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Monday, October 27, 2014

BOO WHO

Not the scariest October in record, in fact one of the most expected corrections in recent years - sans Fed activity. Usually the Hallowe'en Effect creates a buying opportunity for stocks, but not last year, nor 2010.

Sentiment extremes quieted down last week, with the breadth (advance/decline) continuing UP and the Insider selling DOWN. In fact the 10% stockholders are Buying recently. The McClellan Oscillator went to a +68 - way overbought, hence the small selloff at today's open. MMF flows are making as violent swings as the markets.

Here are the numbers:

Date> 10/24/2014 10/17/2014
Indices: DJIA  16805 16380
NAZ  4483 4258
SPX  1964 1886
WklyVolume (Bshs). naz/ny 9.3/3.9 12.7/5.2
Specul.Ratio hi=bullish 2.38 2.44
Sentiment: put/call-CBOE  63 75
VIX>50-alltmlow=8.8 16.1 22
Advance/Dec-NYSE.. 2135/572 2000/1250
Weekly Net: 1563 750
     Cumulative: 161787 160224
Weekly  NYSE hi/low 214/101 89/813
New Hi's/Low's Nasdaq h/l 137/152 81/650
McClellan  Oscillator 68 10
McClellanSum .+750/-1000 -353 -625
Newsletter Inv.Intel -Bull:tues 35.3 37.8
Surveys Bear:-5yrs 18.2 17.3
AAII  -Bull :wed. 49.7 42.7
Bear  22.5 33.7
COT:SPX w/w large/small (net)k (1k)/(7k) 0k/20k
COT:gold  comm.hedg long-short.000 (105k) (75k)
CEOinsider selling 12:1 13:1
off.&bd b/s.vs. 10% holder b/s 210:25 160:20BUY
3-box rev Bullish%-  48 41
US equity -ICI Fund Flows WeekDelay (5.0B)
MMF flows Change in $B 12.9B (22B)
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.39% 0.38%

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, October 20, 2014

ZUGZWANG

In Chess jargon the German word Zugzwang means "Forced Move", wherein the opponent has to make only one choice, and it is usually not a good one! As the investing world moves forward, fewer and fewer choices are available to prudent investors, and economists and Fundamental Analysts seem to be in unanimous agreement (usually a bad contrary sign) that the U.S. stock market will rise in the next three months to 2 years or more.

The Technical picture, based here on Sentiment Indicators is not so one-sided, although there are some eye-popping moves from last week - more explanation at:    http://www.examiner.com/stock-market-in-san-francisco/brent-leonard

Exchange Volume was at a 2014 high (Selling Climax?); the CBOE put/call ratio as well. The Commitment of Traders "smart money" - large traders, was dead even (buy/short), while the small ones were net long 20k.Finally, Insider Trading dropped to 13:1 sellers, but the surprise number was the 10% stock holders almost unanimously buying more stock!

Here are the numbers:


Date> 10/17/2014 10/10/2014
Indices: DJIA  16380 16544
NAZ  4258 4276
SPX  1886 1906
WklyVolume (Bshs). naz/ny 12.7/5.2 11.3/4.2
Specul.Ratio hi=bullish 2.44 2.69
Sentiment: put/call-CBOE  75 72
VIX>50-alltmlow=8.8 22 21.2
Advance/Dec-NYSE.. 2000/1250 801/2453
Weekly Net: -750 -1652
     Cumulative: 158724 160251
Weekly  NYSE hi/low 89/813 103/565
New Hi's/Low's Nasdaq h/l 81/650 80/549
McClellan  Oscillator 10 -61
McClellanSum .+750/-1000 -625 -475
Newsletter Inv.Intel -Bull:tues 37.8 45.5
Surveys Bear:-5yrs 17.3 14.1
AAII  -Bull :wed. 42.7 39.9
Bear  33.7 31
COT:SPX w/w large/small (net)k 0k/20k (7k)/24k
COT:gold  comm.hedg long-short.000 (75k) (63k)
CEOinsider selling 13:1 40:1
off.&bd b/s.vs. 10% holder b/s 160:20BUY 175:40
3-box rev Bullish%-  41 61
US equity -ICI Fund Flows WeekDelay (.5B)
MMF flows Change in $B (22B) 17.0B
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.38% 0.43%

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, October 13, 2014

WILD WEEK

I knew if I went on vacation to San Diego for a week the market would go crazy - especially during this critical Sept.-Oct. span. Luckily, even with a few Sentiment and breadth extremes, my current investment strategies - DITM and especially Leaps are not directly affected. I shall be giving a talk on these this Saturday at the SF Option Group monthly meetup at Ft. Mason - 9 a.m. BLDG C (Rm.235) for local readers.

