Being correct is most important with over 20 years of experience and five years as a stock and bond broker.Home Since 1995
Shields Up Is A Timely Stock And Bond Risk Management Financial Advisory By Thomas Scott Burns
Believe In It and be Ahead Of Now
 

Shields Up First Quarter 2000 Red Alerts

Red Alert! Q Tips

Proper Perspective For Performance Finesse

If it matters being positioned when support / resistance levels may be reached to get IN or OUT of your investment or mutual fund, you should subscribe to the Email Red Alert service. This is not market timing, but performance finesse.

Aggressive Portfolio 1/1/00-3/31/00 -6% ~Four Million Dollar Example

Conservative Full Shield Portfolio 1/1/00-3/31/00 0% ~Fifteen Million Dollar Example

March 31, 2000; 7:33 AM PT Edited Partial Sample Of Red Alert Email Service. Subscribe Today and get Ahead Of Now.

Motivation

Blood Flow was all about selling into strength when there are more buyers and buying when there are more sellers. I will still keep the bear as the opening of the second quarter mainly because of the chance that the Federal Reserve may keep on raising interest rates until enough of the money supply is restricted and I still feel that it may take closer to 8% fed funds to do this. Building a cash stash may be the best place to go with money from closed stock positions instead of reinvesting even in the old economy stocks because they also can be vulnerable to competitive investments such as a simple money market cash stash.

Since Jan 2nd of 2000, no one else took this stance until much later. All the Yabby Dabby Do's nor Bat Breath's even gave you a hint that there was trouble until much later. All I want is to be properly credited for making the correct call. After all, I always thought that helping you get ahead of now with your investments and not being a media palmed price chaser was the purpose of making a correct macro economic market forecast.

Mar 29, 8:21 AM PT

Another Test For The NASD

This may be where new lows could be made below the 4,500 zone of the NASD. The first chart shows the 50 day moving average and the second chart shows the 100 day moving average. It seems this index may bounce from each moving average on a descending formation until the 200 day moving average is reached. This can be done by going sideways for three or more months or falling rapidly to that level.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Mar 28, 7:24 AM PT

Ms. Fields

I’d rather know what Ms. Fields thinks of the financial markets instead of the over hyped, palm jobbing, business media presentation of Yabby Dabby Do’s thoughts.

Mar 26, 7:06 PM PT

Metricom 10-k

The 10 k on MCOM is in the news and does not look good short term with component supply problems lurking. So, there are finally leap options which are the January 2001 50’s. I am waiting to see the open on Monday.

Mar 22, 7:33 AM PT

Compaq Base Building

This could be the second leg higher for Compaq that could take the stock price closer to the 40’s. That may be followed by a consolidation period before a major move to new highs. CPQ sells for a little over one times sales where many other competing companies sell for many times their sales. This could set the stock up for an earnings surprise higher. AMD seems to be a good hinting mechanism for various improvements such as ADBE seems to help reflect the improvements in Apple Computer’s situation even though much of ADBE’s business is associated with Windows now.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Mar 18, 11:33 AM PT

Glory

The GLORY of forecasting correctly to the dismay of the media and others. A major business cable commentator actually said that he did not care where the market went and he influences many of the chasers who react to what he says. Two things should happen; don't be a chaser and he should start caring. You would think that if you had been caught on the wrong side of the 1987 crash that you would have tried to find out why things happened as they did. By doing so, one could use that information to help decipher current situations thereby providing wisdom to your observations. This is my whole point of doing what I do. People get paid a lot of money to do this and fortunately there are those who do subscribe of the tens of thousands of viewers per month who understand it is more important to be correct ahead of the fact than to have a smile or a great sales pitch.

Glory by Jos Binne

Mar 17, 5:51 AM PT

Revisit

This chart of the Nasdaq showing the 50 day moving average makes me feel it is sideways at best from here as in the same period last year where it took several months for the longer term major averages to catch up with recent stock price movement. Careful when you listen to the cable cheerleaders who focus on a story line regarding the greatest point gain instead of the percentage gain which would be a truer impression of the reality.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Mar 16, 8:47 AM PT

Resistance

Dow Jones Industrial average resistance seems to be near 10,800 where the 100 and 200 day moving averages are currently. There may be a pause at that level as the events over the weekend with China play out and the Federal Reserve decision becomes reality. The Nasdaq seems to be playing the stairway bouncing ball game as it stops at each moving average and tries to rally. The 100 day moving average may play the biggest bounce to cause money to flow back in. Nobody seems to like cash yet.

