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Monday, August 3, 2015

FOOL'S GOLD??

There is absolutely no reason on earth to own gold - that's why, as a Contrarian, I like it around these levels! An old Wall St. maxim is "When everyone is looking one way, look the other" Gold is an Inflation hedge - there is none in sight for the foreseeable future; it pays no dividend, in fact, costs money to harbor. With all the calamities around the globe - Greece, China, Brazil, etc. it only goes DOWN. Countries needing cash for debt, are selling gold, used as collateral for other assets; finally, a stronger dollar (with imminent rising rates) will only hurt gold's price, measured in $$.

While riding it down, I decided to hedge it with JDST, DZZ, even looked at $GVZ, the gold Vix, but have had bad luck using the VIX to hedge the market - VXX futures calls, longterm VIX calls!
Even with Larry McMillan's recent talk at UC Extension solely on the VIX.

So what happened to the stock market? The Traders' Almanac, run by another recent local speaker -Jeffrey Hirsch-  used to say " the market rises more on the first trading day of the month than all other days combined! Not a good sign!!!! Another former TSAA speaker - Tom DeMark- as well as a chart from John Mauldin's newsletter- has compared the China bubble market crash to 1929 - a tight correlation, with 14% to go (TDM). Gunslingers can use the ASHR ETF puts to play this.

Last week's Sentiment Indicators showed no signs of today's decline - the AAII Bear/Bull ratio swung heavily to the Bear side - a Bullish FOR the market signal; A longer term signal from corporate Insider Selling to Buying swung from 180:1 to 16:1 (college funding??).
Recent signs, however, have shown a decay in market breadth - advance/declines, new highs/lows, etc. Market declines always precede this weakness, but these weakness don't always result in a market decline (??). As shown below, New Lows on the NYSE reached 600.

Here are the numbers:
Date> 7/31/2015 7/24/2016
Indices: DJIA  17689 17568
  NAZ  5128 5088
SPX  2103 2079
WklyVolume (Bshs). naz/ny…. 9.6/4.5 9.5/4.1
Specul.Ratio hi=bullish 2.13 2.32
Sentiment: put/call-CBOE  63 69
VIX>50-alltmlow=8.8 12 13.7
Advance/Dec-NYSE.. 2102/1135 645/2610
Weekly Net: 967 -1965
     Cumulative: 163222 162255
Weekly  NYSE hi/low… 182/600 245/626
New Hi's/Low's Nasdaq h/l 172/440 287/403
McClellan  Oscillator 18 -43
McClellanSum .+750/-1000 -338 -282
Newsletter Inv.Intel -Bull 43.3 49
Surveys-Tues Bear:-5yrs 17.5 15.6
Wed. AAII  -Bull  21.1 32.5
Bear  40.7 25.6
COT:SPX w/w large/small (net)k 7K/(13K) 9k/(16k)
COT:gold  comm.hedg long-short.000 (15K) (21k)
COT:OIL comm.hedg long-short. (244K) (257k)
US$-WSJ n/a 88.5
CEOinsider selling n/a .16:1
off.&bd b/s.vs. 10% holder b/s discont.
3-box rev Bullish%-  52 53
US equity -ICI Fund Flows week delay (3.2B)
MMF flows Change in $B UNCH 16.2B
MargDebt- top (300M) monthly  505B JUNE:
ETF:mthlyEqty/ Int'l/Bond-$B 1250/514/314 JUNE:
2-yr Tsy Yield: Inflation 0.67% 0.69%
TIP (ETF) Inflation 112.6 112.1



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, July 27, 2015

CRUELEST MONTHS

T.S. Elliot said April was the cruelest month  (even before Income Tax); but for stocks the cruelest months are August through October. Going back to the 1929 Crash, Oct. was #1, August (upcoming soon) was #2, per Barron's this week.

Short term traers may want to exit for a vaca; longer term may want to hedge! Many stocks are looking pug ugly, from a chart point of view - AKA falling knife. Especially gold, oil, etc.

Last week I attended a meetup with the savviest option guru on the planet - Larry McMillan- who spent the whole time explaining the VIX, or Volatility Index. This is  a great way to hedge various asset classes - even gold. I'm using the nearby VXX ETF calls.

