well as the long-term risks of this market. Warren
Buffet has said that Wall Street has no stocks worth
buying at current prices, while George Soros has
pledged to spend millions, perhaps even billions, to
defeat President Kennedy, er, Nixon, no, Bush (get it
straight!) next November. (Curious that with such
business-oriented enemies, he is still referred to as a
“pro-business” president.) All that said, it’s time for our: 2004 Position Update If you’ve been following our Taipan alerts since
mid 2003, you know that we’ve recommended the S&P Spiders (SPY:AMEX) at two prices: first for US$99.50 and then again for US$102.00. As we write, the Spiders are trading for
US$107.39 and looking to break out to a new high.
This gives you a gain between 5.3% and 7.9% over
the course of three months. For the “traders” in the group, we also initiated
an upside SPX call option in the November issue of Taipan. If you recall, we recommended buying SPX
March 1150 Call (SPT CJ) options between US$6.20 and US$7.00. At the moment these calls trade for
US$6.30. Since they’re still within our original trad-
ing range, they remain an active and open “buy” in
our Taipan portfolio. Looking to the upside while
protecting the backside Following Adam’s chart above, we’re sticking to the upside price target we gave for these calls in the
December Taipan issue. That is, at SPX 1,176, we’d
expect these calls would trade for approximately
US$39.00 per contract, good for a 520% gain over
the next four to five months. In addition to your two S&P positions (the SPY
and the more aggressive SPX March calls), we’d
also like you to maintain your long position in DIA.
We recommended the “Diamonds” via our daily 247profits e-Dispatch on November 10, 2003, for US$98.00 a share. As a quick reminder, the
Diamonds act as a low-cost proxy for the Dow Jones
Industrial Average. They trade for 1/100th the cost of
the Dow. Right now, as the Dow threatens to crack
10,000, this position is showing a modest yet
respectable one-month gain of 2%. Since we’re still optimistic about the future mar-
ket upside, we recommend holding all positions. At
the same time, you should use a measure of caution
and place a 10% trailing stop on your SPY and DIA
positions. At current levels, that equates to US$96.87
on the SPY and US$90 on the DIA. As for your SPX
March 1150 Calls, place a protective sell order at
US$4.00 per contract. n During George W. Bush’s
presidential campaign in 2001,
he said “China is not our friend
in the Far East. Our friends are
Japan, Taiwan and South
Korea.” Although he didn’t see
China as a friend, he still felt that
“It’s our country’s advantage to
have trade with China… it’s to
our advantage to open up
Chinese markets to farmers and producers and entrepreneurs.” Two years later, the American public is complain-
ing about China’s “unfair” trade advantage. All this
complaining in an apparent recovery that seems to
have traction. Investment spending is on the rise,
and the employment outlook looks promising. And
the rest of the world, once a drag on economic vigor,
is improving. So why are Americans whining over US unem-
ployment and the loss of income because of China?
Do the Bush Administration and the American public
understand the implications of imposing tariffs on
Chinese goods? Haven’t we learned from the steel
tariffs fiasco? Let me remind you what happened. Winning votes The Bush administration imposed a tariff on non-
American steel in 2002. Initially, the tariff did give
the US steel industry some relief. But prices eventu-
ally increased for domestic manufacturers. And jobs
were lost as a result. Finally, threats of sanctions from the European
Union and other trading partners forced Bush to lift
the tariff. This will only help long-term US economic
growth. 8 Hotline: 410 528 8228 TAIPAN How the 2004 campaign will
affect Taipan’s Dragon plays Siu-Yee Ng
