Monday, May 30, 2016

TAKE A HIKE

The prominent story these days in the media, other than the Hilary/Trump saga, is whether the Fed will again raise rates soon - June or July. Normally rate hikes are beneficial for stocks, providing the economy is strong - which it is NOT these days. In fact, per Barron's, rate hikes with low GDP during the years 1976, 1986, and Dec. 2015 led to double-digit declines (1983 did not). There is also the Brexit vote on the 23rd to consider. As for S&P earnings, it is rare that they decline, year over year, as they did in 2015, and even moreso 2 years in a row, which appears likely.

In another small sampling, whenever the Yield Curve flattens, i.e., the 2-year Treas yield is equal to the 10-year (due to rate hikes), we have Recessions and Bear markets, going back to 1980 (1991, 2001, and 2008). But nice rallies can precede these.

So marks the Sentiment Indicators these days. The AAII Bull/Bear survey hit a recent low (2005) of Bulls - see below-, with a decade high of Neutrals (2003) - Bullish FOR the markets. Last week saw strong Breadth, if not Volume, with the Holiday this week. $$ are still going into MMFs and out of Equity MUFs, and IPOs are slowing recent months.
Here are the numbers:
Date>   5/27/2016 5/20/2016
Indices: DJIA  17873 17500
  NAZ  4933 4769
SPX  2099 2052
WklyVolume (Bshs). naz/ny…. 8.6/4.2 9.3/4.6
Specul.Ratio hi=bullish 2.05 2.02
Sentiment: put/call-CBOE  59 75
VIX>50-alltmlow=8.8 13.1 15.2
DeltaMSI-50% MAC crossover 64% 63%
Advance/Dec-NYSE.. 2482/695 1515/1653
Weekly Net: 1787 -138
     Cumulative: 167170 165383
Weekly  NYSE hi/low… 241/50 277/76
New Hi's/Low's Nasdaq h/l 190/106 115/212
McClellan  Oscillator 21 -31
McClellanSum .+750/-1000 731 723
Newsletter Inv.Intel -Bull 35.4 40.2
Surveys-Tues Bear:-5yrs 24 21.7
Wed. AAII  -Bull  17.8 19.3
Bear  29.4 34.1
US$-WSJ 95.7 95.3
3-box rev Bullish%-  69 67
US equity -ICI Fund Flows WeekLate (2.7B)
MMF flows Change in $B 14.2B 4.3B
MargDebt- top (300M) monthly  March 446B
10-yr Tsy yield hi= stock buying 1.85% 1.84%
2-yr Tsy Yield: Inflation 0.92% 0.88%
TIP (ETF) Inflation 114.3 114.1


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, May 23, 2016

FED UP

For weeks now the  only topics in the media - print, online, and video - have been Politics and Viagra commercials (Elections and Erections). Finally they have shifted to what the Fed is going to do about interest rates come June, including interviews with the neighborhood gardener and other experts.
Funnily enough, according to technical analysis studies, markets actually like the first couple of rate hikes, before hitting its average, then pendulum-swinging too far. That is, if the economy warrants it - as it did NOT in December, when January made them pay.

I'm not much of a bond guy - especially now with Zero rates - but a very insightful column by Ben Levisohn in Barron's Streetwise piece, talks of the January Crashette with conditions similar now if a June hike is imminent (odds are increasing). Ben posits that when the 10-year Treas yield rises (bond prices fall) it is good for the stock market, so I'll be adding the 10-year to my 2-year Inflation indicator, which is registering nothing these days. Another bond column signals that if the 10-year minus the 2-year yield gets down to zero (flat) it almost always signals a Recession and/or Bear market.
Unfortunately, my switch to the UVXY hedge is not working out as planned, although better than the TVIX hedge, since I am milking a huge covered call premium on it. It has de-correlated from the VIX, due to Beta-slippage and futures rollovers. Still, a crash before Sept. would be profitable. After all, Put options have more decay as hedges.
Most Sentiment Indicators are benign, with breadth and A/D in stocks weakening. Here are the numbers:

Date>   5/20/2016 5/13/2016
Indices: DJIA  17500 17535
  NAZ  4769 4717
SPX  2052 2046
WklyVolume (Bshs). naz/ny…. 9.3/4.6 8.8/4.6
Specul.Ratio hi=bullish 2.02 1.91
Sentiment: put/call-CBOE  75 84
VIX>50-alltmlow=8.8 15.2 15
DeltaMSI-50% MAC crossover 63% 70%
Advance/Dec-NYSE.. 1515/1653 1361/1793
Weekly Net: -138 -432
     Cumulative: 165383 165521
Weekly  NYSE hi/low… 277/76 445/80
New Hi's/Low's Nasdaq h/l 115/212 137/201
McClellan  Oscillator -31 -46
McClellanSum .+750/-1000 723 922.0
Newsletter Inv.Intel -Bull 40.2 39.2
Surveys-Tues Bear:-5yrs 21.7 21.6
Wed. AAII  -Bull  19.3 20.4
Bear  34.1 31.3
US$-WSJ 95.3 94.6
3-box rev Bullish%-  67 70
US equity -ICI Fund Flows WeekLate (7.4B)
MMF flows Change in $B 4.3B 5.7B
MargDebt- top (300M) monthly  MARCH
10-yr Tsy yield hi= stock buying 1.84%
2-yr Tsy Yield: Inflation 0.88% 0.75%
TIP (ETF) Inflation 114.1 115.2