If there is any doubt that our Fed is still behind the "Invisible Hand" supporting markets, despite the exit of QEs, So far this year the DJIA has crossed the 2014 closing price (17,823) a total of  21 times - the most since 1900. Either that or the investment community has gone bipolar!

However, if there is any doubt that we are in a problematic time - thisis the fifth day in a row for the markets to be down, the fifth of six down weeks for major markets; and the McClellan Oscillator, which gave a BUY signal at minus 43 (-50 is usually a short term up signal). Its cumulative index, the Summation, is below zero, as is the Dow 30 for the year.

Other Sentiment standouts are: Sector Insider selling made a huge reversal last week from its large selling (180 to 1) to only 16 sellers; the Advancing stocks vs. declining (breadth) was also large on the declining side.


Finally, the public is moving its $$ from equity (stock) mutual funds into MMFs (money markets. For a list of my Sentiment Indicators, please see: mktsentiment.blogspot.com - you can sign up for free (with no commercials).  

Date> 7/24/2016 7/17/2015
Indices: DJIA  17568 18086
  NAZ  5088 5210
SPX  2079 2126
WklyVolume (Bshs). naz/ny…. 9.5/4.1 8.6/3.8
Specul.Ratio hi=bullish 2.32 2.26
Sentiment: put/call-CBOE  69 62
VIX>50-alltmlow=8.8 13.7 12
Advance/Dec-NYSE.. 645/2610 1896/1347
Weekly Net: -1965 549
     Cumulative: 162255 164220
Weekly  NYSE hi/low… 245/626 266/281
New Hi's/Low's Nasdaq h/l 287/403 355/199
McClellan  Oscillator -43 28
McClellanSum .+750/-1000 -282 -211
Newsletter Inv.Intel -Bull 49 43.7
Surveys-Tues Bear:-5yrs 15.6 15.6
Wed. AAII  -Bull  32.5 30.8
Bear  25.6 23.2
COT:SPX w/w large/small (net)k 9k/(16k) 11k/(23k)
COT:gold  comm.hedg long-short.000 (21k) (48k)
COT:OIL comm.hedg long-short. (257k) (257k)
US$-WSJ 88.5 88.6
CEOinsider selling .16:1 .*180:1
off.&bd b/s.vs. 10% holder b/s discont. discont.
3-box rev Bullish%-  53 56
US equity -ICI Fund Flows week delay (11.5B)
MMF flows Change in $B 16.2B (1.4B)
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.69% 0.67%
TIP (ETF) Inflation 112.1 112.02

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, July 20, 2015

INSIDE "OUT"

One of the few movers in Sentiment this week was the Huge Insider Selling to Buying by Sectors, with Industrials seeing 50% of all the CEO/Key officers doing it; Finance was next with 25%.
Also noticeable was MMF flows, from $19B into to over $1B out from the week prior.

Despite the ugliness lately of commodity selling, the commercials (hedgers) showed less shorting in Oil and gold - SPX futures traders also widened their lead - large traders over small.

Here are the numbers:

Date> 7/17/2015 7/10/2015
Indices: DJIA  18086 17760
NAZ  5210 4997
SPX  2126 2076
WklyVolume (Bshs). naz/ny…. 8.6/3.8 9.2/3.9
Specul.Ratio hi=bullish 2.26 2.36
Sentiment: put/call-CBOE  62 73
VIX>50-alltmlow=8.8 12 16.8
Advance/Dec-NYSE.. 1896/1347 715/1177
Weekly Net: 549 -462
     Cumulative: 164220 163671
Weekly  NYSE hi/low… 266/281 113/446
New Hi's/Low's Nasdaq h/l 355/199 157/354
McClellan  Oscillator 28 13
McClellanSum .+750/-1000 -211 -402
Newsletter Inv.Intel -Bull 43.7 44.8
Surveys-Tues Bear:-5yrs 15.6 15.6
Wed. AAII  -Bull  30.8 27.9
Bear  23.2 29.2
COT:SPX w/w large/small (net)k 11k/(23k) 9k/(29k)
COT:gold  comm.hedg long-short.000 (48k) (63k)
COT:OIL comm.hedg long-short. (257k) (291k)
US$-WSJ 88.6 87.1
CEOinsider selling .*180:1 28:01:00
off.&bd b/s.vs. 10% holder b/s discont. discont.
3-box rev Bullish%-  56 54
US equity -ICI Fund Flows week delay (2.4B)
MMF flows Change in $B (1.4B) 19.2B
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.67% 0.64%
TIP (ETF) Inflation 112.02 111.82
50%Indust.

