Presidential cycle that until this year did not sell off in a vicious
V-Spike, and that was in 1986. It did, however, make up for its delay in
1987 with a record point selloff after James Baker , then Sec'y of State
(and now a name currently in the news), went to Germany and demanded that
they revive their economy or the U.S.would "let the Dollar slide!".
This week BOTH Fed Head Bernanke and U.S.Treasury chief Paulson are on a
mission to China to discuss China's economy, fair trade, and the Dollar-pegged Yuan (too bad Condoleeza isn't going (it would be a first - sending "rice" to China). Considering we've had 100 trading days without any major correction, this Sea of Tranquility must be getting a bit tired, even though we are headed for the Conventional Wisdom's period of a Santa Claus rally and possible January Effect (although there may be no losing stocks to sell for tax purposes this year!).
If a NYSE new high/low ratio of 936 to 21 isn't indicative of a mania
(even though many of these are foreign ADSs, preferred and ETFs), then a
rise in UBS Investor Optimism from 79 to 93 and a rash of corporate Insider
Selling might tip us off to impending weakness.
The McClellan ratio-adjusted (for CEFs, etc.) Summation Index is also sky high at an
overbought 1127; stock charts Bullish Per Cent is also at an elevated
78%, and the Investors' Intelligence surveys of 100 advisory letters has
a Bullish reading just under 60, with 62 being the 5-year high.
Suspiciously, the AAII ratio is Bullishly inverted, an event as rare as a
three-star movie on the Lifetime channel.
Here, then, is this week's grid:
Mktsentiment. 12/08/2006......5Yr.HI........ LOW
DJIA 12307...........11577...........7286
Nasdaq 2437............2243............1114
S&P500 1409............1325............776
CBOE Equity put/call 60.............87-5/04........46-1/03
VIX 12.........44 9/02........10.3-7/05
ISEE-call/put 148...........299-12/04.......82-4/02
(>200/Bearish)
McClel Osc.(+75/-100) -6...............91-5/04.........(81)-5/04
McClelSum.(+750/-1153nh) 1153...........1568-6/03.......(726)-5/04
Newsletter Surveys:
Inv.Intel -Bull:62/28 ..59.8...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 23.9.........38.2-3/03.......16-6/03
AAII-Bull/Bear 38.9/41.6.....n/a n/a
MarketVane Bulls 73......... 73..............24
Barron's Panic/Euphoric
Master Idx -0.48........-0.24 4/06.....-0.75 11/05
Bullish%- 78...............88 -2/04...... 46-8/04
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