DOW and the 100 day moving average

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Mar 14, 5:59 AM PT

Consideration

Tax situations pose an interesting problem after a huge increase in the value of a stock. Do you get taxed if you sell or get hit by a 30% drop in the stock such as in the Aggressive portfolio with one of the major holdings down 30% since January 1st . The only alternative was to tightly shield that position and wait for the opportunity to open up a long strategy when the damage seems finished. Qualcomm is another stock that has been correcting this year and may be getting to a point where it could start a new leg higher with the 100 day moving average providing support for the price. Of course, most corrections don’t finish until the 200 day moving average is reached. Subscribers get further updates and know how and when to put shields up to protect their assets. Syndication of this advisory with another major website is being investigated.

Qualcomm and the 200 day moving average

Metricom and the 200 day moving average

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Mar 13, 6:20 AM PT

Subscribers Ready

Today the Nasdaq may feel a little reality as the brazen nonchalant naive gamblers get a little economic education. 

Mar 7, 6:06 AM PT 

Nasdaq Will Follow

Don’t put any more money at risk unless you are going to by puts too. The NASDAQ should follow the DOW down and maybe faster. Please be careful. Here comes 9,000 at least and 8,000 would be equivalent to where the Dow stopped falling in 1987.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Mar 6, 6:43 AM PT

AMD Leaps Ahead

The news about the one gig chip from AMD is now a reality with the trading in the stock and leap options showing the belief that the future looks very promising. There was nice volume in the January 2001 50 call option contract and the January 2002 50 call options which I wanted to try to buy this morning for the Conservative and Aggressive portfolios. This may also be a positive situation for Compaq which seems to be showing good strength in the technical formations.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Mar 2, 12:01 PM PT

Close To The Palm

Compaq has burst higher on a change in perspective after the Palm Job by Three Com. Maybe a new valuation will be considered for CPQ.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Mar 1, 12:33 PM PT

Falling Apart

This rally may be falling apart late today. Buying pressure seems equally matched with sell orders. Pockets of happiness exist today especially in the wireless area. To see IBM get hammered as the day went on makes me want to go to as much cash as I can because there could be a break of over one thousand points to 9,000 or lower. Giving ISP service away free such as Lycos and Alta Vista may be a start of further consolidation and mergers.  This could put more pressure on AOL and everyone else in that business.

Mar 1, 9:00 AM PT

Palm Job

Buy on the rumor, sell on the news when the Palm Job IPO comes out. COMS could go to 60 or 70 before a new move higher.

Mar 1, 8:14 AM PT

Metricom Situation

I am hoping for Metricom stock price to move sideways near 80 for a few days, but the risk in the market remains high. The wireless network alliance between Qualcomm and Microsoft could be competition with data speed that is at 144 Kbps compared to 128 Kbps for Metricom. The price of the service may be the most important comparison.

Mar 1, 7:44 AM PT

Weak Rally Attempt

This weak rally attempt seems to have started more in the financial and retail sectors over the last two days and now shows signs of moving into IBM again and others. I don’t trust it though, so I will sell the IBM stock position and keep the put option spread.

Feb 25, 10:12 AM PT

Visual Dow

Here is a chart of the Dow Jones Industrial average that shows how the 80 week moving average has held up over the past few years. I am hoping the average stays here for a week or so. Back around November of 1994, the 40 and 80 week moving average almost intersected. The election results gave hope for deficit spending cuts and thus one reason for the rise in stock prices since then. The next support zones may be near 9,000 then 8,000.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Feb 24, 10:43 AM PT

Measuring Bounce

There should be some support at 10,000and if not, then 9,600. The trick here is to measure the strength of any bounce. It could be good if we just sit here trending sideways and better if we can spring away, especially in the financial sector. One thing seems obvious, this may be the scare zone where institutions start to be more concerned about capital preservation than risking new or old money for the sake of performance.

Feb 24, 7:20 AM PT

Top Guns

The averages are struggling to stay high by gunning the Nasdaq to new highs using the largest capital members such as CSCO and QCOM yesterday and with INTC and MSFT today.