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, July 13, 2015

BREAKING NEWS, BREAKING WIND

Major media might as well use Templates for some of their "Breaking News" outbursts, such as:
Greece faces Deadline
Iran talks postpone deadlines
    (What's taking Kerry so long? It's as easy as riding a bike!)
A Shooting in Oakland
No rain in California today

Looking into the China economic mess - it is plug ugly! Their GDP is $10T and they lost $4T in the stock crash over there; US GDP is $18T - the same as our debt.

Gold and other commodities are getting hit bigtime as global investors sell to meet margin and other reqs. ; using them as collateral to buy and hedge stocks. Gold is down 40% from Sept., Silver down 70%, Oil 50% from highs.

Last week's markets took a Bungee jump (twice) and wound up where it started , as did the VIX- SPX (500) went from 2076 to 2076! still under the Technical Support turned Resistance of 2080 ( although it has climbed above that today via the Greek "promise". - Owed To A Grecian Earn?
Why don't we let the rich EX-Patriots from Greece bail them out??

MMFs (money markets) increased a lot due to the turmoil; the McClellan Oscillator jumped up over the equator (zero line) and the AAII Bears still outnumbered Bulls, slightly. Breadth was better, but New Lows dominated the New Highs. Investors are selling high dividend players (Rate Hike?) - of the SPX - top 50 high dividend payers fell 6% in 2015 where low payers rose 6%. Per Barron's

Here are the Sentiment ##s:

Date> 7/10/2015 7/3/2015
Indices: DJIA  17760 17730
NAZ  4997 5009
SPX  2076 2076
WklyVolume (Bshs). naz/ny…. 9.2/3.9 7.3/3.6
Specul.Ratio hi=bullish 2.36 2.03
Sentiment: put/call-CBOE  73 78
VIX>50-alltmlow=8.8 16.8 16.8
Advance/Dec-NYSE.. 715/1177 977/2260
Weekly Net: -462 -1283
     Cumulative: 163671 164133
Weekly  NYSE hi/low… 113/446 115/514
New Hi's/Low's Nasdaq h/l 157/354 160/255
McClellan  Oscillator 13 -12
McClellanSum .+750/-1000 -402 -328
Newsletter Inv.Intel -Bull 44.8 49.5
Surveys-Tues Bear:-5yrs 15.6 15.4
Wed. AAII  -Bull  27.9 22.6
Bear  29.2 35.1
COT:SPX w/w large/small (net)k 9k/(29k) n/a
COT:gold  comm.hedg long-short.000 (63k) n/a
COT:OIL comm.hedg long-short. (291k) n/a
US$-WSJ 87.1 87.1
CEOinsider selling 28:01:00 n/a
off.&bd b/s.vs. 10% holder b/s discont. discont.
3-box rev Bullish%-  54 57
US equity -ICI Fund Flows week delay (5.5b)
MMF flows Change in $B 19.2B 13B
MargDebt- top (300M) monthly  499B
ETF:mthlyEqty/ Int'l/Bond-$B 1268/525/320
2-yr Tsy Yield: Inflation 0.64% 0.63%
TIP (ETF) Inflation 111.82 112.13




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, July 6, 2015

It's Greek To Me

From the Cradle of Democracy, with Socrates, Plato and marble-mouth Demosthenes, Greece has not evolved like other democracies. With only 11 million people - three times the population of Puerto Rico (AKA Rich Port!! ; and a territory of Ame-rica -Rich Friend ), despite all the Deadlines, nothing has been resolved. Deadlines just become Headlines for the media. Nearly 50% of their citizens are below the Poverty line - talk about Income Inequality.

It does seem to have some effect on markets, however - Sentiment last week showed a huge increase in CBOE put/call volume. Just as with last Sundays futures of US stocks, there was another drop of 300 points on the DJIA, which was wiped away today, unlike last Monday's 350 decline.

Although investors are still rushing to Index ETFs and funds, they are abandoning dividend-paying stocks, with the hope of interest rates rising in September. The Bullish percent - stocks on a Buy signal- have receded to last October's level. Despite wild swings lately, 2015's first half has been one of the quietest Volatility swings (< 4%) for the 11th time in 60 years for the SPX (500). What bodes well, is that the previous 10 times the stock market double its average for the second half -positive every time! The average was 7%, over the 3.6% usual number until January.