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, May 16, 2016

TIRED

In deference to the annual ATOC - Amgen Tour of California this week , I ask "Why do bicycles fall over?" - "Because they are two-tired!!"
Despite today's strong rally - caused I'm sure by the McClellan Oscillator nearing minus 50 last week- the U S stock market has had a long run, based on the Fed's largesse of Zero rates for a decade now. This has caused, as I borrow from Barron's this week - stocks driven by TINA FOMO - These Is No Alternative, and Fear Of Missing Out!. The economy and earnings are not correlated to the strength of the market since March '09, without at least some correction. Many aged veterans are calling for such in this weak semi-annual cycle - May through October.
Several breadth and momentum Indicators have topped out the last week or two - the new Delta MSI and Bullish % - stocks on Buy signals; the McClellan Summation from its 4-digit reading; and money flows from equity MUFs into MMFs and some ETFs.
Still mixed, as shown below, are  the Bull/Bear surveys, Inflation - by the 2-year Treas. and TIPS (at a recent high.
Date>   5/13/2016 5/6/2016
Indices: DJIA  17535 17740
  NAZ  4717 4736
SPX  2046 2057
WklyVolume (Bshs). naz/ny…. 8.8/4.6 .       9.5/5.0
Specul.Ratio hi=bullish 1.91 1.9
Sentiment: put/call-CBOE  84 81
VIX>50-alltmlow=8.8 15 14.7
DeltaMSI-50% MAC crossover 70% 79%
Advance/Dec-NYSE.. 1361/1793 1413/1759
Weekly Net: -432 -346
     Cumulative: 165521 165953
Weekly  NYSE hi/low… 445/80 365/64
New Hi's/Low's Nasdaq h/l 137/201 155/168
McClellan  Oscillator -46 -30
McClellanSum .+750/-1000 922.0 1064.0
Newsletter Inv.Intel -Bull 39.2 40.2
Surveys-Tues Bear:-5yrs 21.6 21.7
Wed. AAII  -Bull  20.4 22.3
Bear  31.3 30.3
US$-WSJ 94.6 93.8
3-box rev Bullish%-  70 72
US equity -ICI Fund Flows WeekLate (12.9B)
MMF flows Change in $B 5.7B 1.7B
MargDebt- top (300M) monthly  MARCH 446B
2-yr Tsy Yield: Inflation 0.75% 0.73%
TIP (ETF) Inflation 115.2 114.7

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, May 9, 2016

FACE THE BARRON'S WASTE

I've always been a big fan of Barron's weekly mag - charts, data, great columnists - what is virtually useless is their stock picks - either from "journalists" or chosen "expert analysts". Even worse than their cartoons!
What prompts me to look at this is my recent (infrequent) venture into one of these picks, as usual should rise 20%, based on Fundamental figuring: Seagate. Luckily I did a DITM covered call on it with a high dividend, because 4 days later it cratered from $35 to 25; it is still going down past 18.
I also checked a Dec. 7 (a date that will go down in history!!) of their best 10 stocks to buy in 2016. At present, 5 months hence, 8 of the 10 are negative, with the S&P about the same level! They even show on their website their Bull and Bear picks for each year - basically a coin flip average.

As for market calls themselves, more and more esteemed veterans are getting quite Bearish about the near future - Bigtime. Druckenmiller, Icahn, et.al. are sounding like Ravi Batra, Bob Prechter, Harry Dent. Could get ugly into year end.

However, so far Sentiment Indicators are not showing much either way. Bull/Bear Surveys are mixed ; My new Delta MSI and the McClellan Summation both peaked at high levels, like the A/D line, the CEO Insider Selling line, and the Bullish % lines. Weekly Mutual fund equity flows have only been positive twice in 2016. On TV TrimTabs Biderman says money flows show only stock buybacks are driving the market (along with the FED).

Here are the numbers:

  5/6/2016 4/29/2016
DJIA  17740 17773
NAZ  4736 4775
SPX  2057 2065
naz/ny…. .       9.5/5.0 …...9.8/5.1
1.9 1.92
put/call-CBOE  81 68
14.7 15.7
MAC crossover 79% 85%
1413/1759 1639/1528
-346 111
165953 166299
NYSE hi/low… 365/64 270/25
Nasdaq h/l 155/168 207/93
Oscillator -30 -9
.+750/-1000 1064.0 1215.0
Inv.Intel -Bull 40.2 44.3
Bear:-5yrs 21.7 20.6
AAII  -Bull  22.3 27.4
Bear  30.3 28.6
93.8 93
Bullish%-  72 76
Fund Flows WeekLate (3.0B)
Change in $B 1.7B 10.3B
monthly  446B
0.73% 0.78%
Inflation 114.7 114.9


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, May 2, 2016

OOPS!!!

