Tuesday, January 18, 2005


As several of the Indicators come down off their extreme year-end complacent highs (e.g.,605 new highs vs. 35 new lows) - which Fundamental analysts would call year-end position squaring - one stands out immediately: IBD's mutual fund cash jumped up from a steady 5.2% to 5.5% going back to November, a significant Bullish change, coupled with corporate cash of $2T. It appears that the U.S. might be making another paradigm shift in the new millenium from Agrarian to Industrial to Technology now to Financial power as we outsource production to cheaper labor, cut down on capital expenditures in lieu of a softer domestic and global economy. So far since 2000 we have increased our foreign Treasury indebtedness from 30% to 40% and jeopardize that with a weaker dollar.
Another standout Indicator this week is the AAII survey Index which shows a Bullish crossover, with the Bears outnumbering the Bulls 40 to 34%. Hopefully these few Bullish factors will put an end to this January slide until more Indicators line up oversold and predict a positive 5th year.

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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