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[Weekend Summary]

Dear Member:

The first few days of 2008 have hit the bulls hard. The Dow Industrials, S&P 500, and Nasdaq Composite have all fallen below their important 200 day moving averages. Each is coming toward a very critical level of support. The next Dow support is around 12,724, the Nasdaq around 2540 and the S&P 500 about 1406. If these levels are broken, it could be a very unpleasant ride for bulls and those who advocate buy and hold no matter what. There is a great deal of speculation about the Fed reducing interest rates another 1/2 point in January and that may serve to stem the tide, but there are still huge credit problems out there. As I have said and written before, if we think there is a problem with the sub-prime mortgages, wait until consumer debt catches up. There are already signs of borrowers falling farther behind on consumer debt and that certainly bears watching in my view. All that having been said, there are plenty of ways to profit from downturns and I have used some to my advantage this past week.

I bought the Jun 35 puts on Nvidia (NVDA) on Wednesday and the stock tumbled since then, falling below the 200 day exponential moving average today. I sold half my position today and realized a 21.4% gain before commission on the closed contracts in just 2 days! That is one of the things a falling market can make possible. NVDA is closing in on a support and I'll watch to see how the stock reacts there to determine whether to take the rest of my profit or hold for a further drop.

My Jan puts on the Q's are regaining value and rather than sell additional puts against the current position, I may decide to roll them out a few months. That is a decision for next week.

With only 10 trading days until expiration, my iron condor on Baidu.com (BIDU) continues to look good. I am in fine shape as long as the stock price stays between 290 and 460 to Jan expiration. It closed at 361 Friday, right at the 50 day exponential moving average.

The spreads on Sirius Satellite Radio (SIRI) and SPY have a great deal of time to go and I see no need to adjust my positions at this point.

I will see what strike I can sell against my long call position in Citigroup (C) next week to bring in some income and further reduce risk.

I have previously written about my plan for Genitope (GTOP) where I expect to incur a very modest loss at worst.

Here's to a great 2008!

Bill

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