Monday, May 30, 2016


The prominent story these days in the media, other than the Hilary/Trump saga, is whether the Fed will again raise rates soon - June or July. Normally rate hikes are beneficial for stocks, providing the economy is strong - which it is NOT these days. In fact, per Barron's, rate hikes with low GDP during the years 1976, 1986, and Dec. 2015 led to double-digit declines (1983 did not). There is also the Brexit vote on the 23rd to consider. As for S&P earnings, it is rare that they decline, year over year, as they did in 2015, and even moreso 2 years in a row, which appears likely.

In another small sampling, whenever the Yield Curve flattens, i.e., the 2-year Treas yield is equal to the 10-year (due to rate hikes), we have Recessions and Bear markets, going back to 1980 (1991, 2001, and 2008). But nice rallies can precede these.

So marks the Sentiment Indicators these days. The AAII Bull/Bear survey hit a recent low (2005) of Bulls - see below-, with a decade high of Neutrals (2003) - Bullish FOR the markets. Last week saw strong Breadth, if not Volume, with the Holiday this week. $$ are still going into MMFs and out of Equity MUFs, and IPOs are slowing recent months.
Here are the numbers:
Date>   5/27/2016 5/20/2016
Indices: DJIA  17873 17500
  NAZ  4933 4769
SPX  2099 2052
WklyVolume (Bshs). naz/ny…. 8.6/4.2 9.3/4.6
Specul.Ratio hi=bullish 2.05 2.02
Sentiment: put/call-CBOE  59 75
VIX>50-alltmlow=8.8 13.1 15.2
DeltaMSI-50% MAC crossover 64% 63%
Advance/Dec-NYSE.. 2482/695 1515/1653
Weekly Net: 1787 -138
     Cumulative: 167170 165383
Weekly  NYSE hi/low… 241/50 277/76
New Hi's/Low's Nasdaq h/l 190/106 115/212
McClellan  Oscillator 21 -31
McClellanSum .+750/-1000 731 723
Newsletter Inv.Intel -Bull 35.4 40.2
Surveys-Tues Bear:-5yrs 24 21.7
Wed. AAII  -Bull  17.8 19.3
Bear  29.4 34.1
US$-WSJ 95.7 95.3
3-box rev Bullish%-  69 67
US equity -ICI Fund Flows WeekLate (2.7B)
MMF flows Change in $B 14.2B 4.3B
MargDebt- top (300M) monthly  March 446B
10-yr Tsy yield hi= stock buying 1.85% 1.84%
2-yr Tsy Yield: Inflation 0.92% 0.88%
TIP (ETF) Inflation 114.3 114.1

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