END OF QUARTER:

Despite two ugly days last week, as they square positions for the quarter ending, not too much changed in the realm of sentiment. What with rebalancing the Russell Indexes, institutions and hedge funds selling losers and buying winners (read Google) for window dressing, even a 300+ point drop in the Dow only changed a few of my signals:The ISEE put/call ratio, getting more attention now that the ISE is coming out with new futures on gold, oil, etc., went to a Bearish 247 (well above the 200 mark), the McClellan Oscillator went minus to -21 from +45, with its concomitant Summation rising to scary highs of +784 in spite of a negative A/D on the NYSE for the week. Adding to the Bearish view, the AAII Bear number slipped further to only 18.2, with the I.I. at 20.2, while the Market Vane Bulls shot up to 70.

CHERCHEZ LA RESISTANCE:

Although not Indicators themselves, Horizontal Resistance levels constitute a psychological area where previous buying and selling has taken place, either by self-fulfilling technical analysis, automatic stops or computer alerts.
This past week the DJIA stopped just shy of the 10,660 Resistance, closing Friday at 10,623; the Nasdaq closed at 2090, just under the 2100 level; and the SPX right at 1216. Monday then reversed down at the open, which it does frequently after Quadruple Witching when previous price action was rising.
Only a few Sentiment Indicators remain short term Positive this week: Adv/Decs were strong at 2600 to 900, and the New His to Lows were a climactic 9:1. Barron's Panic/Euphoria Index is still in the Panic zone, barely, at -.46; the NAZ to NY Volme is not speculative as yet, and the Specialist shorting is still benign.
What stands out on the topping scenario are the following: my cumulative advance/declines reading hit a new alltime high of 62,015 while the concomitant McClellan Summation also broke the 750 boundary by the Oscillator hitting a high of 45; the survey Bears are receding with the AAIIs at 18.8 and I.I.at 20.4; Market Vane's Bulls are at 69. Even the U. of Michigan Confidence Index rose to 94.8 from 86.9. While the Bullish percent has seen higher tops, up to 78, it is now at 66, where previous tops have occurred.

THE END IS NEAR:

In spite of today's 60 pt.runup in anticipation of ??Flag Day?? (why not), too many Sentiment Indicators are warning of a complacent top nearby: I.I., or Investor's Intelligence Bearish % at 20.9 is a low for '05 while the Bulls hit 50.9 -although it was at 55 and 56 at the mid-March and mid-Feb tops. My cumulative Adv/Dec topped 60k for the first time since that March top.
The VIX is also at a Feb-Mar yawn level just under 12; the McClellan Summation is at a high of 577, not seen since Feb-Mar when it topped out at 707.
The Bullish per cent is at 64; five times it topped at that level in recent months, although it could go somewhat higher. Finally, a new Indicator I am tracking is the IBD short interest ratio now at 5.8 (6.7 was a 5-year high, also a topping sign).
Since 1990, Summer is the only season with a negative return in stocks, (-1%) vs. 2 to 4% rises in the other three, despite Sept. and Oct. performances. While I dislike relying on small sampling like this (15 years), due to all the above data, I would certainly be wary in the near future as Volume continues to dry up.

JUNE SWOON:

The market seems to be taking a well-deserved rest from its May runup, rolling over into a Trading Range, hopefully bounded by previous 10,370 Support of "horizontal trendline touches" in Nov., Jan., Mar., April, and May, where Sellers have come in. The 10,550 Resistance we just encountered was also formed from these same months visits, so one can hope for a containment within these bounds ( for approximate SPX (S&P 500) numbers, one can multiply current levels (10440X1193), then divide by the Dow numbers 10370 or 10550 to get comparative SPX levels).
This week's Sentiment Indicators reflect this tired rolling over in the McClellan Oscillator, back down to 40 from last week's 47 top; Public to NYSE Specialist shorting back down to 2.33 from a record 3.29; NAZ to NY Volume is a high 130 -speculative- ratio; and too many newsletter surveyees are Bullish (AAII at 48.6, I.I. at 47.8).
On the flip side, indicating that the Bull move isn't over, are: DJIA dividend yield increasing to 5.08%; Bullish per cent in a Long trend at 62%; CBOE put/call at a cautious 62 and New Highs screaming at 373 to only 47 New Lows.
Best Sectors, per Barron's Market Lab, are Basic Materials, including Oil, and Consumer Goods and Services. Gold and Silver have rallied the last few days, but are approaching Resistance from previous levels, Bollinger Band tops and MAs.
That's it for now, if you have trouble understanding my esoteric acronyms , initials, etc., check out last week's column for explanations. Also, please feel free to comment with suggestions, alternative successful indicators, or questions

VALIDATION:

I recently made the statement that the reason Sentiment Indicators were so important to a stock investor was that 70 to 80% of a stock's movement is predicated on the overall market and individual Sector's and Industry Group's behavior, not the stock's fundamentals, although they are important longterm. In my recent column, "Mayday,M'aidez", I made the observation that several of my Sentiment Indicators were at extremes, calling for a market rise: Specialist shorting of stocks vs. Public was at a record 3.67;Investor's Intelligence Bearishness was 29.7%, also a recent record high; Univ. of Michigan Confidence at a record 87.7; and an INVERTED Bull/Bear ratio in the AAII survey!
Since then, the Nasdaq has risen over 9% (not a bad full year return)and still going.
This week, several Indicators have moved into midrange (not quite overbought yet), although the McClellan Oscillator is nearing its upper boundary, and Volume has actually been declining during the upmove. Also, the Nova/Ursa fund ratio is at 24, where it was on April 8, before an ugly downmove. Another notable extreme is the speculative Nasdaq Volume vs. NYSE ( a recent high of 122), and longer term Bullish signs include Barron's newly added Panic/Euphoria chart still barely in Panic mode of -.7 (please see previous blog for parameters), and the Bullish percent of stocks on Buy signals just gave a Buy signal itself at 58. Finally, the delayed Public/Specialist short ratio climbed back up over 3, a contrary signal.
So, the Jekyll/Hyde week so far is probably due to hedge fund profit-taking May 31( a Trillion dollar entity), and start of the month funding and Money Markets (another Trillion dollar entity).
READERS: Now that Haloscan has kindly made it possible to post comments with joining Bloggers, I would appreciate comments such as other favorite Sentiment Indicators that have a proven record, and thought-provoking comments and questions which I'm used to experiencing in the graduate CyberClasses on Technical Analysis that I've been teaching at Golden Gate Univ. the past 5 years.