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Monday, January 26, 2015

The January Effect

According to the model from 1928 to 2012, if the DJIA can end the week/month positive (above 17,823) and the S&P 500 above 2058, the average annual return for stocks should @10.9%, the consensus opinion!! Markets were up 78% of the time. Failing that, even a down jones could end the year up 2.8%, about 50% of the time.
According to the above chart (my latest technological breakthough) although we seem to be in a deflationary spiral - locally as well as globally- the 2-year Treasury rate has risen steadily for the last 12 months. The TIPs ETF at the bottom of my grid (below) has also been rising, but well off the 2012 highs.  
Even the Patriots balls seem to be in deflation!
In another great article from Barron's by Steve Sears, the Option guy, he posits that 2015 will bring flat Volatility in the SPX, but a higher one in the VIX. This bodes well for the return of my DITM (Deep-In-The-Money) covered call strategy that did well before the Fed markets kicked in, lowering the premium in call options - hence the lower returns. Although the strategy has the benefit of hedging (selling a call lower than buying the stock), if it really drops, it can erase much of the lesser gains of successful DITM trades. As they say, (Fed) stocks ride the Escalator up but take the Elevator down!!
The stunning Sentiment Indicator last week was the sharp, record-breaking rise of Commercial shorts in Gold, even though it has been climbing lately, above $1300. I would hope that eventually it would cause short covering/buying. On the contrary, CEO Insider Selling (by Sector), and other Insiders, have not shown the madness of the prior year. They dropped from 73 to 1 two weeks ago, down to 18:1. Finally, the AAII Bull/Bear survey moved quite a bit to the middle again (Bullish FOR the markets)
Here are the numbers:

  
Date> 1/23/2015 1/16/2015
Indices: DJIA  17672 17511
  NAZ  4757 4634
SPX  2051 2019
WklyVolume (Bshs). naz/ny…. 7.3/3.3 9.9/4.4
Specul.Ratio hi=bullish 2.21 2.25
Sentiment: put/call-CBOE  62 70
VIX>50-alltmlow=8.8 16.7 20.9
Advance/Dec-NYSE.. 2083/1152 1448/1796
Weekly Net: 931 -348
     Cumulative: 165001 164070
Weekly  NYSE hi/low… 516/165 479/339
New Hi's/Low's Nasdaq h/l 174/243 207/294
McClellan  Oscillator 16 -2
McClellanSum .+750/-1000 257 227
Newsletter Inv.Intel -Bull:tues 49 48
Surveys Bear:-5yrs 17.4 16.3
AAII  -Bull :wed. 37.1 46.1
Bear  30.8 21.5
COT:SPX w/w large/small (net)k 4k/12k 1k/19k
COT:gold  comm.hedg long-short.000 (178k) (138k)
CEOinsider selling .18:1 .25:1
off.&bd b/s.vs. 10% holder b/s .160:30 160:20
3-box rev Bullish%-  64 62
US equity -ICI Fund Flows WeekDelay 0
MMF flows Change in $B (1.0B) (9.0B)
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.49% 0.49%
TIP (ETF) Inflation 114.17 113.8

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance


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Monday, January 19, 2015

January FX

Named after JANUS, the two-faced God, January is fraught with Volatility - mostly to the downside. The January effect, usually a rebound from the Xmas rally and year end position squaring, is said to predict the rest of the year. I hope not (so far). Making lows for the third week after the 18,000 record @ Xmas, the DJIA does not bode well for January. Low energy may be helpful for Joe Sixpack, but for the S&P companies, 1/3 of CapEx comes from it. I'll be watching the January model annually from 1928 as the year progresses. A negative January declines for 6 months, only to rebound a bit into year end.

Dr. Copper, supposedly the Economic indicator, hit a five- year low, and retail sales are down for December. With the U S being the best house in a bad block, our dollar should only get stronger as global rates get lower. Money should continue to flood into our markets for safety and yield.

Looking at the table below, Volume has again resumed its normal range, but breadth is beginning to weaken (Advance/Declines, New Highs/Lows); newsletter surveys (taken midweek) are benign, as is Insider Selling by sector and Officers/Board members, for this time of year. EXCEPT for Gold - which was huge last week, just as gold was rising - could short-covering be far behind?
Finally, managed mutual funds saw $$ losses for the 9th year in a row, as people move to Index funds to avoid high fees and poor performance ( 80% underperforming the Indices!).