Even with the positive Holiday looming, Breadth was terrible (negative 4 digits), and new highs/lows went negative. As for the Bull/Bears, the AAII individual survey took a wild swing south, reversing the complacent ratio of 35-22 from the prior week. Finally, the monthly figures for margin debt stayed basically the same (unlike China!!), and ETF flows also remained highs - see below:

Date> 7/3/2015 6/26/2015
Indices: DJIA  17730 17946
  NAZ  5009 5080
SPX  2076 2101
WklyVolume (Bshs). naz/ny…. 7.3/3.6 9.2/4.7
Specul.Ratio hi=bullish 2.03 1.96
Sentiment: put/call-CBOE  78 61
VIX>50-alltmlow=8.8 16.8 14
Advance/Dec-NYSE.. 977/2260 1262/1992
Weekly Net: -1283 -730
     Cumulative: 164133 165416
Weekly  NYSE hi/low… 115/514 312/269
New Hi's/Low's Nasdaq h/l 160/255 401/149
McClellan  Oscillator -12 -19
McClellanSum .+750/-1000 -328 -208
Newsletter Inv.Intel -Bull 49.5 51.6
Surveys-Tues Bear:-5yrs 15.4 15.4
Wed. AAII  -Bull  22.6 35.6
Bear  35.1 21.7
COT:SPX w/w large/small (net)k n/a 9k/(8k)
COT:gold  comm.hedg long-short.000 n/a (101k)
COT:OIL comm.hedg long-short. n/a (335k)
US$-WSJ 87.1 86.7
CEOinsider selling n/a 9:1
off.&bd b/s.vs. 10% holder b/s discont. 160/50
3-box rev Bullish%-  57 61
US equity -ICI Fund Flows week delay n/a
MMF flows Change in $B 13B 2.7B
MargDebt- top (300M) monthly  499B
ETF:mthlyEqty/ Int'l/Bond-$B 1268/525/320
2-yr Tsy Yield: Inflation 0.63% 0.72%
TIP (ETF) Inflation 112.13 111.44

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, June 29, 2015

PARADOX LOST

Last week the Nasdaq Composite hit a record high; the S&P 500 (SPX) nearly did - yet most Sectors - as measured by ETFs- seem to be in a downslide. Today, behind the Greek tragedy, U S markets also sold off, breaking technical Support levels ( 2080 on the SPX), as well as multi-year trendline Support. This does not bode well for the seasonally weak season - JASON- (July, Aug. Sept. Oct. Nov.).
Carl Icahn , no dummy when it comes to investing, having made over $1B on Netflix alone! calls the market "extremely overheated". Also worrisome are the technical indicators: OBV, or collective On Balance Volume and RSI or Relative Strength Index which topped out last year. Although stock Buybacks were fairly strong in Q2, even they failed to move the markets very much.

Sentiment Indicators, however, tell a different story: as shown below, newsletter Bulls increased in both wire house newsletters and Individual (AAII) surveys; CEO insider selling (legal) was way low - single digit, over buyers. Most other Indicators were quite calm and neutral considering the global situation. Stay tuned!!!

  
Date> 6/26/2015 6/19/2015
Indices: DJIA  17946 18015
  NAZ  5080 5117
SPX  2101 2109
WklyVolume (Bshs). naz/ny…. 9.2/4.7 9.2/4.8
Specul.Ratio hi=bullish 1.96 1.92
Sentiment: put/call-CBOE  61 62
VIX>50-alltmlow=8.8 14 14
Advance/Dec-NYSE.. 1262/1992 1766/1477
Weekly Net: -730 289
     Cumulative: 165416 166146
Weekly  NYSE hi/low… 312/269 237/241
New Hi's/Low's Nasdaq h/l 401/149 380/146
McClellan  Oscillator -19 0
McClellanSum .+750/-1000 -208 -199
Newsletter Inv.Intel -Bull 51.6 45.5
Surveys-Tues Bear:-5yrs 15.4 16.5
Wed. AAII  -Bull  35.6 25.4
Bear  21.7 34.3
COT:SPX w/w large/small (net)k 9k/(8k) 7k/(51k)
COT:gold  comm.hedg long-short.000 (101k) (76k)
COT:OIL comm.hedg long-short. (335k) (330k)
US$-WSJ 86.7 85.6
CEOinsider selling 9:1 24:1
off.&bd b/s.vs. 10% holder b/s 160/50 160/35
3-box rev Bullish%-  61 62
US equity -ICI Fund Flows WeekDelay (3.5B)
MMF flows Change in $B 2.7B (11.1B)
MargDebt- top (300M) monthly  507B
ETF:mthlyEqty/ Int'l/Bond-$B 1256/519/318
2-yr Tsy Yield: Inflation 0.72% n/a
TIP (ETF) Inflation 111.44 112.61