Feb 22, 9:33 Am PT

Cheap Shot

Once again the term “cheap” is being used by the business media which may be misleading. Consider that the bank stocks sold at PE’s of 3 in the early 90’s when the Fed was pushing on a string by lowering interest rates to get them to lend and trying to rebuild their capital with the low risk treasury market spreads. The other consideration would be the PE itself; whether it is rising, falling, future estimate or current PE. The prices may look cheap based on the recent past stock price which seems to be the area of expertise the business media has, hindsight.

Feb 22, 8:24 AM PT

Inflammatory Terms

There once was a policy in the brokerage industry that ordered brokers not to use terms such as hot, on fire, guarantee because that was the boiler room approach to creating incentive to buy something emotionally and grounds for a law suit if harmed by such action. It seems the words hot and on fire are used constantly when the business media reports the Nasdaq market news. Could this be a problem in the future?

Feb 22, 8:03 AM PT

AOL'ers Bulletin Board

Having AOL fall to 40 may be the experience of current stock holders which is a fall in price back to the low last October. The problem may be that the level of sophistication is rising finally to the level where direct searching over the internet may be far more fulfilling than the controlled bulletin board environment within the AOL experience. Longer term support may be near 30 in a high interest rate environment.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Feb 18, 10:54 AM PT

JPM and 200 Day MA

Both GE and AXP have bounced off their 200 day moving average, but the next test may be the 400 day MA after a slow rolling bounce. Look at the chart of JPM to get a feel for how long it can take. Maybe it will be much quicker now that more investors are getting the idea of the Federal Reserve’s intentions.

JPM and the 200 Day Moving Average

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Feb 18, 9:07 AM PT

Expiration

Usually a stocks price gets squeezed to a level that will hurt the most put and call option owners, such as GE  near 130 or AXP between 140 and 145. There seems to be a dangerous pumping action to the downside probably caused by program selling bursts as we straddle the 10,400 level of the Dow Jones Industrial average. I picture the scene as you would a balancing act, where the Federal Reserve has taken the balancing pole away and the performer has now fallen and is holding on to the rope with both his hands threatening to lose the grip and fall to the net that may be closer to 10,000.

Feb 16, 8:16 AM PT

Holding Their Own

Look at how hyped the Palm Pilot IPO is. My question is why sell something that is supposed to be so fantastic? The answer may be that you can make more money now by selling stock than waiting for actual profits over the next few years. The reality may be that competition which offers more value and computing power may be taking some of your market share away.

American Express seems to be ready to break down through the 100 day moving average which usually is followed by a move to the 200 day moving average.

AXP and the 200 Day Moving Average

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Feb 15, 10:09 AM PT

Couple Things

Qualcomm seems to be trying to bounce on the 75 day moving average near 120. The other thing is that Compaq may be far more affiliated with Microsoft and the Windows 2000 launch than Dell. The media has missed it again. Also, the Palm Pilot seems to be a wimpy thing compared to what the Compaq Aero can do for the money.

Personal active trading of any or all positions mentioned in this advisory.

Feb 15, 7:57 AM PT

Trying To Rally With Financials

The financial sector seems to be the choice today to try and get a rally going. The selling looks pretty strong though. Since AXP seems to be a favorite rally stock, I will sell the AXP March 150 covered put options against the March 165 held long.

Feb 15, 7:15 AM PT

Metricom Idea

Here may be something! You could buy the shares of MCOM at 97 and sell the MQMGB July 110 covered call for 19 plus. That is a huge premium and could be a fantastic return. The downside may be around 80 now for the stock if hit by the market.

MCOM

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Feb 15, 6:45 AM PT

Finally Fed Up

Finally, the Federal Reserve may lead the bond market by raising the short term lending rate faster than the debt market expects. In the past, it was the market that lead the Fed by moving interest rates higher ahead of any Fed action. Perhaps, not any longer. Soon there could be a steep sloping yield curve with the shortest interest rates at the highest level.

