Tuesday, December 21, 2004


I've always maintained that the market phrase "Fear and Greed" should be "Fear and Hope" encompassing a wider range of investors. The latest Contrarian hope is that the Dollar is about to rally after its steep decline. A Barron's article posits a 5% Bullish stance on it, although it may retest the low in a late January shakeout. Another seasonal anomaly should be revealed this Thursday as Tom Herschfeld will appear as guest on the Nightly Business Report and tout his Closed-End Fund theory about a selloff at year-end, only to rise sharply in the opening weeks of '05. Muni and Gov't Bond funds are examples: NCP,NCA,MUC, et.al. Barron's Abelson also reports 6 corporate Directors Selling for each one Buying, an often extreme market negative. Longer term, Schwab's Ken Tower reminds us that we are 561 days into a secular Bull market which averages @800 days (mid-November of '05).
More accurate, I've found over 4 years, is the Rydex Nova (bullish) fund vs. Ursa (bearish) ratio which is now quite high at 41. Like most Sentiment Indicators and Technical Oscillators it reflects a majority trend in which the public is correct UNTIL the turning point, so it serves more as a Yellow light. Although the recent Trading Range has quieted down some Indicators, others remain near Bullish extremes (bearish): the VIX at a low 11.95; Investor's Intelligence Bullish % at 62.1 - Bearish at 21.1; Market Vane Bears at 19.2 and Chartcraft's Bullish per cent at a toppy 76. HAPPY HOLIDAYS!

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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