Monday, May 23, 2016


For weeks now the  only topics in the media - print, online, and video - have been Politics and Viagra commercials (Elections and Erections). Finally they have shifted to what the Fed is going to do about interest rates come June, including interviews with the neighborhood gardener and other experts.
Funnily enough, according to technical analysis studies, markets actually like the first couple of rate hikes, before hitting its average, then pendulum-swinging too far. That is, if the economy warrants it - as it did NOT in December, when January made them pay.

I'm not much of a bond guy - especially now with Zero rates - but a very insightful column by Ben Levisohn in Barron's Streetwise piece, talks of the January Crashette with conditions similar now if a June hike is imminent (odds are increasing). Ben posits that when the 10-year Treas yield rises (bond prices fall) it is good for the stock market, so I'll be adding the 10-year to my 2-year Inflation indicator, which is registering nothing these days. Another bond column signals that if the 10-year minus the 2-year yield gets down to zero (flat) it almost always signals a Recession and/or Bear market.
Unfortunately, my switch to the UVXY hedge is not working out as planned, although better than the TVIX hedge, since I am milking a huge covered call premium on it. It has de-correlated from the VIX, due to Beta-slippage and futures rollovers. Still, a crash before Sept. would be profitable. After all, Put options have more decay as hedges.
Most Sentiment Indicators are benign, with breadth and A/D in stocks weakening. Here are the numbers:

Date>   5/20/2016 5/13/2016
Indices: DJIA  17500 17535
  NAZ  4769 4717
SPX  2052 2046
WklyVolume (Bshs). naz/ny…. 9.3/4.6 8.8/4.6
Specul.Ratio hi=bullish 2.02 1.91
Sentiment: put/call-CBOE  75 84
VIX>50-alltmlow=8.8 15.2 15
DeltaMSI-50% MAC crossover 63% 70%
Advance/Dec-NYSE.. 1515/1653 1361/1793
Weekly Net: -138 -432
     Cumulative: 165383 165521
Weekly  NYSE hi/low… 277/76 445/80
New Hi's/Low's Nasdaq h/l 115/212 137/201
McClellan  Oscillator -31 -46
McClellanSum .+750/-1000 723 922.0
Newsletter Inv.Intel -Bull 40.2 39.2
Surveys-Tues Bear:-5yrs 21.7 21.6
Wed. AAII  -Bull  19.3 20.4
Bear  34.1 31.3
US$-WSJ 95.3 94.6
3-box rev Bullish%-  67 70
US equity -ICI Fund Flows WeekLate (7.4B)
MMF flows Change in $B 4.3B 5.7B
MargDebt- top (300M) monthly  MARCH
10-yr Tsy yield hi= stock buying 1.84%
2-yr Tsy Yield: Inflation 0.88% 0.75%
TIP (ETF) Inflation 114.1 115.2

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