The overdue correction brought a few extreme readings in the last two posts - the previous week's unavailable (n/a) are updated today:
NYSE Volume increased as expected; also the CBOE put/call ratio and VIX did as well. Breadth (advance/declines) were negative for the fourth week - mutual fund outflows reached 6 straight weeks. The McClellan Oscillator was below -50, which again failed to see a buy signal today, and the Summation is at a recent low - hopefully support. Incidentally, Tom McClellan will be presenting at the TSAA annual seminar this month - please see my Examiner.com column if interested in attending:   http://www.examiner.com/stock-market-in-san-francisco/brent-leonard.

Finally, the 2-year Treasury yield dropped dramatically- all numbers are below:

Date> 10/10/2014 10/2/14*
Indices: DJIA  16544 17010
  NAZ  4276 4481
SPX  1906 1968
WklyVolume (Bshs). naz/ny 11.3/4.2 10.0/4.1
Specul.Ratio hi=bullish 2.69 2.44
Sentiment: put/call-CBOE  72 65
VIX>50-alltmlow=8.8 21.2 14.6
Advance/Dec-NYSE.. 801/2453 1235/2012
Weekly Net: -1652 -777
     Cumulative: 160251 161126
Weekly  NYSE hi/low 103/565 92/445
New Hi's/Low's Nasdaq h/l 80/549 105/410
McClellan  Oscillator -61 -53
McClellanSum .+750/-1000 -475 -272
Newsletter Inv.Intel -Bull:tues 45.5 47.5
Surveys Bear:-5yrs 14.1 15.1
AAII  -Bull :wed. 39.9 35.4
Bear  31 30.9
COT:SPX w/w large/small (net)k (7k)/24k n/a
COT:gold  comm.hedg long-short.000 (63k)
CEOinsider selling 40:1 52:1
off.&bd b/s.vs. 10% holder b/s 175:40 175:40
3-box rev Bullish%-  61 65
US equity -ICI Fund Flows WeekDelay (4.1B)
MMF flows Change in $B 17.0B 22.8B
MargDebt- top (300M) monthly  463B
ETF:mthlyEqty/ Int'l/Bond-$B 1141/454/281
2-yr Tsy Yield: Inflation 0.43% 0.57%

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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Friday, October 3, 2014

San Diego

Before I fly out on United's Ebola Gay to San Diego here is the week's Sentiment update a/o Friday midday:
Although the usual signal from the McClellan Oscillator did not work on Monday, it did kick in after the minus 50 (53) signal from Thursday - hence Friday's upsurge. The Bull / Bear surveys remained the same - the I I comes out on Tuesdays and the AAII on Wednesdays. Many n/as from the week in progress; individual insider selling remains strangely constant, with the Sector figures doubling - 25: to 52:1 sellers over buyers.
Finally the August numbers came in for margin debt (actually reported last week) just below record highs at 463B; ETF totals all rose to new highs - equity, Int'l and Bonds - despite Gross's departure.
Here are the numbers:

Date> 10/2/14* 9/26/2014
Indices: DJIA  17010 17113
  NAZ  4481 4512
SPX  1968 1982
WklyVolume (Bshs). naz/ny n/a 9.0/3.5
Specul.Ratio hi=bullish n/a 2.57
Sentiment: put/call-CBOE  69
VIX>50-alltmlow=8.8 14.9
Advance/Dec-NYSE.. n/a 646/2592
Weekly Net: n/a -1946
     Cumulative: n/a 161903
Weekly  NYSE hi/low n/a 88/315
New Hi's/Low's Nasdaq h/l n/a 95/322
McClellan  Oscillator -53 -43
McClellanSum .+750/-1000 -272 -55
Newsletter Inv.Intel -Bull:tues 47.5 48
Surveys Bear:-5yrs 15.1 15.3
AAII  -Bull :wed. 35.4 41.8
Bear  30.9 28.2
COT:SPX w/w large/small (net)k n/a (1k)/35k
COT:gold  comm.hedg long-short.000 (64k)
CEOinsider selling 52:1 25:1
off.&bd b/s.vs. 10% holder b/s 175:40 175/35
3-box rev Bullish%-  65 70
US equity -ICI Fund Flows WeekDelay  (1.5B)
MMF flows Change in $B 22.8B 15B
MargDebt- top (300M) monthly  463B 463B
ETF:mthlyEqty/ Int'l/Bond-$B 1141/454/281 1141/454/281
2-yr Tsy Yield: Inflation 0.57% 0.58%nh

