Monday, November 14, 2005


Although we are coming off the Bearish Sentiment extremes that prompted my RALLY cry a few columns ago, we still appear to be in a rising mode as we enter the favorable months of the year for stocks, especially around Thanksgiving. Early December might be correctional as Institutions and hedge funds sell losers, take profits and avoid the 30-day wash rule (possibly buying call options a month prior to selling stocks).Still at high levels are short interest (record for Nasdaq) and Public/Specialist shorting at 4.74 and 3.77, respectively; the Panic/Euphoria Index is way low at -.69, Nova/Ursa is rising slightly at 19, and the CBOE put/call ratio is a Bullish 62, but off its Oct.14 high of 76.
Exhibiting caution are the VIX, now at a complacent 11.6, and various surveys such as Investors Intelligence at 50 Bulls/ 24.7 Bears amd the AAII Individual Investor poll at 58/23. Univ. of Mich. Confidence came in high at just under 80. And mutual fund cash is a low of 4.4%, although corporate cash stands at $2T, per Market Maven Stephanie Pomboy - this should be spent eventually in buybacks, dividends, or capital expenditures. The ratio-adjusted McClellan Oscillator is nearing a high area at 37 (75 seems to be Resistance), and the Averages/Indices (DJIA, Nasdaq, SPX) are also reaching previous toppy areas which might call for at least a stopping and reaccumulation for the Xmas rally.
That's it for now - we welcome any comments!

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