Although I've always thought that the stock market should be a non-"prophet" organization, technicians know we can learn from history: Pre-election years, per Ned Davis Research, have averaged 17.6% over several decades (think 2011); while a distant second is Election year at +9.5%. The best months also lie ahead - November, December and January. NDR also cites years where capital gains are hiked only rise 6.1%, vs a normal 8% (19.5% when CG are cut). Best market gains also occur with a Democratic President and Republican Congress (9.6%).
That said, some alarming Sentiment statistics occurred this past week: the AAII Bears % was the lowest since December 15 of 2006 at 20.6%, although the major top did not occur until Oct.'07 -10 months later. Previous low was 19.1% in January '06 at 19.1%, only 4 months before a minor correction. And the Bulls breached the 50% mark as well.
Another startling fact was Insider (CEO) Selling, reaching an almost record high of 104:1 over Buying, up from 28:1 the week before. Then I realized that the record of 108:1 occurred in April '09, at the beginning of the 1,000 points of "light" in the stock market - who says corporate insiders know what their companies are doing?
Here are the numbers:
| MktSentiment | Last Week | Prev. Week | 5 Yr HI | 5 Yr LOW |
| DJIA: | 11118 | 11132 | 14093 | 6626 |
| Nasdaq: | 2507 | 2479 | 2805 | 1114 |
| S&P 500: | 1183 | 1183 | 1561 | 683 |
| CBOE Eq. put/call: | 61 | 67 | 96-10/08 | 46-1/03 |
| VIX: | 21.2 | 18.8 | 90 | 8.8 |
| McClellan Osc: | (14) | (1) | 108 | (123) |
| McClellan Sum: | 859 | 923 | 1568 | (1514) |
| Newsletter Surveys | ||||
InvestorsIntel.Bull: | 45.6 | 45.1 | 63 | 22.21 |
InvestorsIntel.Bear: | 24.4 | 22.0 | 54.4 | 16 |
AAII Bull: | 51.2 | 49.6 | n/a | n/a |
AAII Bear: | 21.6 | 25.2 | n/a | n/a |
| US Equity-1 week lag | n/a | (.2B) | ||
| Money Market Flows | (24.6B) | (17.0B) | ||
| Baltic Dry Index: | 2678 | 2720 | 11700 | 663 |
Bullish %: | 74 | 731 | 88 | 2 |
| Insider Corporate Sellers: | 104:1 | 28:1 | 108:1 | 2.4:1 |
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: 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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