Monday, October 11, 2010


The Post-Depression Song title also serves as the slogan for my favorite Investing Strategy for the Post-Recession era: the Deep-In-The Money covered call strategy that has been extensively tested over a year and a half to not only approach double-digit returns, but more importantly, is a defensive hedge against all but a severe Bear Market.

This coming Wednesday, Oct.13, I shall be giving a talk to the Silicon Valley Option Group at the Embassy Suites (near Great American Parkway) in San Jose, for those who are interested in learning more about it.

In an earlier blog I opined that too much media hype might reverse the Sept. jinx, although the reliable 4-year Kinchin/Presidential cycle bottom in October is still a possibility, before entering the positive year-end time of year. Providing further impetus is the large number of underperforming mutual funds and hedgehogs that need to catch up by year-end.

Volume remains week, as does the VIX, now just above 20; breadth remains very strong - breaking my cumulative A/D total every week. This allows put buyers to hedge more cheaply, as the put/call ratio is now high at 61. Both the Bullish% and newsletter surveys are showing complacency.

Here are last weeks numbers:

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
S&P 500:116511461561683
CBOE Eq. put/call: 615796-10/0846-1/03
McClellan Osc:2121108(123)
McClellan Sum:866n/a1568(1514)
           Newsletter Surveys

AAII Bull:
AAII Bear:
US Equity-1 week lagn/a(4.1B)
Money Market Flows(.5B)n/a

Baltic Dry Index:2696n/a11700663
Bullish %:
Insider Corporate Sellers:21:1n/a108:12.4:1

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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