xxx

-- Lobo (atthelair@yahoo.com), January 13, 2000

Answers

This is the original thread that started the discussion:

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002G0d

HTH

-- LunaC (LunaC@moon.com), January 13, 2000.

I'm buying June puts on the Dow Jones Industrial Average tomorrow. I'm look at at strike prices around 10.4K. I think it's a slam-dunk (i.e. $2,000 investment turning into $12,000 when the DJI drops to 9.3K in May Oh-Oh).

-- Think It (Through@Pollies.Duh), January 13, 2000.

Think It: Every time I think I figured the market out, I lose my ass. Last March, expecting a Y2K gold rush, I bought 17 July Gold options for about $7000. Strike price was $310. Believe me, it was a smart buy at the time because the Gold charts showed a bullish breakout from a l-o-n-g downtrend.

The breakout was a false one and I bought too soon. The downtrend continued and my options expired worthless. Of course, soon after, Gold skyrocketed in just a few days, but it was too late for me. My cash was gone. Just have to chalk those things up to experience.

I'm not to knock you - I am a stock market bear by default. I think a bear market is long overdue. However, keep this in mind, one thing that I learned in my 10 years of stocks and futures trading (disclaimer: I'm no expert! Just an astute observation). If a market is exhibiting a trend, a healthy trend will have a certain amount of contrarians warning about a trend change. This keeps balance on the trading floor as it puts a lid on stocks and futures prices.

However, once a market becomes OVERWHELMINGLY bullish or bearish, THEN look out for a major trend change! It's called a "sentiment index."

I do think we are heading into a dangerous period for the stock market. Last year, there were plenty of stock market bears fueled by Y2K worries. The bulls just kept on pushing and those of us who pulled money out of the market because of Y2K (like I did), missed out on some great money-making opps. What makes it dangerous now is that everybody is breathing a sigh of relief that Y2K problems did not show up, so all of a sudden everybody is bullish. If Greenspan raises rates on Feb. 2 just a quarter point, you will see a bullish push that defies the imagination. The market is becoming vertical and this is very dangerous for the small investor.

Longer term, I agree with your prediction. I'm just not sure of when, especially with this year being a presidential election year.

-- Be Wise (TheSpoiler@reason.com), January 13, 2000.