Tuesday, September 5, 2017


In school, Recess was always looked forward to - but in Economics, Recessions are definitely anathema . As history is our guide, nearly every zero year in the decade has seen one- since 1900 there has always been at least one ( up to 3).
So far in the last ten years we have not seen one. Barron's Cover story has a nice chart of how stock Crashes involve Recessions, usually precede the "R" by a year or so, and 5 of the last 6 since 1970 were just after the 0.
As for now, both Technical and Fundamental (Quant) signals are still Bullish, but the next 3-4 weeks could see a single-digit Correction before a final leg up into next year. Another conclusive signal to watch for in a R is the Flat Yield curve, where short term rates - 2-year and 3-month Treasurys (as well as the Fed Funds) are higher than the 10-year Tsy. (backwardation in futures lingo).

Last week saw Volume starting to pick up again as the Nasdaq made a new high ; the McClellan Oscillator (advances v. decline formula) gave a sell signal Friday at +46 -providential. Finally, MMFs (money markets) Flows reversed bigtime -see below:

Date 9/1/2017 8/25/2017
Indices: DJIA  21987 21813
NAZ  6435nh 6265
SPX  2476 2443
WklyVolume (Bshs). naz/ny…. 8.2/3.6 7.6/3.5
Specul.Ratio hi=bullish 2.28 2.17
Sentiment: put/call-CBOE  57 61
VIX>50-alltmlow=8.8 10.1 11.3
DeltaMSI-50% MAC crossover 51 48
Advance/Dec-NYSE.. 2210/867 2126/944
Weekly Net: 1343 1182
     Cumulative: 180146nh 178803
Weekly  NYSE hi/low… 285/115 207/203
New Hi's/Low's Nasdaq h/l 302/133 152/222
McClellan  Oscillator 46 8
McClellanSum .+750/-1000 267 172
Newsletter Inv.Intel -Bull 49.5 48.1
Surveys-Tues Bear:-5yrs 19.1 18.3
Wed. AAII  -Bull  25 28.1
Bear  39.9 38.3
US$-WSJ 92.8 92.5
3-box rev Bullish%-  66 65
US equity -ICI Fund Flows weeklate (4.7B)
MMF flows Change in $B (20B) 29,4B
MargDebt- top (300M) monthly  JULY: 550B
10-yr Tsy yield hi= stock buying 2.17 2.17
2-yr Tsy Yield: Inflation 1.35 1.33
TIP (ETF) Inflation 114.2 114.1

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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