Monday, August 20, 2007

Cramer Emptor:

Those of us who enjoy schadenfreude must have liked the James Cramer cover story in Barron's this weekend, about with all his antics and wisdom, his picks have underperformed all major indices.
This week shook loose a lot of Indicators from their August stupor. Technician John Roque states that although stocks above their 200-MA number only 30%, they slid to 15 and 16 in this decade's prior corrections; however, Bullish Per Cent slid below its 2001 low of 38 (to 36-closing the week at 39), a major Buy signal. Major indices dropped below their 200-EMA, but closed at or near them on Friday.
The CBOE Equity put/call ratio jumped to a new high (nh) of 91 -most Bullish- while the ISEE call to put ratio is again re-revised, as we await meaningful data there. Washout new lows on the NYSE were 65 to 1284, a 20:1 ratio.
Newsletter surveys, out before the week's end, were mixed: the I.I was unchanged while the AAII inverted to 42 vs 45, normally a Buy signal; Market Vane dropped nicely to 52, while insiders selling was low, at 6:1. Just looking over the last 2 months the Birinyi bloggers seem to have it more right than the contrary above newsletter. Public shorting was huge at a record 15.89 for each Specialist, and I started tracking Money Market Funds behind the rumor that short term CP had a lot of CDOs, auto loans, etc., but their inflows were the highest YTD, at $42B. ETFs were also heavily bought, although mutual funds showed slight outflows for the week.
With Sept. and Oct. looming, it might be wise to tiptoe in while seeing if this credit crunch will bend but not break!
Here are the stats:
Mktsentiment. 8/17/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13079……..13239 …… 13668..............7286
Nasdaq………. 2505……….2544……… 2707.............1114
S&P500…….. 1445………1453………. 1557……..776
CBOE Eq. put/call …91nh………….65…………. 91…..........46-1/03

VIX ………. 29.99……….28.3………..44 9/02........10.0-7/05

ISEE-call/put ……. 105
All Equities (ETF)
McClel Osc……-20………………-31…………-64.91-5/04.........(81)-5/04
McClelSum……-917nl…………....-667…….…….-1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 43.8………..43.8……….........62.9-12/04......35-6/06
Bear:………… 32.6……….. 31.5…………38.2-3/03.......16-6/03

AAII-Bull/Bear ………42.2/45.6……45.8/39…....n/a n/a
MarketVane Bulls…. 52………….58………… ………74..............24
IBD: Short Interest- …6.17……….6.65………….8.25………. 4.0
Public/NYSE Spec.-…..15.89nh……..9.07……….…15.89……….1.0
Birinyi Blogger
Bull/Bear Poll ……43.3/33.3…….35.3/41.2….
Bullish%- ………39nl……….…50...........88 -2/04...... 46-8/04
*Insider corporate sellers..12:1….7:1……..
Sectors: Most Buyers: Finance
Most Sellers: Tech, Healthcare

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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