Monday, July 27, 2015


T.S. Elliot said April was the cruelest month  (even before Income Tax); but for stocks the cruelest months are August through October. Going back to the 1929 Crash, Oct. was #1, August (upcoming soon) was #2, per Barron's this week.

Short term traers may want to exit for a vaca; longer term may want to hedge! Many stocks are looking pug ugly, from a chart point of view - AKA falling knife. Especially gold, oil, etc.

Last week I attended a meetup with the savviest option guru on the planet - Larry McMillan- who spent the whole time explaining the VIX, or Volatility Index. This is  a great way to hedge various asset classes - even gold. I'm using the nearby VXX ETF calls.

If there is any doubt that our Fed is still behind the "Invisible Hand" supporting markets, despite the exit of QEs, So far this year the DJIA has crossed the 2014 closing price (17,823) a total of  21 times - the most since 1900. Either that or the investment community has gone bipolar!

However, if there is any doubt that we are in a problematic time - thisis the fifth day in a row for the markets to be down, the fifth of six down weeks for major markets; and the McClellan Oscillator, which gave a BUY signal at minus 43 (-50 is usually a short term up signal). Its cumulative index, the Summation, is below zero, as is the Dow 30 for the year.

Other Sentiment standouts are: Sector Insider selling made a huge reversal last week from its large selling (180 to 1) to only 16 sellers; the Advancing stocks vs. declining (breadth) was also large on the declining side.

Finally, the public is moving its $$ from equity (stock) mutual funds into MMFs (money markets. For a list of my Sentiment Indicators, please see: - you can sign up for free (with no commercials).  

Date> 7/24/2016 7/17/2015
Indices: DJIA  17568 18086
  NAZ  5088 5210
SPX  2079 2126
WklyVolume (Bshs). naz/ny…. 9.5/4.1 8.6/3.8
Specul.Ratio hi=bullish 2.32 2.26
Sentiment: put/call-CBOE  69 62
VIX>50-alltmlow=8.8 13.7 12
Advance/Dec-NYSE.. 645/2610 1896/1347
Weekly Net: -1965 549
     Cumulative: 162255 164220
Weekly  NYSE hi/low… 245/626 266/281
New Hi's/Low's Nasdaq h/l 287/403 355/199
McClellan  Oscillator -43 28
McClellanSum .+750/-1000 -282 -211
Newsletter Inv.Intel -Bull 49 43.7
Surveys-Tues Bear:-5yrs 15.6 15.6
Wed. AAII  -Bull  32.5 30.8
Bear  25.6 23.2
COT:SPX w/w large/small (net)k 9k/(16k) 11k/(23k)
COT:gold  comm.hedg long-short.000 (21k) (48k)
COT:OIL comm.hedg long-short. (257k) (257k)
US$-WSJ 88.5 88.6
CEOinsider selling .16:1 .*180:1
off.&bd b/s.vs. 10% holder b/s discont. discont.
3-box rev Bullish%-  53 56
US equity -ICI Fund Flows week delay (11.5B)
MMF flows Change in $B 16.2B (1.4B)
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.69% 0.67%
TIP (ETF) Inflation 112.1 112.02

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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