Feb 13, 7:21 AM PT

Cisco 1994

After viewing many charts this morning, I have found an interesting situation where you could hedge CSCO with a target of the 70 price zone. The target zone is assumed from measurements of previous corrections in the stock price during corrections in the overall market. There are many signs of large sophisticated investors positioning for such a move lower such as 5,300 of the CSCO CWYST July 100 put option contracts being traded on Friday and a surge in the CSCO CWYGF July 130 call options on Thursday along with many other calls traded on other calendar strikes. All of this has been the signature of at least a short term top in the past. Keep in mind that an investor may sell put options to raise cash to buy call options. So as an alternative to selling 100 shares of CSCO, the strategy could be to sell the CWYGG July 135 covered call contract for around 16 and buy the CWYSF July 130 put option for 14 ¾ if you want to shield your position with limited downside risk and avoid paying taxes by selling the stock.. Notice how the stock of Cisco performed in 1994 when the Federal Reserve was raising interest rates several times.

CSCO

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Feb 11, 6:28 AM PT

Blood Flow

Soon every investor will have the majority of their investment money in only two sectors of equity ownership. Everything else will fall away as dead money investments. The life source can flow as long as investment money continues to pump life support to the stock price streaming to higher levels. Once everyone is caught in the tinny thin capillaries of the investment world, will the ability to turn and go elsewhere be too tight for the blood to flow fast enough to allow all to survive. Falling price action tends to be many times faster than rising price action. So, if you like seeing 10 or 20 percent moves higher in a day, you might also like 20 or 40 percent moves lower.

The greatest controller of inflation in the last four years has been investment in the equity markets by taking money away from spending and holding it in stocks. Spending may increase if the investment trend slows and less money is invested in financial instruments. This causes a “catch 22” situation for the central banks of the world knowing that by raising interest rates to slow the economies could cause a sloppy environment for six to eighteen months where the equity markets fade and spending increases. Once interest rates go high enough to start getting investors putting their money into interest bearing investments such as corporate bonds would the fight against inflation subside.

The .COM’s of the world have an attitude that one or two percentage points won’t affect them. This attitude was formed because of the ease of raising cash by selling printed paper with the hope of riches later. Instead of later, these riches come quickly in the stocks rapid appreciation to levels projected out many years. There will be a day again where warrants would have to be issued with every share as an incentive in order to raise the same kind of cash in an IPO. The day may come when interest rates go high enough to lower this level of speculation. Maybe the Casino’s of the world will become more popular than the equity exchanges, especially if they create an IPO game unaffected by the central banks of the world.

Habits are hard to break, have you noticed that the split heads are not getting rewarded as in the past after a stock splits. There is a bad habit being broken after a little education and maybe the IPO scene is next.

Feb 10, 11:18 AM PT

Implosion

If the world is changing at an ever increasing pace, how can you pay for something on a projection of value out ten, twenty or thirty years. Logically the chance of obsolescence should increase, especially when dealing in the internet sector not to mention margin squeeze from new competition cannibalizing your business for market share. The only way to invest currently in the high tech sector is with carefully placed shields that limit and control the risk. When carefully timed, this strategy can bring you high returns and a lot less stress.  

Feb 9, 12:11 PM PT

Major Break Down

Time for a quick ride to 10,500 in order to find an area of support for the Dow Jones Industrial average. The timing of the comment from Summers seems suspicious.

Feb 9, 8:28 AM PT

Breaking Support

What seems to be happening is the Dow Jones Industrial average looks like it may break the 100 and 200 day moving average which means that 10,500 could be the next area of support. If this happens, GE and AXP could find their stock price at their 200 day moving average. This situation  in the Dow Jones Industrial average has not happened since maybe November 1994, 1990 or 1987. Caution advised because the auction may not even be a factor now with this kind of price action happening in the large cap stocks.

Feb 8, 6:42 AM PT

Compressed Zone

This would be the time to have a strong rally based on the productivity statistics that could even get the financial sector to bounce. The 100 then 200 day moving average usually provides a springboard for at least a bounce. The auction seems to be set up to go smoothly.

Feb 7, 8:41 AM PT

On The Front Line

The name of the game is rate of change. Measurements made relative to interest rates rate of increase, revenue rate of growth, earnings rate of growth, equity rate of appreciation, real estate rate of price appreciation, etc., may be shifting to a very different interpretation of value. Money seems to be thrown at stocks more out of habit than economic reality. Once April passes there could be the final reckoning to pay because the rate of increase in the interest rate environment may be changing comparatively as fast if not faster than the rate of other asset appreciation thereby causing money to flow more into interest bearing financial instruments than to equities with no obligations of any kind with respect to capital preservation.

