SLIP SLIDING AWAY:

Recently on CNBC, Robert Stovall, the Fundamental dinosaur and ultimate disser of Technical Analysis, expounded the technical study that, more often than not, the final week of September (and the U.S.Gov't's fiscal year) is a downer. Today's continuation of the Ben-efit rate cut is ending the day with yet another 100 point swing to the downside- not boding well for the week. In a study I've been doing, in 36 of the past 42 months the SPX has made a lower or even close between option expiration and the end of the month.
As one might expect, Bullish sentiment has rebounded with the rate cut and concomitant market rise: the CBOE put/call ratio dropped as the ISE call/put ratio rose materially; all the newsletter surveys jumped up to the Bullish camp, yet Public shorting rose vs. Specialists (those that are left). Corporate insiders are selling (Tech and Energy) while buying Finance at a 28:1 clip. Finally, investment money has stopped going into Money market funds and mutual funds, but sent 28 Billion into ETFs for the week.
Here are the stats:

Mktsentiment. 9/21/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13820……….13442………14001..............7286
Nasdaq………. 2671…………2602……….. 2707.............1114
S&P500…….. 1525…………1484…………1557……..776
CBOE Eq. put/call …60……………68………… 91…..........46-1/03

VIX ………. 19…………….34.9………44 9/02........10.0-7/05

ISEE-call/put ……. 151……………118………..177………..118
All Equities (ETF)
McClel Osc…………39…………….31………91-5/04.........(81)-5/04
McClelSum………-60……………..-246…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 53.9…………48.3………..62.9-12/04......35-6/06
Bear:………… 27……………31.0………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……39.2/31.7……..40/35.3……..n/a n/a
MarketVane Bulls….64…………… 58…………. 74..............24
UBS investor confidence..73………..87……………178……………53
(monthly change)
IBD: Short Interest- …7.77………..7.41….………8.25………. 4.0
Public/NYSE Spec.-….9.88………...7.85…..……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ……22.6/53.2………26.9/50
Bullish%- ………...62…………..54……….…88 -2/04...... 46-8/04
*Insider corporate sellers..28:1……..22:1
Sectors: Most Buyers: Finance
Most Sellers: Tech, Energy

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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SLIP SLIDING AWAY:

FIRST CUT IS THE DEEPEST:

Whether Uncle Ben cuts rates 1/2 point or two 1/4 points, economists and analysts end-to-end will still not reach an opinion about market direction - as usual, the technicals: Price, Volume, Trend momentum, are the things to watch. In a small sampling of rate cuts over almost 40 years, Laszlo Birinyi observes that 7 of 9 resulted in up markets shortly after, although (nota bene) there was an 18% decline in 2001. The average gain for 3 months was 5.5%; after 6 months , over 12% - and the seasonal timing is on its favor.
Implied Volatility in options is already at a 4-year high, and Tuesday's news on rates and broker earnings could even widen that.
In apprehension of this, trading volume has receded and sentiment indicators have regressed from their Bullish position a bit. Although still young, the revised ISEE call to put ratio seems to correlate pretty well, as its high 177 level preceded the decline of 2 weeks ago and its swing to 118 has seen a slow market rise; the opposite CBOE put/call ratio remains Bullishly high at 68, off its 71 mark.
The AAII and I.I. surveys have swung back to neutral/complacent; the Birinyi bloggers, in early testing, seem to be more prescient than contrary - their new high of 50 negative certainly "Bears" watching, as does the huge decline in Public shorting. Money continues to flow back into money market funds, and CEO insider selling has picked up again.
Here are all the numbers:

Mktsentiment. 9/14/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13442……….13113………14001..............7286
Nasdaq………. 2602…………2565……….. 2707.............1114
S&P500…….. 1484…………1453…………1557……..776
CBOE Eq. put/call …68…………..69………… 91…..........46-1/03

VIX ………. 24.9…………26.2………44 9/02........10.0-7/05

ISEE-call/put ……. 118………….177………..177………..118
All Equities (ETF)
McClel Osc…………31……………21………91-5/04.........(81)-5/04
McClelSum………-246………….-370…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 48.3………..42.9………..62.9-12/04......35-6/06
Bear:………… 31.0………….37.4………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……40/35.3………38.4/42.4……..n/a n/a
MarketVane Bulls…. 58………….59…………. 74..............24
UBS investor confidence..73………..87……………178……………53
IBD: Short Interest- …7.41…………7.0….………8.25………. 4.0
Public/NYSE Spec.-…..7.85…………12.9…..……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ……26.9/50…………31.3/40.6
Bullish%- ………...54……………52……….…88 -2/04...... 46-8/04
*Insider corporate sellers..22:1………30:1

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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FIRST CUT IS THE DEEPEST:

