Monday, September 11, 2006


Returning from vacation at Palm Springs, where I found the casinos way cooler than the golf courses, I find the Big Boys are Back also - and are they selling! Although the absolute worst time to trade is early Monday morning (where the weekend warriors/worriers panic), it appears that for what it's worth, the last 2 weeks ETFs have been gaining buyers while regular mutual funds have been selling.
The July/August rally showed great strength in breadth, although on weaker Volume, but seems to have peaked, at least temporarily, at the top of the old Trading Range. Conventional Wisdom that September is the cruelest month is almost too rampant to believe, so let's look at the Sentiment Indicators:
The CBOE Equity put/call ratio is still healthily high at 68, not the 76 panics which occurred twice during the course of the 2-month rally. NYSE short interest is at record high levels- 6.94!
The McClellan Oscillator, a measure of advance/decline action, topped out before the decline at 45 and now is at a neutral -4, while its Summation rolled over at 682.
Finally, a couple more signals belying an ongoing Sept. selloff include a huge increase in change of Commercial Hedgers purchase ( a new signal for my quiver), and the Bullish Per Cent, or stocks on a Buy signal, which is actually itself on a BUY signal, with more than 3 2-point boxes up on a Point & Figure chart (6% reversal move).
Here is the matrix of Indicators:

Mktsentiment.blogspot 9/8/2006 4Yr.HI LOW
DJIA 11392 11577 7286
Nasdaq 2165 2243 1114
S&P500 1302 1325 776

CBOE Equity 68 87-5/04 46-1/03
put/call ratio

VIX 12.9 44-9/02 10.3-7/05

ISEE-call/put 125 299-12/04 82-4/02

McClel Osc.(+75/-100) -4 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 682 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 43.2 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 33.7 38.2-3/03 16-6/03

AAII-Bull/Bear 43.0/29.9 n/a n/a
MarketVane Bulls 68 73 24

Barron's Panic/
Euphoric Master Idx -0.68 -0.24 4/06 -0.75 11/05

Bullish%- .82%/12% 57 88 -2/04 46-8/04

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