Monday, November 22, 2004


In a Wyckoffian upthrust through the Resistance-becomes-Support level @10,500 DJIA that has harnessed stocks for a 9 months gestation period, we appear to have typically retested that horizontal line and trend upward into the best 2 months of the trading year. The struggling Fundamental forces seem to be a weaker Dollar with higher oil and gas prices going into winter, some trepidation on the part of foreigners to service our huge debt, and an apparent weaker Economy and S&P earnings forecast for '05. On the plus side, besides the seasonality, corporations have huge caches of cash which they refuse to spend on CapEx, so could bolster the stock market through dividends and stock repurchases. Most of MSFT's dividend on Dec. 2 will probably go back into the market.Mutual Fund inflows were $5B last week, and for the first time ETF Volume exceeded that of Mutual Funds, according to Trim Tabs.Sentiment extremes include a huge momentum rally in November (with short covering) with last week's 719 New Highs vs. 26 New Lows on the NYSE; IBD's fund cash remains high at 5.1% and the DJIA dividend rate is 3.93%. The ISE put/call ratio stayed high at 183.
On the overbought side, the McClellan Summation rose to 1105 while the Oscillator went negative and Public/ Specialist shorting lessened. Newsletter surveys showed Market Vane again at 70, with Investor's Intelligence 58% Bulls - only 22% Bears, same as AAII. Finally, the Bullish % is reaching old high levels at 72% of stocks on Buy signals.

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