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Year End Review

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And now for a song for the bulls in 2003. I give you Peace frog. By the doors. :grin:



There's blood in the streets, it's up to my ankles


Blood in the streets, it's up to my knee


Blood in the streets in the town of Chicago


Blood on the rise, it's following me

Think about the break of day


She came and then she drove away

Sunlight in her hair


She came

Blood in the streets runs a river of sadness


Blood in the streets it's up to my thigh


Yeah the river runs red down the legs of a city


The women are crying red rivers of weepin'


She came into town and then she drove away

Sunlight in her hair


Indians scattered on dawn's highway bleeding

Ghosts crowd the young child's fragile eggshell mind


Blood in the streets in the town of New Haven

Blood stains the roofs and the palm trees of Venice

Blood in my love in the terrible summer

Bloody red sun of Phantastic L.A.


Blood screams her brain as they chop off her fingers

Blood will be born in the birth of a nation

Blood is the rose of mysterious union


There's blood in the streets, it's up to my ankles

Blood in the streets, it's up to my knee

Blood in the streets in the town of Chicago

Blood on the rise, it's following me



[ www.azlyrics.com ]

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Bounce coming by Friday. New stupid money likes to flow in at beginning of year. Dow Jones McClellan Oscillator at -100 from where it frequently bounces. SPX at 50% retrace. Nas adv/decl showing contracting lows as the index makes new lows and we are entering a minor time cluster. Who the hell knows but I suspect now a few days of buying. best to all and good night, b

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nyse macOsi is at a +9, a buy


Nazcrap macOsi is at a -61, a sell.


Keep in mind the low volume.


I expect some sorda bounce but, this market is soooo weak that one should only think about the low 900's (spx).


Don't listen to me.

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Iraq will not be a push over this time...


Don't step foot into Iraq...


Cowboys and Iraqis


as for the Oil in Venezuela... They supply 1.4 million barrels of oil/day


Per day so the 30 x 1.4 million barrels = 42 million barrels a month not a pretty picture...


Iraq 500,000




Stratigic Reserves = 500 million barrels


Everything will happen at once... when "it" happens...

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Hypertiger - I'm inclined to believe that Bagdad will not be taken by military force, because I don't think GWB could stand all that blood on his hands politically. He is probably hoping that SH will somehow abdicate or will just lay seige to Bagdad.


I'm sure the market will twist and turn as the events unfold, but I don't envision any war scenario (including somewhat possible lower oil prices) turning back the bear market very long (more than 2 months).

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Guest alex

Hey Tig, thanx for the info on BEGBX. Suspected a dividend might be the cause, but couldnt find info. Just wanted to make sure we're not correcting the dollar dive.

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To maintain the Presidency and the hold on power the war is needed very very very badly Saddam will not step down... It could be a surprize for sure but the WAR should have started months ago... In fact the first gulf war should have secured the oil, it didn't... and now the situation is so grave that very few people can understand it, or want to. What we see on the surface is tame compaird to what we can not see...


If the US military enters Iraq it will be a blood bath not seen since Viet Nam and if the US backs down without the oil, for any reason, it will be the end of GW Bush...

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Guest AssMaster

Baghdad schamgdad. No oil there! Why not just take over the northern and southern no-fly zones, isolate Baghdad. Blast some Scorpions over loudspeakers at them until they give up like Marcos in Panama. :grin:


I like the sound of that. Northern Iraq, Southern Iraq and Central Iraq. Unocal gets Nortern and XOM get Southern. Central? The new no-fly, no-oil zone.

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Funny... But then the pretense is blown and the lies are exposed... The power of Iraq is concentrated in Baghdad along with all the banks that will be looted...


Like I said the situation is grave...


It is a looting operation...


But thats it, political stool is where this will end up maybe I will start a thread there...

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planning to be heavily in phat-lambda (high leverage / way OTM) index puts by NO LATER than the end of next week.


I hope you can share with us your ideas on some OTM puts. Thanks.

happy to. this may be longish, hope it'll be useful.


in an options montage, the area of highest leverage (% move in option value per % move in underlying, or lambda) is somewhere out near the edge of the listed OTM options. this area moves towards the money as expiry nears and time value shrinks, until just before expiry when everything OTM is nearly worthless and everything ITM moves 1 for 1 with the underlying. for options with several months or more until expiry, there's often a noticeable lambda/leverage bulge way OTM, where there are juicy picks that respond well to a favorable move in the underlying.


this is probably an excellent time to mention that you can get your ass handed to you doing this. if the market moves against an option, the position will lose intrinsic value and time value, and with OTM options all you've got is time value, so now you will need a larger move back in your favor over a shorter time frame to make up ground. for a big upward reversal, like off the jul & oct lows, being caught in way OTM puts is lethal. you can lose almost all of your capital. :o


once more: you can lose almost all of your capital. :o :o


ok - that said....in an options montage with more than a couple months to expiry, there is almost always one (and often only one) OTM option out in the lambda bulge that represents the 'sweet spot'. you usually don't need an abacus to find it, just look at the previous day's montage (i like schaeffer's).