Feb 7, 8:13 AM PT

Generals On The Front

The 200 day moving average for the Dow Jones Industrial average rests right where we are now. This can be violated very easily if GE would fall a few points more with the stock price possibly going to 120 in order to reach the 200 day moving average. AXP can go to 140 in order to reach that 200 day moving average. IBM and JPM are already below such a point along with several others. This may be one of the most dangerous times in quite a while to be long stocks. Only special situation stocks may do well. Full caution may be recommended watching the treasury auction this week that could give the stock averages an excuse to rally after, if the auction goes well.

Feb 4, 8:39 AM PT

Dead Mans Curve Too

Who to listen to and the rest mute; God, Greenspan, Bill Gross, Rick Santelli and your mate somewhere after God. Short term interest rates are more likely to go much higher, especially with the artificial thirty year t-bond distortion caused by the treasury buy back manipulation.

Feb 3, 6:56 AM PT

10-Year Benchmark

In the future, I will have to follow the price and yield of the ten year bond now that the thirty year T bond seems to be no longer creditable. Traditionally, I would interpret the movement in the T-bond as a bad omen for the stock market by saying that 6% is fine because of a chance that stock prices could fall more. The other interpretation is that there is some damage happening to those short the thirty year T-Bond, thereby causing the extreme price change. Any which way you look at it, I think there may be trouble soon to be exposed.

Jan 30, 5:46 PM PT

Sore Spot

Surely you can assume that Mr. Greenspan will only raise interest rates ¼% at a time because of his arguments displayed in interviews dating back before he became Chairman. The issue is how many times would such 1/4 point moves be complete. The trauma in the market seems not to be a reflection of the possibility, but more of valuation relative to historic measurement. Hence, the over owned stocks might suffer while under valued stocks may start to see interest. This is why I am very bullish on Compaq, which I have positions, considering the release of Windows 2000 on their Alpha Servers which seems like an amazing improvement along with Office 2000 functionality.

Jan 27, 12:21 PM PT

Snap Drag-On

Sell programs seem popular today and is snapping the prices down in a way that is difficult to defend unless you already have your shields up so that you don’t have to do anything but wait for a bottom to appear some other day. Nov 3, 1999 Multiple Moves

Jan 26, 11:22 AM PT

Compaq Opportunity

This may be a true buying opportunity and I hate it when I hear others say that about different stocks. I feel it is true when it comes to value which is why there is no selling on this end of the stick. It is the focus of the media misrepresenting the true growth of this company. It won’t be the first time the media loses sight of the future because of focusing on the past. Compaq is sitting on the 400 day moving average with a major positive intersection of the thirty day MA happening which usually precedes a major move higher. It could be three or so days of consolidation at this point.

CPQ

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Jan 25, 9:30 AM PT

Too Thinly Traded

My view of the Russell 2000 is one of treachery. It takes less money flow to move the price higher and when that stops, the price could fall even faster. The demand for the stock could go from an average 50,000 shares traded to 800,000 shares. Once the buying is over, you can't get out because the volume falls to 50,000 again or less. Liquidity may be why a few large cap stocks have been over invested in during the last few years. Concentrated buying where the volume stays high to absorb any buying or selling pressure can be more of a conservative approach, but in this investment environment that may not work either. A high cash stash may be the best investment for a little while longer. Investors may be too quick to reinvest after selling something. Waiting for traditional classic buying points should be the best discipline at this time.

Jan 20, 7:26 AM PT

Open Up Compaq

For the Aggressive Shields Up portfolio, I will close the CPQ February 35 covered call option position feeling that Compaq may surge based on the AMD performance along with favorable performance of IBM and AAPL.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com. Personal active trading of any or all positions mentioned in this advisory.

