SENTIMENT RULES ! TW3: STOCKS,OIL,$

The secret to using Sentiment or Contrary Opinion to track the market is to allow that the public is usually right all the way up or down to the extremes. In the case of TW3 - That Was The Week That Was - the perfect storm of various indicators, both sentiment and breadth, was conclusive in its change of direction call. How far it extends depends, of course, on the balance of supply vs. demand - one way is to watch the IBD (Investor's Business Daily) signal of a followup day, 4 or so days later to confirm a material rally. And, of course, the amount of Volume on both up and down days.
Last week's indicators backed off for the most part from the sometime record extremes. The Bullish per cent went on a Buy signal of a 3 Pt.& Figure boxes (6%) rally. Although naked shorts is the topic du jour, total record shorting has to be a consideration, even though it is mostly used by institutions for hedging. 150 of the most heavily shorted stocks in the S&P1500 rose 15% while the least shorted rose only 2%.
A large part of potential supply includes the $3.5T that has gone into Money Market Funds, which not only yield 1/2 of the Inflation rate, they are not even insured by FDIC. And the New Low/ New High ratio last week was cathartic at 46 vs 1361.

Here are last week's stats:

MktSentiment. 7/18/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11496……….11100………..14093............7286
Nasdaq………. 2282…………2239…………2810.............1114
S&P500…….. 1260…………1239………….1561………..776
CBOE Eq. put/call …79……………85……………..92-1/08….....46-1/03

VIX ………. 24.0………….27.5…….…….44.. 9/02 bu..10.0-7/05 br

McClellan Osc……….15………….-44……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-1187……..-1060…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…27.8……….….27.6……….…12/04br......35-6/06bu
Bear:………… 48.9……..…..47.3…..………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……25.0/58.1……...22.2/55.2……..n/a n/a
IBD: Short Interest- 13.4………….14.1…………15.0………. 4.0
Public/NYSE Spec.-…18.45……….18.4…….….21bl…………..1.0br
Bullish%- ………….34buy……..27…….…88 -2/04br.....19bu
*Insider corporate sellers.8:1………4:1………..97…………..4
Sectors: Most Buyers: Finance, Tech
Most Sellers: Healthcare, Tech

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

SENTIMENT RULES ! TW3: STOCKS,OIL,$