to figure the lambda, assume the worst case - that you'll buy at the ask and sell at the bid - and compare the ask of one option to the bid of another option one interval nearer to the money. what's the % jump? do this for several options, using the same intervals. if you've got software doing the number crunching work for you, great, but don't fret over mathematical abstractions. the biggest jump - the sweet spot - will present itself at a glance. (quick guide: do you see an option way out on the edge, one that didn't have much volume, and didn't really budge even though the market moved towards it? it's probably the next one in toward the money.)


for a big down move, spx puts are arguably the best, since they're heavily traded and easiest to enter & exit. and the broad market can't be propped or jammed as easily as can a sector or a single stock.


so in terms of a practical discussion of the spx....jan puts are obviously out of the question, and if you expect a big dump through feb, then feb puts are too - the accelerating decay in time value may rob you of the gains from the market drop. so at present, that leaves mar, jun, or sep (not all months are listed for trade at all times). for our purposes, jun and sep have too much time value built in to realize a big % gain....which leaves us with mar.


looking over the mar spx puts as per the above, the biggest gains right now are to be had with the 600 and 625 puts. the 500 puts are even juicier on a % basis, but there's not much volume there, and the commissions will be considerable. so in practice, the sweet-spot theory is a pretty reductive process: spx mar 600 puts (SYGOT) or spx mar 625 puts (SYGOE).


[a curious note on this example: most options contract volume is clustered in a generally bell-shaped distribution pattern at the money. spx options volume is currently showing a clump of anomalous activity down in the OTM area we're discussing. more curious still is the fact that no options below 600 (except 500) are listed for trade, when current trading patterns clearly suggest that there is a market for them. hmmmm. :ph34r: ]



a couple thoughts:


1) you may want to 'ladder in', or buy puts at successive strikes....and depending on how much capital you're committing, you may have to. if we a get pop over the next couple days or weeks, puts with higher strikes may become better choices. if you constantly adjust to get optimal entries, you can build a 'ladder' that you then can unwind and reinvest (or not) as the market declines. i believe b4 is doing this as well.


2) in the event of an extended decline, you may want to roll these positions forward, e.g. sell them and buy some with a later expiry month, as the drop goes on. accelerating time decay is not your friend here.


3) when you're fishing way OTM, a small price difference can have a substantial impact. yesterday i was looking at SYFOT puts (spx mar 500), and the bid/ask was .30/.40 (so i probably could have gotten in at .35). i left them alone. at market close, the bid/ask was .10/.30 (so i maybe could have gotten in at .20, or at least .25). the difference between buying at .35 and buying at .25 is huge - 40% more profit. this could be a substantial amount of money in a month or two. :)


ok - hope this is useful. make sure to put your own Sorting Hat on these as well. happy sweetspotting, let me know how it goes.



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The bear just has to continue in 2003 for sanity to finally prevail.


However I will say this: some good value is appearing in the insurance sector.


Some retailers look like good value.


2003 will be the year that tech finally gets completely crushed. The quality tech will be the last to go but Dell, Cisco and Microsoft will get a real comeuppance.


Expect the financial sector (sans insurance) to go down big time.




Expect the gold breakout to broaden to other metals.


Inflation and interest rates may well surge,

causing property and bonds to go down the plughole.

(The Governments pump priming to fight unemployment will play right into this scenario)


yep - its going to be the old "Lets steal from savers to bail out the over extended debt junkies" scenario all over again.


faced with mounting losses bond holders are going to flee $US dollar bonds and get into gold, foreign currency bonds in countries with real interest rates on their debts - and who have the ability to repay them.


The flight to reality from unreality continues


Mark has excelled himself this year.


If he wants to play long the bounces I suggest he reads Adam Hamiltons essays (HE USES THE QQQ's).


Very hard to play the bounces well in a bear Market.


Personnally I think a better Strategy might be to pick sectors. They have a stronger tendency to go down or up over extended periods.


Or like Piledriver just short the worst of the worst chosen on technicals/fundamentals eg no profits, no assets, no sales - just red ink all the way down.

(which is a sector stratgey if you think about it - the worst sector!)

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You have done a fantatic job with Mark to Market all year...congratulations!


Food for thought:


[1] No one ever went broke by taking a profit


[2] You should think about creating a Mark to Market portfolio for 2003 to see how well you do against the 7 figure geniuses on the Street


[3] I ended the year up 6% on my portfolio, not bad and relatively low-risk being in various stable value investments.


PS It is now quite evident that Larry Crodlow is back on the hooch, as I have never seen such unabased bullishness in the face of a declining market. The Crudlow Cramer year end show was a joke...had the market finished up for the year the noise makers, paper hats and confetti would have been plentiful....

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