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, September 29, 2014

JANUS - The Two-faced GOD

The definition of NT Taleb's Black Swan is a material event causing a shock that should have been foreseen. Gross's departure was probably imminent but is sending shock waves throughout the bond and ETF markets.

  Sentiment: Standouts from last week in the Sentiment area include halitosis (bad breadth) in both NYSE and Nasdaq, as well as new highs and lows, despite the great Friday rally!  Insider selling by sector was huge, but so was the buying, so that the S/B ratio came down to 25:1 from 61 the previous week.
The McClellan Oscillator, a fairly fast-twitch indicator, closed at minus 43, a BUY signal for Monday. Again, in spite of Friday's big UP day, the VIX closed up nearly 3 points w/w.  The S&P500 COT (Traders') large guys reversed from 11k to only 1k, while the small guys (dumb money?) reversed to Bullish from minus 22k to plus 35k! The two-year Treas. hit a new recent high in yield to 0.58%.
*note:  I shall be on vacay next week, away from electronic thingees.
Here are the numbers:

Date> 9/26/2014 9/19/2014
Indices: DJIA  17113 17279
  NAZ  4512 4579
SPX  1982 2010
WklyVolume (Bshs). naz/ny 9.0/3.5 10.1/4.4
Specul.Ratio hi=bullish 2.57 2.3
Sentiment: put/call-CBOE  69 60
VIX>50-alltmlow=8.8 14.9 12.1
Advance/Dec-NYSE.. 646/2592 1604/1622
Weekly Net: -1946 -18
     Cumulative: 161903 163849
Weekly  NYSE hi/low 88/315 209/187
New Hi's/Low's Nasdaq h/l 95/322 174/232
McClellan  Oscillator -43 -28
McClellanSum .+750/-1000 -55 248
Newsletter Inv.Intel -Bull:tues 48 52.5
Surveys Bear:-5yrs 15.3 15.2
AAII  -Bull :wed. 41.8 42.2
Bear  28.2 23
COT:SPX w/w large/small (net)k (1k)/35k 11k/(22k)
COT:gold  comm.hedg long-short.000 (64k) (77k)
CEOinsider selling 25:1 61:1
off.&bd b/s.vs. 10% holder b/s 175/35 175/30
3-box rev Bullish%-  70 74
US equity -ICI Fund Flows WeekDelay (2.0B)
MMF flows Change in $B 15B (16.7B)
MargDebt- top (300M) monthly  463B 460B
ETF:mthlyEqty/ Int'l/Bond-$B n/a 1100/443/272
2-yr Tsy Yield: Inflation 0.58%nh 0.57%

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, September 22, 2014

Monday, Monday

Today marks the Autumnal Equinox, and the market is reacting to it, so far. At least it's as good an excuse as the other media offerings. Breadth, as measured by the NYSE Advance/Decline line, was negative (barely) for the third week. Despite all the headlines about DJIA and S&P500 up to new highs, the underlying picture is not that great - especially for small caps.

Per Barron's Trader: Since March 2009 stocks have made new highs, the fourth longest and biggest rise in history; yet now the average stock in the SPX is DOWN 7% from its 52-week high. For one thing, only about 250 of the 500 stocks from 2008 still exist in the Index; the Wilshire 5000 went to @6500 awhile back, but is now only @2500 stocks - Survivorship bias. Also, The SPX is Cap weighted, meaning the biggest stocks (Google, Apple, ) dominate.

More of this at:   http://www.examiner.com/stock-market-in-san-francisco/brent-leonard

Although most Sentiment Indicators have regressed to the mean lately, a couple are notable: In the Commitment of Traders (COT) large traders have jumped to the Buy side, while small ones reversed to selling (see below); although Gold looks terrible weak vis-a-vis the strong Dollar, commercial traders have lightened upon their selling. Finally, insider selling, at least by sector, rose the past two weeks, while MMF flows reversed from Up $6B to Down $16B.

