CHAMPAGNE CORKS WERE

popping again on Wall Street Friday after the Dow Jones Industrial Average closed at a new record. Was it just eight weeks ago that the average plunged a dizzying 416 points in one session?

I was in a celebratory mood, too. Back in cold and now-forgotten February, I promised that the Nasdaq Composite would again reach my selling threshold of 2515. It hit that target on Feb. 21, just days before the historic swoon. As I noted then, it was a half-hearted effort, with the average barely creeping over the mark. Nor did it stay long (three days). Like many of you, I was too busy with other things to take advantage of that brief window while it was open. But I urged you (and myself) to be prepared for the next time.

That actually turned out to be last Monday, when the Nasdaq again closed just above 2515. Despite my admonitions, I was traveling and was even less prepared. The window had closed by Wednesday, with the Nasdaq again below 2515. Then on Friday came a broad-based rally, and the Nasdaq finally broke through in convincing fashion, right along with the Dow. This time I had the weekend to savor my good fortune and to get ready to sell something on Monday.

What's the magic of 2515 on the Nasdaq anyway? New readers of Common Sense may well be wondering. That number represents a 25% gain on the Nasdaq from its most recent interim low. I use a simple, disciplined system of buying and selling in order to implement the Common Sense mantra, which is to buy lower and sell higher. I sell at intervals of 25% gains, and buy at intervals of 10% declines. These easy-to-compute thresholds are based on the historical gains and losses in the Nasdaq during bull and bear markets. This is a modest approach to market timing, one which has worked remarkably well over recent years. They don't happen all that often, and selling thresholds are especially satisfying.

Friday was a red letter day for another reason: The call options I sold on Devon Energy last September were set to expire, and they promised to be a cliffhanger. In all the excitement over new records on the Dow, have you noticed the rally in oil prices? On Monday, crude oil futures rose above $65 a barrel. This would ordinarily be deemed bearish for the market, which seems to be shrugging it off. But it has vindicated the energy strategy I recommended last fall.

My strategy then was to sell Devon calls (the May 75s, for $4.27 each) and buy Chevron calls (the January 2008 60s, for $8.72 each). For a while I thought it likely I'd have to deliver the Devon shares (or buy back the options), since they traded above $75 several days last week. (I only sell covered calls, meaning I own the underlying shares and can deliver them if necessary.) But despite Friday's broad-based rally, they closed just under $75. I kept the proceeds and my shares. Meanwhile, thanks to rising oil prices, my Chevron calls have soared, and were recently trading at $19.10, more than double what I paid for them.

With oil prices again approaching $70 a barrel, and gas prices near $3 a gallon, it soon may be time to take some profits in the oil sector, or sell more calls on energy stocks. But not yet. With the Nasdaq over 2515, there are more immediate candidates to sell.

This time I again sold calls (if the call premiums were rich) and sold shares. As before, I targeted stocks with high price-to-growth ratios (the subject of my May column in SmartMoney). This time I also added stocks from my portfolio of "Ten Stocks for the Next Ten Years," which are the subject of my current cover story in SmartMoney. I am selling some of my earlier portfolio in order to make room for the new 10. From the earlier list I sold Cytyc, P.F. Chang, and Monaco Coach. I sold calls on Cymer (I've sold so many calls over the years on Cymer without ever delivering shares that I think of it as my leading cash cow). I looked into selling Flir Systems calls, but didn't find any at attractive prices. I still may reduce my Flir position.

I also sold Agilent, Comverse Technology, and Symantec shares as well as calls on Network Appliance and Goldman Sachs. In the case of Goldman, a stock I've recommended repeatedly in this column, it has done so well that it has become significantly overweighted in my portfolio. I sold the October 250s for $6.30 each. Still, I feel comfortable maintaining Goldman as a core holding.

In other words, it's been a busy and gratifying week at Common Sense. This is unusual, since I advocate a buy-and-hold approach that minimizes transaction costs. I was a little wistful parting with stocks like Cytyc and P.F. Chang that have done well and I've owned for many years. I hope they and their shareholders continue to prosper.