Jan 20, 7:03 AM PT

Metricom Moving Out

Metricom may be in the hundreds very soon as it moves out from a recent consolidation zone. The danger may be that they have zero earnings and revenue may still be weak, but the growth potential for this wireless technology being deployed should be huge.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 20, 6:56 AM PT

Break On Through To The Other Side

Break on through to the other side of 6 ¾% may be why GE is just sitting there while AXP and JPM look like they are getting smashed. There seems to be a window of a couple weeks to rally the special situation sectors, but that could end with impact against a 7% T-Bond wall. JPM is below the 200 day moving average and seems to be falling further away to perhaps the next support which is very close to the current price.

JPM

AXP

GE

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 19, 3:09 PM PT

AMD

AMD earnings of .43 and IBM showing better numbers may be a great sign for Compaq sales and earnings due out next week on Wednesday. Compaq servers with Windows 2000 may be very positive over the next several months as well.

Jan 19, 7:25 AM PT

IBM Situation

I think I’d like to keep IBM in the Conservative Full Shield Portfolio. Therefore, since the original IBM shares are at risk of being called away, I will buy more shares and sell the January 2001 110 or 120 leap options against the holding.

Jan 18, 1:02 PM PT

Dead Mans Curve

We seem to be in a slide and everybody’s still laughing. Soon we may all know we are out of control as we find ourselves up a tree. (Inverted Yield Curve)

Jan 18, 6:35 AM PT

Relative To History

Mute those that say buy because, “it is undervalued relative to the market”. Instead, buy relative to historic measures. The classic economic realities still apply. The term “market” means nothing, especially when stocks can be dropped and added in order to keep the averages high. Japan manipulated their financial markets right up to 40,000. Outlaw selling could help here.

Jan 14, 12:01 PM PT

Not Only IBM, But GE Weak

Intel is making the average look good as two of the stars flicker without ignition in this select rally. This kind of action keeps me very cautious into option expiration next week.

IBM

GE

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 14, 4:54 AM PT

Brazen Nonchalant Naiveté

Once again, there could not be more of a warning than what Mr. Greenspan said last night. It is really sad because this time around there are so many critical economic situations that have to be contained. Once they are so obvious that the media starts changing their tune, it will be too late. Remember how the major business media was saying that the third interest rate hike was the last. Well, once again the focus is to short term and it will take the fullness of time to play things out.

On November eighth, I wrote Multiple Moves and now you are seeing it played out. One of the most important points of mine is that interest rates have to go much higher to have an effect that the Federal Reserve wants. This level of interest rates has to be competitive with other investments in order to draw the cash away from such instruments of return.

Currently our economy is experiencing strong retail sales growth with the relationship between the Treasury yield and the return on equity in the stock market as it is. When this changes to a more competitive situation, money that had been attracted to the stock market and bidding up prices there may soon shift to spending on real assets under the notion that inflation could be starting and real assets can appreciate better than a financial instrument. This psychology may start with the endorsement from the Federal Reserve by addressing their view that inflation seems right at the horizon and the battle needs to be fought before there is any momentum established. Hence, the small quarter point tightening moves as the Fed tweaks our economy with eagle like observation of the interrelationships of global capital flow. Daily examination of economic statistics will be analyzed and scrutinized in order to justify any action taken, so don’t be put to sleep by the hind sight media reporting journalists. If you get caught here it will be your own fault for being taken by the brazen nonchalant naiveté of others.

Jan 13, 6:18 AM PT

Closing Covered Calls

For the Conservative Full Shield portfolio, I will try to buy back the Apple Computer April 100 covered call options. Also, I will try to sell the April 90 covered put options against the April 100 puts held long. Compaq could finally launch above 30 this morning.

Apple Computer

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 12, 8:44 AM PT

Compaq

Compaq seems very strong and looks like it could break above 30 today. I own call options along with positions in both the Aggressive and Conservative portfolios hoping to see 35 real soon.

Stock Graph

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 11, 5:08 AM PT

Financial Sector

General Electric seemed to show signs of weakness at the close yesterday. Now that the Bank One disappointing earnings announcement is out, the view from Wall Street may turn less positive for the financial sector again and American Express along with JP Morgan sometimes move very fast in either direction and could be good short positions for the near term.

GE

GE

AXP

JPM

Stock Graph

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 11, 4:41 AM PT

Nobody Matters

This may be the battle cry of the internet companies and their underwriters as they raise capital with no obligation to pay back a cent. You may be surprised at how many investors are oblivious to the fact that debt is senior to equity. A company can stay in business for many years paying its bills, especially debt obligations, and have the common stock slide to under-valuation.