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, June 22, 2015

WISDOM OF CROWDS

In his epic book - The Wisdom of Crowds, James Suroweicki avers that masses of people will come up with the right solution to problems (as exhibited in the TV show where a "HELP" line was usually the best resource); however, in the Memoirs of Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay, he opines that crowds do exactly the wrong thing at the wrong time - an Contrary Opinion is the best tool for forecasting. So who is right?

Actually, both are! Depending on the timing. As local analyst Harry Domash recently stated at a Money Show talk: The Trend is your Friend until it Bends at the End! In other words, it is at extremes that surprises occur. The current Bull stock market, although not record-setting in lack of corrections or Bear markets, is quite long in the tooth. Per a recent Barron's headline - the SPX has gone 1350 days without even a 10% correction. Prior longer records were 2004-07 and 1990-97 - and we know how that ended up!

Still, there is little evidence that the end is nigh - record margin interest - much higher than the above two periods- could result in a cascading drop, similar to the 1987 "Portfolio Insurance" calamity, where selling begat more selling. Most other Sentiment Indicators are still quite average; and the AAII (Individual Investor) Bulls have dropped below 30% for almost two months- recently 20% and 25%. No complacency here, especially with all the global troubles pending. The Retail investor has been conspicuously absent during this rally from March 2009, with the exception of Index ETFs.

The Nasdaq continues to make new highs, although the Volume dropped last week in relation to the NYSE - the Naz being the more speculative vehicle - possibly due to Triple Witching of expiring options. The NYSE Volume Friday was more than the previous two days combined!!! The McClellan Summation Index - cumulative reading of the Oscillators - continued to be negative - a rara avis, and a Bullish sign historically. Finally, money is flowing out of both MMFunds and Equity mutual funds - where is it going? We should know more next week when the monthly numbers from ICI come out (see below):

Date> 6/19/2015 6/12/2015
Indices: DJIA  18015 17898
  NAZ  5117 5051
SPX  2109 2094
WklyVolume (Bshs). naz/ny…. 9.2/4.8 8.2/3.6
Specul.Ratio hi=bullish 1.92 2.28
Sentiment: put/call-CBOE  62 58
VIX>50-alltmlow=8.8 14 13.8
Advance/Dec-NYSE.. 1766/1477 1442/1801
Weekly Net: 289 -359
     Cumulative: 166146 165857
Weekly  NYSE hi/low… 237/241 212/292
New Hi's/Low's Nasdaq h/l 380/146 307/120
McClellan  Oscillator 0 -25
McClellanSum .+750/-1000 -199 -150
Newsletter Inv.Intel -Bull 45.5 47.4
Surveys-Tues Bear:-5yrs 16.5 16.5
Wed. AAII  -Bull  25.4 20.0
Bear  34.3 32.6
COT:SPX w/w large/small (net)k 7k/(51k) 6k/(28k)
COT:gold  comm.hedg long-short.000 (76k) (79k)
COT:OIL comm.hedg long-short. (330k) (325k)
US$-WSJ 85.6 86.3
CEOinsider selling 24:1 18:1
off.&bd b/s.vs. 10% holder b/s 160/35 160/50
3-box rev Bullish%-  62 61
US equity -ICI Fund Flows WeekDelay (3.9B)
MMF flows Change in $B (11.1B) (7.7B)
MargDebt- top (300M) monthly  507B APR.:
ETF:mthlyEqty/ Int'l/Bond-$B 1256/519/318 APR.:
2-yr Tsy Yield: Inflation 0.73%
TIP (ETF) Inflation 112.61 111.67

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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