Sunday, July 15, 2012


In a recent Bloomberg interview, Canaccord Financial's Tony Dwyer exhibited a chart from Ned Davis Research on market performance in Election years since 1900 ( 28 years meets the typical analysts' sample size of @ 30). The interview can be accessed on Bloomberg's website - search Tony Dwyer . A blow by blow report is also on my column from last week:

According to the model (not available here) the market is expected to rally into October 1 - the strength of the rally dependent on whether the incumbent is expected to be re-elected or not - after that there is a dramatic divergence: if the incumbent is successful, the rally continues into year end with a huge surge; if not, it dramatically sells off into the November 6 election, then enters a trading range.

Despite triskadekaphobia, the market reversed a terrible week, but breadth continued to make new records in my cumulative Advance/Decline stat; Investor Intelligence Bull/Bears ratio widened to even more Bullishness.
On the positive side, the CBOE put/call ratio went back to a high 72; MMFs reversed money flows with an $18B Inflow; and CEO Insider selling remained high (very few buyers). If anyone is skeptical of the importance of the Inv.Intell. and AAII Bull/Bear signal, one can only check the past years extremes:
Most Bulls - 2/10/12
Most Bears - 4/25/12
Least Bears - 9/30/11
Least Bulls 5/30/12
All resulted in proper turning points to some extent.

Here are the numbers:

7/13/2012 7/6/2012
Indices: DJIA  12777 12772
NAZ  2908 2937

SPX  1356 1354
NASD/NYSE WklyVolume (Bshs). 7.7/3.6 5.7/2.5
nasd/nyse Specul.Ratio hi=bullish 2.14 2.28
Sentiment: put/call-CBOE  72 69
Barron's VIX>50-alltmlow=8.8 16.7 17.1

Advance/Dec-NYSE.. 1619/1541 2030/1126

Weekly Net: 78 904

     Cumulative: 137010 136932
Weekly  NYSE hi/low 485/93 513/22
New Hi's/Low's Nasdaq h/l 235/140 297/71
McClellan  Oscillator 21 47
McClellan Sum .+750/-1000 579 519
Newsletter Inv.Intel -Bull:tues 44.7 42.5
Surveys Bear:-5yrs 24.5 24.5

AAII  -Bull :wed. 30.2 32.6

Bear  34.7 33.3
COT:Change w/w large/small (net)k 0/(11) (2)/(10)
CEOinsider selling 32:1 34:1
BalticDryIndex GlobalEcon
3-box rev Bullish%-  57 60
US equity -ICI Fund Flows 1 wk lag ($3.1)
MMF flows Change in $B 18.6B 3.3B
MargDebt- top (300M) monthly 
ETF:Eqty/Int'l/Bond  million$$ .
2-yr Tsy Yield: Inflation 0.25% 0.28%

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