AUTUMN RALLY?:

Is this the promised Election year's second-half rally, or just a continuation of what looks like, on a Bollinger Band chart of the Dow, the Dixie Highway headin' South? A wise sage once said "Never predict the Price and the Date of a market in the same newsletter!". Although Economists are prone to do this based on projected economic correlations to stocks ( remember how '04 was a bustout year for earnings?), most Technicians tend to react to a shorter term possibility based on Price, qualified by Volume, over Time. A fourth tenet would have to be Sentiment, or Contrarian indicators, of various timeframes, which at extremes can give excellent signals.
Starting with the Bullish signs that could break us out of the '04 narrow Trading Range would be a high CBOE put/call ratio of 77, a low ISEE option ratio of 99 (near its year low of 82) and a complacent new recent low in the VIX. The Ursa/Nova ratio is also at a Bullish low of 17.
Indicating that we stay in the downward Trend Channel are the low Volume numbers pushing a record Advance/Decline accumulation (my numbers) and a rather lofty ratio-adjusted McClellan Summation of 841; Barron's magazine/Longboat GAC reports a huge, first-time breakout of OTCBB (speculative Bulletin Board) Volume over Nazdaq Volume, as the NAZ to NYSE Volume remains high. With the hedge fund operators (@50% of NYSE Volume) looking to not get paid this year, we might expect increased Volatility in the remaining months of '04.

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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AUTUMN RALLY?: