Hi wildbill,


Selling naked calls (or puts), brrrrr, scares me to death. Not a place for the short funded. They say selling premium is where the money is. But it only takes one wrong move, or an unforeseen event, to do some major damage to your account balance.


Most stock players have a bias to the long side, and a tendency to want to wait out a decline. This includes those with money invested in funds (401K). Using the theory 'stocks always go up', most are not even aware what the fund they have owns.


( If you are the average Joe, commissions will kill you.) I agree, add to this the tax implications and it's hard to see how they can make much by year end. As with anything, there are exceptions and it's those stories we hear about.


I put together a look at the DOW over time, hope the links work.


Here is a chart of the DOW from 1920 to 2000. Can you spot the trend?


http://www.sharelynx.net/Charts/USDJIND.gif


If we say the trend started from the spike low in 1988, and ended in 2000 that's 12 years. 1920 to 2000 is 80 years, 15% 0f 80 = 12 years.


If we draw a line from the 1929 high above the 1994 (4000) consolidation (first area of consolidation before it went parabolic) it projects out to the 4600 area.


OK. So now what do we do? Well, there's an old saying. What goes up in a parabolic fashion, will retrace it's move 85%, should it fall thru major support. Support is in the 7800 area. A close below that points to a retracement back to the 5200 area.


Keep one eye on the Sept.01 low of 7926, if we take that out we could be on the way. If we draw a line from the 1988 spike high above the area of

consolidation in 1996 (5700), it projects out to the 8000 area. Using that spike high area (4000) and the 2000 high (11775) a 50% pull back is 7887.


For the near term, 10,500 is the number to watch on the high side, clear that and we get another leg up, 9500 on the low side give us the T/R.


Here is a yearly chart of the DOW, so easy to see it looking back.


http://chart.bigcharts.com/custom/fo...&compidx=aaaaa%7E0&ma=0&maval=60&uf=0&lf=1&type=4&mocktick=1&cou ntry=US&doChartIV=0&style=1452&size=1&symb=$indu&r and=711


Here you can see the 7800 support area, going back to 1997.


http://chart.bigcharts.com/custom/fo...&compidx=aaaaa%7E0&ma=0&maval=60&uf=0&lf=1&type=4&mocktick=1&cou ntry=US&doChartIV=0&style=1452&size=1&symb=$indu&r and=8901


The trouble with long range projections like this is were talking about 30 DOW stocks, not only are they weighted, they get changed. Fun to watch, tough to trade. Microsoft and Intel were added to the DOW in 1999, how much did that add to the last leg up?


as Keynes put it, "The market can stay irrational longer than you can remain solvent."


SteveB