.

Tomorrow is Veterans day. The bond market is closed but the Stock market is open. Volume will be low and the Dow is likely to move fast and jump around. Be careful.

Have a great Wednesday!

Jim Brown

Plays this week:

I was holding only cash Monday morning and bought the -120 point dip on Monday. I sold everything at the morning bump today. When the market started back up around 1:PM I jumped into LU and CMGI. Lucent pulled a head fake on me and turned around. CMGI jumped up and I sold again an hour later for a nice profit. Merrill never recovered from Monday in spite of my trying to "hope" it up so I took a big loss due to the qty of contracts.

Date Action Stock Qty Symbol Price  Sold Price  Profit/Loss

Mon Buy Dell 40 DLQ-KM 4.25 Tue 6.75 +12,500 Mon Buy AOL 60 AOL-KG 10.63 Tue 13.00 +13,980 Mon Buy MER 100 MER-LL 6.25 Tue 5.38 - 8,700 Mon Buy CSCO 100 CYQ-LM 4.50 Tue 4.25 - 2,500 Mon Buy CMGI 50 QGC-LN 10.63 Tue 12.63 + 9,900 Tue Buy LU 50 LU-KQ 5.00 Tue 4.75 - 1,250 Tue Buy CMGI 20 QGC-KN 9.50 Tue 12.13 + 5,260 Tue Buy $RUT 40 RUZ-KT 4.63 still open days change +29,190

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