Monday, July 7, 2014


Market breadth is usually measured by Advancing stocks versus Declining ones, or New Highs versus New Lows. In this incessant Bull market rally, higher advances have been the norm, as have the New Highs, especially in the NYSE. Such an upward right  translation is thought of as a strong market, with the majority of investors on the Buy side. At some  point that will change - suddenly and drastically. As Harry Domash cited at one Money Show talk I attended: The Trend is your Friend, until it Bends at the End!

Usually a 10 to 1 ratio of the above indicators is something to be monitored, being a bit unusual; last week, however, the NYSE New Hi/Lo total reached a 20:1 ratio - something I've never seen before. Thanks greatly to the Fed's zero interest rate policy (ZIRP), this market keeps getting stronger. Barron's columnist Randall Forsyth opines that many corporations, such as Monsanto, are using low cost debt to buyback their own stock which could perpetuate the move.

How long this will last is unpredictable, but the last 3 Augusts have seen declines of at least 3%, also reports Barron's. Last week, all three major indices set new highs - the DJIA, SPX, and Nasdaq. Market action around holidays is usually positive, especially if around the first of the month. The VIX - volatility indicator- also hit a recent low, signifying complacency.

Finally, as seen below, for what it's worth in indicating Inflation, the 2-year Treasury yield it a recent high of .51%; the 10-year yield in France, however, is at a 300- year low, with Germany and Japan close behind.

Here are the numbers from the holiday-shortened week: 

Date> 7/3/14*hol 6/27/2014
Indices: DJIA  17068 16851
  NAZ  4485 4397
SPX  1985 1960
WklyVolume (Bshs). naz/ny 6.3/2.6 9.5/3.9
Specul.Ratio hi=bullish 2.42 2.44
Sentiment: put/call-CBOE  52 53
VIX>50-alltmlow=8.8 10.3 11.3
Advance/Dec-NYSE.. 1944/1276 1817/1414
Weekly Net: 668 403
     Cumulative: 164731 164063
Weekly  NYSE hi/low 599/30 556/66
New Hi's/Low's Nasdaq h/l 307/51 224/98
McClellan  Oscillator 5 13
McClellanSum .+750/-1000 1053 1000
Newsletter Inv.Intel -Bull:tues 57.6 60.2
Surveys Bear:-5yrs 16.1 16.3
AAII  -Bull :wed. 38.5 37.2
Bear  22.4 21.1
COT:SPX w/w large/small (net)k n/a       .6/6
COT:gold  comm.hedg long-short.000 n/a (131k)
CEOinsider selling 20:1 52:1
off.&bd b/s.vs. 10% holder b/s 175:25 175:20
3-box rev Bullish%-  84 83
US equity -ICI Fund Flows WeekDelay (2.6B)
MMF flows Change in $B 13.1B 5B
MargDebt- top (300M) monthly  428B
ETF:mthlyEqty/ Int'l/Bond-$B 1069/428/276
2-yr Tsy Yield: Inflation 0.51% 0.46%

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