Monday, March 8, 2010


In this week's Barron's the Other Voices column is a startling article about HFT, or High Frequency Trading, which now comprises 73% of the equities markets - how can one be a Contrarian to computers that scalp split-second anomalies by algorithms, presenting such a danger to investors, as in 2007, when they jointly pulled the liquidity, unlike Specialists that make "orderly markets"?

I used to liken investing to playing poker in the World Series of Poker - now I revise that to playing chess against a computer that has no emotion!

It is for this reason that, with my book coming out last Friday on, I had originally written it as an alternative to MMFs, CDs, T-Bills - I now think it is also the best way to invest in stocks. Titled Zero (In)Tolerance, it sells for just under $15, and describes the strategy, with actual results, of how to obtain high returns without the appreciation (HOPE) and much of the risk (FEAR), by buying dividend stocks and selling call options 10% under the buy price, ensuring a safety net against most corrections - as in May of '09 and this past January. Please see more at :

Last week's sentiment and breadth indicators, for what they're worth, show huge MMF redemptions, and a rare (albeit slight) inflow into domestic equities. This month's TSAA meeting in San Francisco is with Charles Biderman of TrimTabs - the guru on fund flows; it should be quite revealing. TA scored a coup in this week's Barron's Market Watch, with both Martin Pring and Tom McClellan writing advisory letters.

Tom's Oscillator went to a cautionary +75 last week, and the Adv/Dec was over 2700-400, with New His/Los at 743 to 6 . Also showing a warning are the Bullish %, a record AAII neutral reading, and the Nova/Ursa fund ratio.

Here are the stats:

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
S&P 500:113811041561683
CBOE Eq. put/call: 597096-10/0846-1/03
McClellan Osc:75316108-100
McClellan Sum:8045061568-1514
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AAII Bull:
AAII Bear:
Nova/Ursa Mutual Funds:0.60.552.20.56
US Equity-1 week lagn/a151M

Money Market Flows-1.6B-37.7B

ETF equity:Monthly TotalsJan.731BDec.777B

Baltic Dry Index:3242270711700663
Bullish %:
Insider Corporate Sellers:18:132:1108:12.4:1

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: 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 Zero (IN)Tolerance

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