Just as with Barron's (my weekly read) which is losing a couple good columnists, I am severing relations with Examiner.com after two years, and will concentrate factoids in this column, as well as the DITM blog. http://ditmcalls.blogspot.com. With the VIX now almost doubling year over year to the 20s, the volatility of call options are great for both the DITM strategy as well as Leap Strangles, as these calls now have more juice in them to sell, bringing in more $$ as well as providing more safety - which is a plus these days.

Here are last week's numbers:

Date> 1/9/2015 1/2/2015
Indices: DJIA  17737 17833
  NAZ  4704 4726
SPX  2044 2058
WklyVolume (Bshs). naz/ny…. 9.6/4.1 5.4/2.4
Specul.Ratio hi=bullish 2.34 2.25
Sentiment: put/call-CBOE  65 66
VIX>50-alltmlow=8.8 17.5 17.8
Advance/Dec-NYSE.. 1512/1748 1355/1893
Weekly Net: -236 -538
     Cumulative: 164418 164654
Weekly  NYSE hi/low… 413/202 413/86
New Hi's/Low's Nasdaq h/l 196/159 287/116
McClellan  Oscillator 0 6
McClellanSum .+750/-1000 323 376
Newsletter Inv.Intel -Bull:tues 50.5 56.4
Surveys Bear:-5yrs 15.2 14.9
AAII  -Bull :wed. 41 51.7
Bear  27.7 19.3
COT:SPX w/w large/small (net)k (1k)/25k 7K/21K
COT:gold  comm.hedg long-short.000 (123k) (105K)
CEOinsider selling .73:1 .17:1
off.&bd b/s.vs. 10% holder b/s .160:30 160:20
3-box rev Bullish%-  70 68
US equity -ICI Fund Flows WeekDelay (.4B)
MMF flows Change in $B (18.6B) 19.4B
MargDebt- top (300M) monthly  NOV 457B
ETF:mthlyEqty/ Int'l/Bond-$B NOV 1221/434/296
2-yr Tsy Yield: Inflation 0.56% 0.68%
TIP (ETF) Inflation 113.08 112.73

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance


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Monday, January 12, 2015

Exchanging Funds

According to Barron's last week, this iis the 9th year that funds have flowed from Mutual Funds to Index and ETFs (Exchange Traded Funds) as most managed funds fail to even equal their benchmarks - which contain all stocks in that category - good and bad. A study shows that the higher the U.S interest rates, the higher the "Alpha" - which is the gain over and above the benchmarks (Beta). So despite being a contrarian, against the crowd, it appears that this is still the best and easiest way to invest.

The Commitment of Traders (COT) shows a departure from smart money and "dumb" (small traders) with large going negative, versus small up 25k. Also , it shows commercial gold shorters still very high, although it seems to be rising recently into the 12-handle.

Here are the numbers:

Date> 1/9/2015 1/2/2015
Indices: DJIA  17737 17833
NAZ  4704 4726
SPX  2044 2058
WklyVolume (Bshs). naz/ny…. 9.6/4.1 5.4/2.4
Specul.Ratio hi=bullish 2.34 2.25
Sentiment: put/call-CBOE  65 66
VIX>50-alltmlow=8.8 17.5 17.8
Advance/Dec-NYSE.. 1512/1748 1355/1893
Weekly Net: -236 -538
     Cumulative: 164418 164654
Weekly  NYSE hi/low… 413/202 413/86
New Hi's/Low's Nasdaq h/l 196/159 287/116
McClellan  Oscillator 0 6
McClellanSum .+750/-1000 323 376
Newsletter Inv.Intel -Bull:tues 50.5 56.4
Surveys Bear:-5yrs 15.2 14.9
AAII  -Bull :wed. 41 51.7
Bear  27.7 19.3
COT:SPX w/w large/small (net)k (1k)/25k 7K/21K
COT:gold  comm.hedg long-short.000 (123k) (105K)
CEOinsider selling .73:1 .17:1
off.&bd b/s.vs. 10% holder b/s .160:30 160:20
3-box rev Bullish%-  70 68
US equity -ICI Fund Flows WeekDelay (.4B)
MMF flows Change in $B (18.6B) 19.4B
MargDebt- top (300M) monthly  NOV 457B
ETF:mthlyEqty/ Int'l/Bond-$B NOV 1221/434/296
2-yr Tsy Yield: Inflation 0.56% 0.68%
TIP (ETF) Inflation 113.08 112.73

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance


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Monday, January 5, 2015

Cinco de Anno

According to my Research there has Never been a down year in the 5th year of the Decennial (10-year) cycle for the DJIA. Other cycles (4-year Pres., 6-month complementary, etc.) also indicate a positive year, despite today's debacle and the 5-year Bull market.

