January FX

Named after JANUS, the two-faced God, January is fraught with Volatility - mostly to the downside. The January effect, usually a rebound from the Xmas rally and year end position squaring, is said to predict the rest of the year. I hope not (so far). Making lows for the third week after the 18,000 record @ Xmas, the DJIA does not bode well for January. Low energy may be helpful for Joe Sixpack, but for the S&P companies, 1/3 of CapEx comes from it. I'll be watching the January model annually from 1928 as the year progresses. A negative January declines for 6 months, only to rebound a bit into year end.

Dr. Copper, supposedly the Economic indicator, hit a five- year low, and retail sales are down for December. With the U S being the best house in a bad block, our dollar should only get stronger as global rates get lower. Money should continue to flood into our markets for safety and yield.

Looking at the table below, Volume has again resumed its normal range, but breadth is beginning to weaken (Advance/Declines, New Highs/Lows); newsletter surveys (taken midweek) are benign, as is Insider Selling by sector and Officers/Board members, for this time of year. EXCEPT for Gold - which was huge last week, just as gold was rising - could short-covering be far behind?
Finally, managed mutual funds saw $$ losses for the 9th year in a row, as people move to Index funds to avoid high fees and poor performance ( 80% underperforming the Indices!).

Just as with Barron's (my weekly read) which is losing a couple good columnists, I am severing relations with Examiner.com after two years, and will concentrate factoids in this column, as well as the DITM blog. http://ditmcalls.blogspot.com. With the VIX now almost doubling year over year to the 20s, the volatility of call options are great for both the DITM strategy as well as Leap Strangles, as these calls now have more juice in them to sell, bringing in more $$ as well as providing more safety - which is a plus these days.

Here are last week's numbers:

Date>		1/9/2015	1/2/2015
Indices:	DJIA	17737	17833
	NAZ	4704	4726
	SPX	2044	2058
WklyVolume (Bshs).	naz/ny….	9.6/4.1	5.4/2.4
Specul.Ratio hi=bullish		2.34	2.25
Sentiment:	put/call-CBOE	65	66
VIX>50-alltmlow=8.8		17.5	17.8
Advance/Dec-NYSE..		1512/1748	1355/1893
Weekly Net:		-236	-538
Cumulative:		164418	164654
Weekly	NYSE hi/low…	413/202	413/86
New Hi's/Low's	Nasdaq h/l	196/159	287/116
McClellan	Oscillator	0	6
McClellanSum	.+750/-1000	323	376
Newsletter	Inv.Intel -Bull:tues	50.5	56.4
Surveys	Bear:-5yrs	15.2	14.9
	AAII  -Bull :wed.	41	51.7
	Bear	27.7	19.3
COT:SPX w/w	large/small (net)k	(1k)/25k	7K/21K
COT:gold  comm.hedg	long-short.000	(123k)	(105K)
CEOinsider	selling	.73:1	.17:1
off.&bd b/s.vs.	10% holder b/s	.160:30	160:20
3-box rev	Bullish%-	70	68
US equity -ICI	Fund Flows	WeekDelay	(.4B)
MMF flows	Change in $B	(18.6B)	19.4B
MargDebt- top (300M)	monthly	NOV	457B
ETF:mthlyEqty/	Int'l/Bond-$B	NOV	1221/434/296
2-yr Tsy Yield: Inflation		0.56%	0.68%
TIP (ETF)	Inflation	113.08	112.73

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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January FX