Monday, January 19, 2015

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 after two years, and will concentrate factoids in this column, as well as the DITM blog. 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: 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 Zero (IN)Tolerance

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