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Monday, May 31, 2010

MAY: GO AWAY AND STAY AWAY ! :

After the worst May since 1962 (almost 50 years) a little sunlight shone through the clouds.

Although the QQQs Insider selling was 231 to 3 buyers, total CEO Insider selling was only 2:1 from 22:1 the previous week. The Advance / Declines got back to being positive, although New Highs to Lows remained negative.
The McClellan Summation Index (cumulative of the Oscillator readings) went below the zero line for the first time since March 9, 2009, a day that will go ........; and the AAII Bears broke up through the 50 level for its first time since last November (before that July and March '09).

For what it's worth, the Baltic Dry Index went to a recent high of 4078 - a proxy for the global economy, despite Europe's woes; and the Bullish per cent went on a BUY signal (up 3 boxes on the Pt.& Fig. chart) to 48, but not exactly off extreme oversold levels.

Here are the numbers:

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
DJIA:1013610193140936626
Nasdaq:2257222928051114
S&P 500:1089710871561683
CBOE Eq. put/call: 598196-10/0846-1/03
VIX:32.140.1908.8
McClellan Osc:-14-91108-123
McClellan Sum:-230531568-1514
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InvestorsIntel.Bull:
39.343.86322.21
InvestorsIntel.Bear:
29.224.754.416
AAII Bull:
29.841.3n/an/a
AAII Bear:
50.933.7n/an/a
Nova/Ursa Mutual Funds:1.030.982.20.56
US Equity-1 week lagn/a-4.8B  
Money Market Flows5B-33B

ETF equity:Monthly TotalsApr.831BMar.805B

Baltic Dry Index:4078360811700663
Bullish %:
4845882
Insider Corporate Sellers:2:122:1108:12.4:1

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: 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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Monday, May 24, 2010

WHERE'S THE PPT?:

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 www.brentleonard.com), 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
DJIA:1019310620140936626
Nasdaq:2229234628051114
S&P 500:108711351561683
CBOE Eq. put/call: 816296-10/0846-1/03
VIX:40.131.2908.8
McClellan Osc:-91-44108-123
McClellan Sum:535421568-1514
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InvestorsIntel.Bull:
43.847.26322.21
InvestorsIntel.Bear:
24.724.754.416
AAII Bull:
41.336.6n/an/a
AAII Bear:
33.736.6n/an/a
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 %:
4563882
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: 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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Monday, May 17, 2010

SATURATED WITH OIL AND GREECE ! :

Sentiment Indicators have been trumped by overwhelming coverage of problems in the Gulf and Europe - you might say the market is "rigged". Especially after 60 Minutes' hatchet job on BP et.al. last night. International exposure to Europe and oil stocks have launched the overdue correction with no end in sight. And with option exasperation this week we could expect more reversals of positions.

Although breadth last week remained strong - boding well for a minor correction- we still continue down today. For the first time since early January funds flowed IN to Money Markets, not out; and out of US equity funds for the first time in a month. The Bullish per cent remains rightfully on a Sell signal while the McClellan Oscillator is now oversold.

Here are the statistics:

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
DJIA:1062010380140936626
Nasdaq:2346226528051114
S&P 500:113511101561683
CBOE Eq. put/call: 626996-10/0846-1/03
VIX:31.241.0908.8
McClellan Osc:-44-123108-123
McClellan Sum:5427681568-1514
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InvestorsIntel.Bull:
47.256.06322.21
InvestorsIntel.Bear:
24.718.754.416
AAII Bull:
36.639.1n/an/a
AAII Bear:
36.628.6n/an/a
Nova/Ursa Mutual Funds:1.191.022.20.56
US Equity-1 week lagn/a-2.2B
Money Market Flows24B-19B

ETF equity:Monthly TotalsMar.805BFeb.750B

Baltic Dry Index:3608360811700663
Bullish %:
6361882
Insider Corporate Sellers:15:152:1108:12.4:1

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: 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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Monday, May 10, 2010

BLACK SWAN DIVE:

Once again (going back to 1987) the Quants were surprised by the failure of their algorithms, causing yet another hiccup in an overbought condition. Coincidentally, I have been reading the excellent book - The Quants- by Scott Patterson, which in very readable narrative style describes the '08 meltdown, so similar to last week's.

As noted here last week, there were huge extremes in breadth and sentiment indicators, and, as in 1987, there were no backstops (such as Specialists and Market Makers) in the ECNs to make orderly markets by hitting the bids.

Since the newsletter surveys come out midweek, they did not factor in the excesses of Thursday, but end-of-week stats such as the McClellan Oscillator, at -123 and a CBOE put/call ratio of 69 posited that after the weekend there might be a rally, if one dared. Although new highs still bested new lows, the A/D for the week was a stunning 150 to 3078!

Finally, the Bullish per cent dropped over 20 points on the Pt.& Fig. charts, for a Sell signal - falling to 61.

Here are the numbers:

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
DJIA:1038011008140936626
Nasdaq:2265246128051114
S&P 500:111011861561683
CBOE Eq. put/call: 695296-10/0846-1/03
VIX:41.022.0908.8
McClellan Osc:-123-32108-123
McClellan Sum:76811331568-1514
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InvestorsIntel.Bull:
56.054.06322.21
InvestorsIntel.Bear:
18.718.054.416
AAII Bull:
39.141.4n/an/a
AAII Bear:
28.628.6n/an/a
Nova/Ursa Mutual Funds:1.021.192.20.56
US Equity-1 week lagn/a               .25B
Money Market Flows-19B-6B

ETF equity:Monthly TotalsMar.805BFeb.750B

Baltic Dry Index:3354300611700663
Bullish %:
618484882
Insider Corporate Sellers:52:1154:1?108:12.4:1

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: 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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Monday, May 3, 2010

PERFECT STORM?:

Almost every analyst is calling for at least a 10% upmove in stocks for the near future, based on fundamental, historical, and cyclical factors, including lack of alternatives with low rates. Sentiment continues to be at extremes, however, indicating hiccups or even burps in the short term.
To coin a phrase, "It is necessary to clean the house before throwing a party!". Warnings continue from last week, including another magazine cover - Barron's - with a Bear getting impaled by a locomotive. Advance/declines and the McClellan Oscillator suffered with another Friday fear selloff, although new highs abound. Insider Selling was record, although suspect due to several "n/a's" from 3 sectors. Without them it tripled the previous week to 154:1. Money is trickling out of MMFs and starting to trickle into domestic equity mutual funds.
Here are the numbers:

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
DJIA:1100811204140936626
Nasdaq:2461253028051114
S&P 500:118612171561683
CBOE Eq. put/call: 525196-10/0846-1/03
VIX:22.016.6908.8
McClellan Osc:-3220108-100
McClellan Sum:113312181568-1514
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InvestorsIntel.Bull:
54.053.36322.21
InvestorsIntel.Bear:
18.017.454.416
AAII Bull:
41.438.1n/an/a
AAII Bear:
28.634.3n/an/a
Nova/Ursa Mutual Funds:1.191.272.20.56
US Equity-1 week lagn/a               2.8B
Money Market Flows-6B-35B

ETF equity:Monthly TotalsMar.805BFeb.750B

Baltic Dry Index:3354300611700663
Bullish %:
8487882
Insider Corporate Sellers:154:1?52:1108:12.4:1

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: 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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