Monday, May 24, 2010


If there is such a thing as the Plunge Protection Team, which I fully believe has been on the job for half a century or so, they were conspicuously absent the past few weeks. Either they were on vacation or just did not like what the Congress was doing to their playground - but they pulled their Bids like a High Frequency Trader computer.

I was rather dubious when, in mid-January at the TSAA monthly meeting, Martin Pring bravely forecasted an upmove for the markets short term, but by mid-summer the DJIA would be about 14% BELOW the January 1 level of 10,428 - or around the 9,000 level.

Other technicians have also supported this view, such as Arch Crawford, Tom McClellan, Bill Gibson, John Roque, Volume Reversal's Mark Liebovit, and Peter Eliades -all with varying but similar scenarios.

Meanwhile all the Fundamental Analysts and Economists are calling for a minimum of 10% higher by the end of 2010 - which could very well happen.
Meanwhile, I remain defensive, relying on my DITM strategy (for more please see, which has consistently returned the 100-year market average of around 10% with a safety net.

My view is based on the nesting of cycles, from the 18-year double cycle, the 10-year zero year, the very reliable 4-year Presidential cycle, the semi-annual "Sell in May" cycle - plus other technical signals such as the failed Santa Claus rally and the January Barometer.

Last week's extemes included the CBOE put/call ratio - jumping 20 points to 81, and the VIX jumping up 10. The McClellan Oscillator is oversold at minus 91, while breadth, based on Advance/Declines on the NYSE and Nasdaq were at least 1 to 10.

Here is the complete list:

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
S&P 500:108711351561683
CBOE Eq. put/call: 816296-10/0846-1/03
McClellan Osc:-91-44108-123
McClellan Sum:535421568-1514
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AAII Bull:
AAII Bear:
Nova/Ursa Mutual Funds:0.981.192.20.56
US Equity-1 week lagn/a-8.6B  
Money Market Flows-33B24B

ETF equity:Monthly TotalsMar.805BFeb.750B

Baltic Dry Index:3608360811700663
Bullish %:
Insider Corporate Sellers:22:115:1108:12.4:1

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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