DECENT OR DESCENT?:

Although several Sentiment Indicators are signalling a long-anticipated decline to the recent rally, it probably won't start immediately. What with the Santa Claus rally (last week of the year), lots of money from bonuses and other year-end contributions looking for a home -some of it mandated- plus any January effect out there, it could be days or weeks before we see demand weaken.
Most eye-catching is the Citicorp/Smith Barney Panic/Euphoria Index found in Barron's. Last week it zoomed up to -.33, just below the waterline out of the Panic zone. Rejiggered once already, it probably needs another adjustment, since it's spent more time under water than Shamu the Whale. Still, it has been a fairly reliable sign, the last time near -.30 was in May; before that the March period and the summer of '05, when it first appeared - all market tops, except for one backfire. Market bottoms at -0.70 have also been quite reliable.
Other signs of overextension include the McClellan Summation Index coming down off a high 1,000 level, although the Oscillator at -44 is near an oversold state. Bullish per cent, the number of stocks on Buy signals, is also at a lofty level.
Finally, the newsletter survey are mixed, with the Investors' Intelligence spread wide at 58.8 Bulls and only 20.6 Bears; meanwhile, the AAII again inverted, with more Bears than Bulls, usually a positive sign for stocks. Mutual funds have had outflows since November, usually a Bullish sign as they again miss out.

Here are the numbers:

Mktsentiment. 12/22/2006......5Yr.HI........ LOW

DJIA ………. 12343...............12342...........7286
Nasdaq………. 2401...................2460............1114
S&P500…….. 1410.................1427............776
CBOE Equity put/call 59.................87-5/04........46-1/03

VIX ………. 11.36...............44 9/02........10.3-7/05

ISEE-call/put ……. 102................299-12/04.......82-4/02
(>200/Bearish)..

McClel Osc.(+75/-100)……-44............91-5/04.........(81)-5/04
McClelSum.(+750/-1153nh) 922......1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..58.8.................62.9-12/04......35-6/06
Bear:………… 20.6..................38.2-3/03.......16-6/03

AAII-Bull/Bear ……. 39.1/42.5.....n/a n/a
MarketVane Bulls…. 72................ 73..............24

Barron's Panic/
Euphoric Master Idx…. -0.33........-0.24 4/06.....-0.75 11/05

Bullish%- ………77........................88 -2/04...... 46-8/04

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DECENT OR DESCENT?: