[Weekend Summary]
Dear Member:
The major indices backed off a bit this week after last week's upward move. The drop this week was on fairly light volume, however, and a downward move on light volume is often thought of as bullish since the direction is not accompanied by heavy trading. Again, we are in the depth of the summer doldrums and that may well continue through Labor Day as the major players enjoy the final vacation days of summer.
As an aside, last weekend, as part of the Newsletter, I mentioned FRO as a stock to watch. As is often the case, I received some email advice not to buy FRO on Monday from someone who had met with officers of the company several years ago and who owned the stock. From the open Monday to the close today, the stock moved up $2.13. While I am always interested in what other traders have to say, I am never guided by their advice. If the advice were based on insider information, it would be illegal to use. If it isn't, I would much rather rely on what the technicals are telling me. Please don't think I am picking on the well-meaning subscriber, I only want to point out how dangerous it can be to follow trading advice without making one's own independent analysis.
This week, I was able to bring in some income against my longer term calls on both the Biotech Hldrs (BBH) and the Spdrs (SPY). Monday, I sold the Oct 185 calls on BBH for $3.10 and today, I bought them back for $2.50, thus realizing a 60 cent a share gain on that leg and reducing my risk in the longer term calls I hold. On SPY, I sold the Oct 133 calls creating a spread with my Dec '07 120 calls and brought in $1.15. Both those legs are still open and I am up 15 cents on the short leg so far.
Sirius Satellite (SIRI) on which I own the Jan '08 $2.50 calls made a nice move up over the week and is showing a little strength. XLK on which I also own LEAPS calls (the '08 15's) was essentially flat for the week. The Micron (MU) spread is looking ok so far.
I have my eye on Boeing (BA) for a possible bearish play.
Expect volume to be very light until after Labor Day.
Bill
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