Monday, June 26, 2006


The ability of hedge funds to control the market!
AMG Data services, which reports mutual funds money flows, cites that in the last 2 weeks, these figures emerge: June 14 - Inflows were $4B, but without ETFs- over $5B in OUTFLOWS; June 21: Outflows were over $5B; without ETFs - only $600M. Talk about zigging and zagging!With the mostly upward retracement (rally) of the past few days, many Sentiment Indicators ameliorated their drastic levels, including the McClellan Oscillator, which is back to minus 11 after breaching the -50 Support area; however, the Summation is below -500 (at 509) about where it was last October.
Both the CBOE put/call and VIX have backed off their highs-still in a positive area for the Bulls, but the ISE roared back to complacency at 133 (Monday's level was 200, not a good sign). The Bullish per cent slipped below 50 to 49, about where it was last August (46). Market surveys also show lots of pessimism with the I.I. finally lowering to a tie of the Bulls and Bears at 35.6 each, with the AAII still inverted at 34.4 vs. 41.6.
Finally, the Panic Index in Barrons' slipped farther to -0.66, deep in the Panic zone. The preponderance of these Indicators are suggesting a rally soon -even in a Bearish environment. History shows a few down days after June's Triple witching option and futures expiry, with a 9-day rally through the July 4th holiday. With the Fed's 100% expectation of hiking rates, bear in mind that the average market move between the last rate HIKE and the first CUT is a minus 7% - contrary to conventional wisdom; also remember that this is a small sampling of polling, and odds of it being exactly 7% are miniscule!

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