Last week saw a rare decline in Advance/Decline stocks in the NYSE; Volume was slightly better than the previous Holiday week, which was the weakest of the year. Funnily enough, Insider trading, for the year end, was very mild - both buying and selling. Gold, however, remains heavily shorted - an harbinger of bad tidings for the intermediate future, with a strong U S, and US Dollar.
Here are last week's numbers:

Date> 1/2/2015 12/26/2014
Indices: DJIA  17833 18053
  NAZ  4726 4806
SPX  2058 2088
WklyVolume (Bshs). naz/ny…. 5.4/2.4 4.9/2.3
Specul.Ratio hi=bullish 2.25 2.13
Sentiment: put/call-CBOE  66 53
VIX>50-alltmlow=8.8 17.8 14.5
Advance/Dec-NYSE.. 1355/1893 2153/1068
Weekly Net: -538 1085
     Cumulative: 164654 165192
Weekly  NYSE hi/low… 413/86 478/72
New Hi's/Low's Nasdaq h/l 287/116 317/124
McClellan  Oscillator 6 36
McClellanSum .+750/-1000 376 306
Newsletter Inv.Intel -Bull:tues 56.4 52.5
Surveys Bear:-5yrs 14.9 15.8
AAII  -Bull :wed. 51.7 50.9
Bear  19.3 18.9
COT:SPX w/w large/small (net)k 7K/21K n/a
COT:gold  comm.hedg long-short.000 (105K) n/a
CEOinsider selling .17:1 31:1
off.&bd b/s.vs. 10% holder b/s 160:20 160:20
3-box rev Bullish%-  68 75
US equity -ICI Fund Flows WeekDelay (1.1B)
MMF flows Change in $B 19.4B 20.5B
MargDebt- top (300M) monthly  457B
ETF:mthlyEqty/ Int'l/Bond-$B 1221/434/296
2-yr Tsy Yield: Inflation 0.68% 0.74%
TIP (ETF) Inflation 112.73

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance


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Monday, December 29, 2014

Best In Class

The U.S. stock market and economy continues into 2015 as the best and safest of all places to invest (and live). Oil prices benefit most of Americans - consumers and corporations ( transports, utilities), etc.) while the JERCs (Japan, Europe, Russia, China) suffer.

The 18,000 level of the DJIA was finally breached last week and ended above there. Another notable recent high was the 2-year Treasury yield jumping 10 basis points from 0.64% to 0.74%. For new Lows, we look to Volume - the lowest week of the year, with the Holiday and 1/2 day trading. Both speculation (NAS Volume to NYSE) and complacency are again on the rise, but not to extremes yet.

Here are the numbers:

Date> 12/26/2014 12/19/2014
Indices: DJIA  18053 17804
  NAZ  4806 4765
SPX  2088 2070
WklyVolume (Bshs). naz/ny…. 4.9/2.3 11.6/6.4
Specul.Ratio hi=bullish 2.13 1.81
Sentiment: put/call-CBOE  53 67
VIX>50-alltmlow=8.8 14.5 16.5
Advance/Dec-NYSE.. 2153/1068 2555/703
Weekly Net: 1085 1852
     Cumulative: 165192 164107
Weekly  NYSE hi/low… 478/72 319/561
New Hi's/Low's Nasdaq h/l 317/124 246/396
McClellan  Oscillator 36 16
McClellanSum .+750/-1000 306 194
Newsletter Inv.Intel -Bull:tues n/a 49.5
Surveys Bear:-5yrs n/a 14.9
AAII  -Bull :wed. 50.9 38.7
Bear  18.9 26.9
COT:SPX w/w large/small (net)k n/a 6k/25k
COT:gold  comm.hedg long-short.000 n/a (115k)
CEOinsider selling 31:1 32:1
off.&bd b/s.vs. 10% holder b/s 160:20 165:50
3-box rev Bullish%-  75 72
US equity -ICI Fund Flows WeekDelay (4.2B)
MMF flows Change in $B 20.5B (13.4B)
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.74% 0.64%
TIP (ETF) Inflation 112