Here are the numbers:

Date> 9/19/2014 9/12/2014
Indices: DJIA  17279 16987
  NAZ  4579 4567
SPX  2010 1985
WklyVolume (Bshs). naz/ny 10.1/4.4 8.8/3.1
Specul.Ratio hi=bullish 2.3 2.84
Sentiment: put/call-CBOE  60 60
VIX>50-alltmlow=8.8 12.1 13.3
Advance/Dec-NYSE.. 1604/1622 718/2528
Weekly Net: -18 -1810
     Cumulative: 163849 163867
Weekly  NYSE hi/low 209/187 219/123
New Hi's/Low's Nasdaq h/l 174/232 195/148
McClellan  Oscillator -28 -51
McClellanSum .+750/-1000 248 433
Newsletter Inv.Intel -Bull:tues 52.5 57.6
Surveys Bear:-5yrs 15.2 14.1
AAII  -Bull :wed. 42.2 40.4
Bear  23 26.6
COT:SPX w/w large/small (net)k 11k/(22k) 0/(7k)
COT:gold  comm.hedg long-short.000 (77k) (98k)
CEOinsider selling 61:1 48:1
off.&bd b/s.vs. 10% holder b/s 175/30 200/40
3-box rev Bullish%-  74 75
US equity -ICI Fund Flows WeekDelay (1.3B)
MMF flows Change in $B (16.7B) 6.5B
MargDebt- top (300M) monthly  460B
ETF:mthlyEqty/ Int'l/Bond-$B 1100/443/272
2-yr Tsy Yield: Inflation 0.57% 0.56%


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, September 15, 2014

DIVIDED KINGDOM

So far this week the markets are slightly positive, as consistently predicted (short term) by the McClellan Oscillator, which ended last week at minus 51. Much happening this week as the Fed tries to parse words about rates, BABA IPO comes out, and Scotland decides whether it wants a divided or united kingdom- DK or UK? (one floor trader I worked with used to use DK as short for Don't Know!)

For what it's worth, the 2-year Treas. yield jumped to a recent high last week at .56%, bringing up the question of Interest Rates versus Inflation. Stocks seem to do well with rising interest rates, especially if due to an improving economy- however, as Jim Paulsen posits, over the past 30 years 6 of the last 7 Inflation hikes have resulted in either corrections or Bear markets - the 7th waiting until 2008! Stock market rises have come during Disinflation.

Finally, despite the NYSE's Advance/decline "bad breadth", Inv. Intlell. Bears (from wire house newsletters) remain at complacent lows. Here are the numbers:

Date> 9/12/2014 9/5/2014
Indices: DJIA  16987 17137
NAZ  4567 4582
SPX  1985 2007
WklyVolume (Bshs). naz/ny 8.8/3.1 7.0/2.4
Specul.Ratio hi=bullish 2.84 2.9
Sentiment: put/call-CBOE  60 64
VIX>50-alltmlow=8.8 13.3 12.1
Advance/Dec-NYSE.. 718/2528 1371/1837
Weekly Net: -1810 -466
     Cumulative: 163867 165677
Weekly  NYSE hi/low 219/123 402/52
New Hi's/Low's Nasdaq h/l 195/148 250/108
McClellan  Oscillator -51 6
McClellanSum .+750/-1000 433 586
Newsletter Inv.Intel -Bull:tues 57.6 56.1
Surveys Bear:-5yrs 14.1 13.3
AAII  -Bull :wed. 40.4 44.7
Bear  26.6 24
COT:SPX w/w large/small (net)k 0/(7k) 3/(9)
COT:gold  comm.hedg long-short.000 (98k) (104k)
CEOinsider selling 48:1 27:1
off.&bd b/s.vs. 10% holder b/s 200/40 175/35
3-box rev Bullish%-  75 76
US equity -ICI Fund Flows WeekDelay (5.3B)
MMF flows Change in $B 6.5B (8.7B)
MargDebt- top (300M) monthly  JULY
ETF:mthlyEqty/ Int'l/Bond-$B JULY
2-yr Tsy Yield: Inflation 0.56% 0.51%


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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