Saturday, April 21, 2007

THE C OF LIQUIDITY: CREDIT

The rationale for the invincibility of this market - endless amounts of liquidity from M&A, stock buybacks, hedge funds, private equity, ad nauseum, is beginning to be too commonplace. And several sentiment indicators are starting to flash caution signs. Those readers who receive my weekly e-mail alerts and tsaasf.org readers can observe a matrix of 5-year levels of indicators at market tops - a few are reaching that level now:
The CBOE Equity put/call ratio is 56, down 10 points from last week; the McClellan Summation Index is above 900, and the bull/bear surveys are being stretched toward complacency after triggering the recent bull move. In fact the Market Vane hit a new high of 74, and the Bullish per cent has risen to 77. Although Insider selling has backed off to 17:1, record short interest (up another 5% on the NYSE), specialist shorting and IBD's short interest are high also.

Here are those numbers:

Mktsentiment. 4/20/2007..5Yr.HI....LOW

DJIA ………. 12961...........12767...........7286
Nasdaq………. 2526............2515............1114
S&P500…….. 1484............1455............776
CBOE Equity put/call .56............87-5/04........46-1/03

VIX ………. 12.07..........44 9/02........10.0-7/05

ISEE-call/put ……. 125...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………13...............91-5/04.........(81)-5/04
McClelSum…………… 902..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..52.7...........62.9-12/04......35-6/06
Bear:………… 25.3 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ……….46.9/29.6....n/a n/a
MarketVane Bulls…. 74......... 74..............24

Birinyi Blogger
Bull/Bear Poll …………34.3/31.2
Bullish%- ……….…77...............88 -2/04...... 46-8/04

*Insider corporate sellers 17:1
Sectors: Most Buyers: Finance, Energy
Most Sellers: Consumers, Tech, Healthcare,Finance

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance


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