SURGIN' FOR GOLD:

The link below has a very clear and concise technical readout on gold, which traditionally acts well in Sept., especially if we're up to our ears in credit issues:
http://headlinecharts.blog.com/
With $6 to $8T in global securitized residential mortgages out there somewhere(?) getting ready to reset from bending to breaking the homeowners/speculators (according to Stephanie Pomboy of Market Maven), and the Dollar index breaking below $80, it's no wonder that gold broke $700. Last January Louise Yamada audaciously called for $1000 gold - we may see it yet.
On top of that, Barron's notes that the mortgage rates are tied to the LIBOR rate, which has been rising due to fear.
Despite Friday's dramatic sellof and today's followthrough, not much in the way of indicators is in extremis. Both the ISE call to put ratio and the Market Vane bulls rose materially, and Tom McClellan thinks the breadth washout is setting up for a late Sept. rally. The AAII is still nicely inverted, but I would still hedge any equity investment for the next few weeks. I wonder what effect the Specialists' upcoming disappearance will have on stocks - I'm sure they'll be grabbing all they can as they circle the drain!
Here are the stats:

Mktsentiment. 9/7/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13113……….13357………13668..............7286
Nasdaq………. 2565…………2596……….. 2707.............1114
S&P500…….. 1453…………1474……….. 1557……..776
CBOE Eq. put/call …69…………..71………… 91…..........46-1/03

VIX ………. 26.2…………23.4………44 9/02........10.0-7/05

ISEE-call/put ……. 177…………..135………..177………..133
All Equities (ETF)
McClel Osc…………21……………..63………91-5/04.........(81)-5/04
McClelSum………-370………………-569…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 42.9………….41.7………..62.9-12/04......35-6/06
Bear:………… 37.4………….37.4………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……38.4/42.4……..40.3/46.3……..n/a n/a
MarketVane Bulls…. 59…………….53…………. ………74..............24
UBS investor confidence..73………..87……………178……………53
IBD: Short Interest- …7.0…………….6.42………8.25………. 4.0
Public/NYSE Spec.-…..12.9…………10.3……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ……31.3/40.6………..27.2/36.3
Bullish%- ………...52……………49……….…88 -2/04...... 46-8/04
*Insider corporate sellers..30:1……..10.2:1
Sectors: Most Buyers: Finance/Tech
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

Subscribe in a reader

SURGIN' FOR GOLD:

TRY TO REMEMBER...:

When the media gets too far on one side of an issue, such as September being historically the worst month of the year for securities, leave it to the markets to fool most of the people most of the time. With few exceptions (coming off a very strong oversold condition), Sentiment Indicators are still mostly positive, at least very short term - until mid-Sept. when we get the Surgin' General's Iraq report, the FOMC decision, brokers' Q2 earnings, and option expiration. We also get more recent housing, credit, and employment data. Since only 40 of the 10,000 hedge funds control 60% of stocks (per WSJ's Charles Gasparino), these big boys could continue to shake things up like a puppy with a rag doll.
This week the UBS Investor Confidence poll was added to the indicators primarily due to its sudden decline from 87 to 73 - it fell to 53 in August of '06 the start of this recent rally. The UBS survey is a Gallup poll of 800 investors with a minimum of $10,000 in equity assets.
Other Bullish extremes include the CBOE Equity put/call ratio again with a 7-handle at 71; the Bullish Per cent is still at a multi-year low of 49, on a Buy signal (it had hit 12 and 16 respectively in '01 and '02); finally, the AAII survey is still inverted, with more Bears than Bulls, and corporate insider buying remains positive.
Here are the results:

Mktsentiment. 8/31/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13357……….13378………13668..............7286
Nasdaq………. 2596…………2576……….. 2707.............1114
S&P500…….. 1474…………1479……….. 1557……..776
CBOE Eq. put/call …71…………..64………… 91…..........46-1/03

VIX ………. 23.4…………20.7………44 9/02........10.0-7/05

ISEE-call/put ……. 135…………..133
All Equities (ETF)
McClel Osc…………63……………..69………..91-5/04.........(81)-5/04
McClelSum………-569………………-747…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 41.7………….40.6………..62.9-12/04......35-6/06
Bear:………… 37.4………….37.4………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ………40.3/46.3……41.3/46.1…..n/a n/a
MarketVane Bulls…. 53…………….54…………. ………74..............24
UBS investor confidence..73………..87
IBD: Short Interest- …6.42…………….6.25………8.25………. 4.0
Public/NYSE Spec.-…..10.3…………18.25nh……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ……27.2/36.3………..43.3/33.3
Bullish%- ………...49……………49……….…88 -2/04...... 46-8/04
*Insider corporate sellers.10.2:1……...6:1
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

Subscribe in a reader

TRY TO REMEMBER...: