Answer: Only three things can happen - and only one of them good!
Stock markets (or individual stocks) can go Up, Down, or Sideways (UNCH); passes (even deflated ones) can be Caught, Incompleted, or Intercepted.
What a greeting from the stock market coming back from vacation! While helplessly on the road Friday, it gave the indication that it would resume today - did it ever. The rebound was impressive, whether it was from the Fed (as China is wont to do), short covering, or -from Barron's- increased stock But Backs. 60% of the S&P 500 stocks used them this year, versus 30% in 2011.
In his newsletter, master Technician John Murphy said the October 2014 lows had to hold to avoid a rout - today the SPX and Nasdaq did hold, the DJIA (30) did not. It has been nearly 4 years since we've had a meaningful correction in stocks, so this could be a blessing in disguise, however painful. Technically, in a Presidential (4 year) cycle, the pre-election year (2015) is by far the best performer - up 16% on average - we now have a ways to go to get there.
Traditionally, JASON (July thru November) is the worst half of the year, with August, Sept., and Oct. the three worst - Nov. and Dec. are usually the best, along with January. Veteran analyst Laszlo Birinyi has called for 3200 on the SPX (500) within a couple years - that's a leap!!!
Sentiment - wise, the VIX leapt up to a rare 28 last week, and Advancing/Declining stocks (breadth) was dismal, as were the new highs to lows. One of my fave short term indicators - the McClellan Oscillator shot down through the -50 line: to -71, usually a BUY signal; better late than never. Money has been flowing into MMFs (money markets) for over a month now, and last week's Volume was huge, considering the heavy hitters were supposed to be on vaca (I guess the HFT computers were not).
STAY TUNED
| Date> | 8/21/2015 | 8/14/2015 | |
| Indices: | DJIA | 16459 | |
| NAZ | 4706 | ||
| SPX | 1970 | ||
| WklyVolume (Bshs). | naz/ny…. | 9.6/4.5 | 8.8/4.1 |
| Specul.Ratio hi=bullish | 2.13 | 2.15 | |
| Sentiment: | put/call-CBOE | 84 | 74 |
| VIX>50-alltmlow=8.8 | 28 | 12.8 | |
| Advance/Dec-NYSE.. | 384/2878 | 1890/1362 | |
| Weekly Net: | -2494 | 528 | |
| Cumulative: | 160295 | 162789 | |
| Weekly | NYSE hi/low… | 143/697 | 164/379 |
| New Hi's/Low's | Nasdaq h/l | 153/468 | 151/339 |
| McClellan | Oscillator | -71 | 20 |
| McClellanSum | .+750/-1000 | -392 | -370 |
| Newsletter | Inv.Intel -Bull | 37.7 | 40.2 |
| Surveys-Tues | Bear:-5yrs | 18.4 | 18.6 |
| Wed. | AAII -Bull | 26.8 | 30.5 |
| Bear | 33.3 | 36.2 | |
| COT:SPX w/w | large/small (net)k | 13k/(33k) | N/A |
| COT:gold comm.hedg | long-short.000 | (30k) | N/A |
| COT:OIL comm.hedg | long-short. | (214k) | N/A |
| US$-WSJ | 87.8 | N/A | |
| CEOinsider | selling | .15:1 | N/A |
| off.&bd b/s.vs. | 10% holder b/s | discont. | |
| 3-box rev | Bullish%- | 44 | 51 |
| US equity -ICI | Fund Flows | weekDelay | (2.3B) |
| MMF flows | Change in $B | 11.0B | 8.3B |
| MargDebt- top (300M) | monthly | 505B | JUNE: |
| ETF:mthlyEqty/ | Int'l/Bond-$B | 1250/514/314 | JUNE: |
| 2-yr Tsy Yield: Inflation | 0.62% | N/A | |
| TIP (ETF) | Inflation | 112.2 | v |
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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