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance


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Monday, December 22, 2014

RUNAWAY TRAIN

The question is: Did the the October runaway train just go into a tunnel in December,  or is it off track? History portends  a much higher market - see more Technical reasons at:

For now, the Sentiment Indicators seem mixed. Volume last week was very high, but the ratio of NYSE to NASDAQ was showing a more cautious note- below 1:2. Breadth and Price were positive, but the New highs/lows were not. Since the mid-October lows money has flowed into MMFunds every week - until last week, when it reversed. Per Barron's, U.S. equity funds had the largest WITHDRAWAL of money in 10 years - over $28B. Finally, Gold shorters (Commercials) remain strong, so that does not bode well at this time.

Here are  last week's numbers:

Date> 12/19/2014 12/12/2014
Indices: DJIA  17804 17280
  NAZ  4765 4653
SPX  2070 2002
WklyVolume (Bshs). naz/ny…. 11.6/6.4 9.4/4.3
Specul.Ratio hi=bullish 1.81 2.19
Sentiment: put/call-CBOE  67 72
VIX>50-alltmlow=8.8 16.5 21.1
Advance/Dec-NYSE.. 2555/703 653/2614
Weekly Net: 1852 -1961
     Cumulative: 164107 162255
Weekly  NYSE hi/low… 319/561 387/522
New Hi's/Low's Nasdaq h/l 246/396 286/373
McClellan  Oscillator 16 -63
McClellanSum .+750/-1000 194 365
Newsletter Inv.Intel -Bull:tues 49.5 51.5
Surveys Bear:-5yrs 14.9 14.8
AAII  -Bull :wed. 38.7 45
Bear  26.9 22.3
COT:SPX w/w large/small (net)k 6k/25k 5k/16k
COT:gold  comm.hedg long-short.000 (115k) (117k)
CEOinsider selling 32:1 32:1
off.&bd b/s.vs. 10% holder b/s 165:50 165:25
3-box rev Bullish%-  72 72
US equity -ICI Fund Flows WeekDelay (4.97B)
MMF flows Change in $B (13.4B) 18.5B
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.64% 0.54%
TIP (ETF) Inflation 112 112

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance


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Monday, December 15, 2014

A Christmas story

Despite the pop up of the 2-year Treasury to a new recent high yield of 0.64%, then back down, I decided to add the TIP ETF (Treasury Inflation fund), which is actually at its recent lows of 112 -110 being the low in 2013 after the December 2012 multiyear high of 123. No Inflation worries now, although Deflation can be even scarier!.  Other notable Indicators were the Gold Commercial shorters rising up again, and Money Market additions went to recent highs - $25B. The  VIX jumped to 21 last week and the CBOE put to call ratio also jumped up to 72 - Bullish FOR the markets.

Here are the numbers:

Date> 12/12/2014 12/5/2014
Indices: DJIA  17280 17958
  NAZ  4653 4780
SPX  2002 2075
WklyVolume (Bshs). naz/ny…. 9.4/4.3 8.9/4.0
Specul.Ratio hi=bullish 2.19 2.23
Sentiment: put/call-CBOE  72 61
VIX>50-alltmlow=8.8 21.1 11.8
Advance/Dec-NYSE.. 653/2614 1478/1786
Weekly Net: -1961 -308
     Cumulative: 162255 164216
Weekly  NYSE hi/low… 387/522 455/326
New Hi's/Low's Nasdaq h/l 286/373 286/302
McClellan  Oscillator -63 -7
McClellanSum .+750/-1000 365 563
Newsletter Inv.Intel -Bull:tues 51.5 53.4
Surveys Bear:-5yrs 14.8 13.9
AAII  -Bull :wed. 45 42.7
Bear  22.3 25.9
COT:SPX w/w large/small (net)k 5k/16k 8k/13k
COT:gold  comm.hedg long-short.000 (117k) -89
CEOinsider selling 32:1 41:1
off.&bd b/s.vs. 10% holder b/s 165:25 165:45
3-box rev Bullish%-  72 76
US equity -ICI Fund Flows WeekDelay (3B)
MMF flows Change in $B 18.5B 25.6B
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.54% 0.64%
TIP (ETF) Inflation 112 112

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance


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