Tuesday, December 14, 2004


Even with a record high deficit number sure to slow the Economy, a 5th Fed rate hike, 21 IPOs this week, and a quarterly Quad Witching expiration where institutional traders usually reframe their future positions, Sentiment Indicators still show much complacency. Although a few came off their extreme highs of last week, such as the Nova/Ursa ratio, new highs and advance/declines, NAZ to NYSE Volume ratio - others remain high.Both put/call ratios - CBOE Equity and ISE are extreme (62 Bulls and 259 c/p) Burke's I.I. survey shows Bulls at 60.8%/ Bears at 21.7% and the Bullish percent near its topping point.Previously mentioned Welles Wilder Delta Phenomenon, which forecasts 6 cyclical turning points every 4 years, indicates an upturn @ Dec.15 which tops out mid-April, much like the accepted wisdom of up Dec./Jans and 5th decile year bullishness. Going against that, however, is the 5th rate hike average history of Steve Leuthold, who cites:
7 days: -1.44%; 22 days: -1.12%; 126 days:-5.38%; and 1 yr (252 days): -2.86%

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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