Maybe investors should go away in May, but this year I was unable to do so, thanks to a slight case if SHINGLES ( I don't even own a House!!) that kept me from travelling this year due to possible contagion. However, signs of market weakness abound these days:

Breaking News: In today's TV interview, Charles Biderman,  of TrimTabs in Santa Rosa, probably the best data analyzer next to Ned Davis and Bespoke Group, announced they were 100% in Cash, just as in early 2016. His reason is that in recent months $$ flows into equities by retail and institutions were net ZERO, so all market movers came from corporate stock Buybacks, although that has dropped as of March.
Another startling fact I observed in Barron's this weekend was the correlation (albeit small sampling of 4) between their Insider Selling peaks and the SPX tops over the past year -May, July, October, now. The Option column states that institutions bought 99,000 SPX calls to hedge VIX calls (against a market decline, and another 330,000 calls as well).
Sentiment Indicators last week showed a high and toppy Delta MSI rising stock level of 85 (same as last week) and a high Bullish%; the McClellan Summation is at a high level over 1200; and the Inv. Intell. Bull to Bear ratio is wildly Bullish, by a 24 point margin (complacency).
Whether to Sell in May or hedge and ride it out is the quandary. One way might be to do a Buy/Write on the VIX ETF - UVXY, as the Implied Volatility on the calls are Huge - 150 (lots of premium to sell)..
Here are the numbers:
Date> 4/29/2016 4/22/2016
Indices: DJIA  17773 18003
NAZ  4775 4906
SPX  2065 2091
WklyVolume (Bshs). naz/ny…. …...9.8/5.1 ……..8.9/4.8
Specul.Ratio hi=bullish 1.92 1.85
Sentiment: put/call-CBOE  68 69
VIX>50-alltmlow=8.8 15.7 13.2
DeltaMSI-50% MAC crossover 85% 85%
Advance/Dec-NYSE.. 1639/1528 2143/1037
Weekly Net: 111 1106
     Cumulative: 166299 166188
Weekly  NYSE hi/low… 270/25 336/27
New Hi's/Low's Nasdaq h/l 207/93 192/77
McClellan  Oscillator -9 25
McClellanSum .+750/-1000 1215.0 1168
Newsletter Inv.Intel -Bull 44.3 47.4
Surveys-Tues Bear:-5yrs 20.6 21.7
Wed. AAII  -Bull  27.4 33.4
Bear  28.6 23.9
US$-WSJ 93 95.1
3-box rev Bullish%-  76 78
US equity -ICI Fund Flows weekLate (4.2B)
MMF flows Change in $B 10.3B (32.9B)
MargDebt- top (300M) monthly  446B
2-yr Tsy Yield: Inflation 0.78% 0.82%
TIP (ETF) Inflation 114.9 113.8


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, April 25, 2016

SELL IN MAY AND GO AWAY

Per usual, I need to head for the hills of Lake Tahoe and Redding, CA to family bond and celebrate my birthdate - Friday the 13th - with my brother's ma-in-law's 96th. Being data dependent, blogs will not be forthcoming for awhile.

Near term and all time peaks abound : the DJIA and SPX approaching last year's highs; Barron's chart of Insider Transaction spiking as with previous tops in April '15, July and Oct.

Breadth has been very strong lately - Advance/Declines (cumulative near tops); stocks on BUY signals -Bullish % and Delta MSI;    VIX with a 13 handle (complacency). NYSE new highs to lows beat the 10:1 ratio last week; even newsletter surveys, reporting midweek, are wildly Bullish - a contrary indicator.
Here are the numbers:

Date> 2016 4/22/2016 4/15/2016
Indices: DJIA  18003 17897
  NAZ  4906 4938
SPX  2091 2080
WklyVolume (Bshs). naz/ny…. 8.9/4.8 8.5/4.8
Specul.Ratio hi=bullish 1.85 1.77
Sentiment: put/call-CBOE  69 65
VIX>50-alltmlow=8.8 13.2 13.6
DeltaMSI-50% MAC crossover 85% n/a
Advance/Dec-NYSE.. 2143/1037 2503/664
Weekly Net: 1106 1839
     Cumulative: 166188 165082
Weekly  NYSE hi/low… 336/27 276/20
New Hi's/Low's Nasdaq h/l 192/77 140/74
McClellan  Oscillator 25 16
McClellanSum .+750/-1000 1168 1020
Newsletter Inv.Intel -Bull 47.4 41.2
Surveys-Tues Bear:-5yrs 21.7 27.8
Wed. AAII  -Bull  33.4 27.9
Bear  23.9 24.9
US$-WSJ 95.1 94.7
3-box rev Bullish%-  78 77
US equity -ICI Fund Flows weekLate (4.3B)
MMF flows Change in $B (32.9B) (7.7B)
MargDebt- top (300M) monthly 
2-yr Tsy Yield: Inflation 0.82% 0.74%
TIP (ETF) Inflation 113.8 114.3


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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