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Monday, June 27, 2011

JUNE SWOON:

Is the June Swoon over, or we just entering the JASON bad cycle where Fall means just that? Having reached Support from a Wyckoffian selloff to the 200MA and Jan. previous levels, can we achieve the conventional wisdom of a higher SPX by year-end?
The CBOE put/call ratio is still high, coming off a very high number, but the VIX doesn't echo fear. Inverted Bull/Bear sentiment has again righted itself, after calling a minor bottom. Money is flowing out of equity funds, but also out of MMFs.

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
DJIA:1193412004140936626
Nasdaq:2652261628611114
S&P 500:126812711561683
CBOE Eq. put/call: 619396-10/0846-1/03
VIX:21.121.9908.8
McClellan Osc:(9)(31)108(123)
McClellan Sum:(11)(41)1568(1514)
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InvestorsIntel.Bull:
37.637.06322.21
InvestorsIntel.Bear:
282654.416
AAII Bull:
37.529n/an/a
AAII Bear:
35.742.8n/an/a
US Equity-1 week lagn/a(5.5B)
  
Money Market Flows(8.1B)(34.4B)

Baltic Dry Index:1409142311700663
Bullish %:
6060892
Insider Corporate Sellers:18:162:1235:12.4:1

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, June 20, 2011

BOTTOMS UP?:

Several Indicators are intimating to me that we may have reached a temporary shelf off the S&P 1260 200MA (11,800 on the DJIA). With a choppy week like a puppy shaking a rag doll every day, the McClellan Summation fell through the zero line for the first time in years; the Oscillator hit -63 the week before and is still negative; what also stood out is the CBOE Equity put/call ratio at 93! Bearish ON the market but Bullish FOR it. The AAII Bull/Bear ratio is still inverted, although the Inv.Intell. is not - thanks to a reader I have found a website that carries the I.I.

Finally, big money is coming out of both MMFs and Equity funds on a weekly basis. And although the legal Insider Selling is well of the record of 235:1 recently, it is high at 62:1. For some unknown reason the Technology selling of key officers is HUGE - over $700M for the second week in a row - I know college is expensive, but... Shortly behind is Consumer Services, over $400M. For years, total sales of all the 10 sectors rarely exceeded $700M.
 
EVERYONE is forecasting an UP yearend, even the good projectors - due to corporate earnings and values; still we are in the JASON semi-annual cycle (June,August,Sept.,Oct.,Nov.). In my mind, the DITM (deep-in-the-money) strategy that I have been successfully testing for over 2 years, is the optimal strategy for this time of the investment cycle:  a Wyckoff selloff, entering a Trading Range where stock prices are lower, dividend %s are higher, and option Volatility is also raised with the selloff - see www.ditmcalls.blogspot.com for recent and historic trading results.


MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
DJIA:1200411951140936626
Nasdaq:2616264328611114
S&P 500:127112701561683
CBOE Eq. put/call: 938696-10/0846-1/03
VIX:21.918.9908.8
McClellan Osc:(31)(68)108(123)
McClellan Sum:(41)1811568(1514)
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InvestorsIntel.Bull:
3740.96322.21
InvestorsIntel.Bear:
2622.654.416
AAII Bull:
29.024.4n/an/a
AAII Bear:
42.847.7n/an/a
US Equity-1 week lagn/a(5.5B)
Money Market Flows(34.4B)15.9B

Baltic Dry Index:1423141811700663
Bullish %:
6064892
Insider Corporate Sellers:62:148:1235:12.4:1

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, June 13, 2011

THE MARKET- OUT OF INTENSIVE CARE;

but still in the hospital! Hopeful signs of recovery are being shown in some of the Sentiment Indicators: my newest indcator - NASD Volume (speculation) divided by NYSE Volume is down from the 2 handle; CBOE Equity put/calls have leaped from 57 2 weeks before to 86 last week; the McClellan Oscillator is below my oversold benchmark of -50 at -68. Also, the AAII Bull/Bear ratio is fearfully nervous at 24 to 47!

Another new indicator I've been following is COT, or commitment of traders - specifically large speculators vs. small. Large ones (the smart money) hit a high shorting number not seen since the March rally this spring.

Finally, although the (legal) Insider Selling is quite high but not record, what stands out is the Tech Sector selling - HUGE.

As many of you know, I've been successfully testing a deep-in-the-money covered call /defensive investing strategy for over two years, achieving at least historic market returns (10-12 %); at last, in the past two weeks 2 conservative institutions have validated my plan - Schwab's top option guru - in an investment letter; and Nuveen,,with 3 closed-end funds. For more on the strategy, please see brentleonard.com.

Here are the Sentiment numbers:

MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
DJIA:1195112151140936626
Nasdaq:2643273228611114
S&P 500:127013001561683
CBOE Eq. put/call: 866996-10/0846-1/03
VIX:18.918.0908.8
McClellan Osc:(68)(29)108(123)
McClellan Sum:1814581568(1514)
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InvestorsIntel.Bull:
n/an/a6322.21
InvestorsIntel.Bear:
n/an/a54.416
AAII Bull:
24.430.2n/an/a
AAII Bear:
47.733.4n/an/a
US Equity-1 week lagn/a(1.0B)
Money Market Flows15.9B(21.9B)

Baltic Dry Index:1418148911700663
Bullish %:
6472892
Insider Corporate Sellers:48:144:1235:12.4:1

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, June 6, 2011

VALIDATION -(SORT OF):

As the reader might be aware of, for the past 2 years I have been almost fully invested and testing a defensive investment strategy I call DITM (deep-in-the-money) covered call, offering double-digit annualized returns, almost no losing positions, and a lot less frustration than the HFT-driven stock market.

Last week I received my monthly Schwab Research letter in which their top guru - Randy Frederick espoused my exact strategy, almost word for word: A or B rated stocks, 3% dividend sold in a Buy/Write about a week before ex-Dividend date, 5-6 months out to "capture" both the option premium and dividend (s).

That said, the current market environment is ideal for that strategy: stock prices are getting cheaper, making the dividend % higher, and call volatility (price) that is sold in a buy/write also higher.

I have a sister blog: http://ditmcalls.blogspot.com, with an extensive track record of actual trades ("older posts), and current trades.

And now to Sentiment: Very little has changed in the Indicators, although slight increases occurred in the McClellan Oscillator (down to -29); margin debt is exceptionally high, at $321B (the high of $381B was in July of '07). Insider selling doubled to 44:1 over buying.

Nothing seems to indicate falling off a cliff - 2-year Tsy yield, VIX, inverted AAII Bull/Bear ratio.



MktSentiment Last WeekPrev. Week 5 Yr HI 5 Yr LOW
DJIA:1215112441140936626
Nasdaq:2732279628611114
S&P 500:130013311561683
CBOE Eq. put/call: 695896-10/0846-1/03
VIX:18.016.0908.8
McClellan Osc:(29)16108(123)
McClellan Sum:4584581568(1514)
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InvestorsIntel.Bull:
n/an/a6322.21
InvestorsIntel.Bear:
n/an/a54.416
AAII Bull:
30.225.6n/an/a
AAII Bear:
33.441.4n/an/a
US Equity-1 week lagn/a(2.4B)
  
Money Market Flows(21.9B)24B

Baltic Dry Index:1489146711700663
Bullish %:
7274892
Insider Corporate Sellers:44:123:1235:12.4:1

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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