This may be the scenario for the AOL/Time Warner deal. Could this strategy have been adopted more as a survival scheme to balance the powers struggling to lead the way into the future? If there is such a company that is leading, once again it may be Microsoft that has been buying into cable and media since around 1997 at stock prices that were much lower than now. Capital problems may be more likely to happen to a company that is paying top valuation rather than the company that bought at much lower valuations. There is a difference between playing offense and playing defense. Especially now that we may be in a time where interest rates could play a stronger roll in the competition for cash.

AOL

TWX

MSFT

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 7, 6:16 AM PT

MCOM

Check your newswire on Metricom, MCOM, because it will show the new stock and note offering details. This may be the only negative item currently for the stock other than the general market climate. It seems to be holding 70 very well, but there still may be a chance to see 60 first before 100 again.

Jan 7, 6:52 AM PT

Qualcomm

Qualcomm may finally be getting to the first stop zone near 135. There still is a chance you could see 100 again, but I would probably be a buyer then depending on other considerations. Step in slowly if you do at 100. You can see that 70 may also be support.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 7, 7:10 AM PT

Metricom

For the Conservative and the Aggressive portfolios, I will try to reposition to a more bullish stance on MCOM by selling long put options and covering short call options.

Chart from www.wallstreetcity.com customized by ShieldsUp.Com

Jan 6, 11:25 AM PT

MCI-Worldcom

Once again having a position shielded has paid off as the price of WCOM falls over three points. The Conservative Full Shield portfolio has owned the January 50 put options for several months and are now doing what they were intended to do. The stock may now be sold at 50 come January option expiration to close that position completely.

Compaq seems to be holding in here very well. Metricom has bounced strongly, but may have a problem around 85, if not here at 78 that should take it back for a retest of 70 before getting back to the last highs. The employment statistics coming out tomorrow should be neutral, thereby giving the market more stability at these levels.

Jan 5, 9:27 AM PT

Metricom

Metricom may be down to 60 before any real support could be found. I had 70 as a first zone, but 60 may be stronger and 50 could be possible, too. No matter, the Aggressive portfolio is ready and may make money if it does fall to 50. If this happens, it may be time to start looking for a rebound again because the next 12 months may be very good for the stock reflecting the proposed expansion.

Jan 4, 6:10 AM PT

Still Eager Buyers

Sell when there are to many buyers and buy when there are to many sellers. Selling into the strength over the last couple months may have been a wise thing to do. It is always hard to stay out when the price continues without you, but remember that the market will always be there. The question is will you? Trying not to buy at the top and becoming a long term investor waiting to get even should be your main concern at this time. Hold to your discipline and wait, or go short even though Monday morning was the best time to have done that. There are lower risk methods to do this even now such as selling in the money covered call options. This is the situation in the Conservative Full Shield portfolio where deep in the money call options were sold on General Electric a long time ago and put options were bought as the stock price went higher so that if the stock gets hit, I plan to actually make more money than if it went higher. The risk in that situation is to have the stock called away and face the capital gains tax.

Jan 2, 3:40 PM PT

Wait And See

It is a wait and see situation in the market. I may be going more to cash until the interest rate situation becomes more evident. Much of the portfolio may be called away come option expiration day which is fine because I expect the year to be fairly flat with even fewer special situation stocks performing like the 28% that gained 50% or more in 1999.

 

 

Red Alert! Q Tips       In The Fullness Of Time         Buy High Stay High – Shield For Yield         Buy / Shield
Thomas Scott Burns PO Box 903 Sherwood OR 97140-0903
©1995-2004 ShieldsUp.Com, all rights reserved. Credentials Privacy policy:

All information regarding a client is absolutely confidential unless approved in writing by the client involved. The purpose of this newsletter is to inform, educate, document the time of trading decisions in addition to record performance, only. Any actions taken by other investors, based on my opinions, do so at their own risk. This is not a solicitation to buy, sell or exchange anything of value without consulting a professional. Past performance is not indicative of future results. All company and product brand names mentioned may be trademarks or registered trademarks of their respective holders, and are hereby acknowledged. ProfitAbleTrust.Net and personal active trading of any or all positions mentioned in this advisory.