JANUS, THE TWO-FACED GOD:

January, named for Janus, can't make up its mind which way to direct the stock market. First it charges out of the chute in record numbers (with new pension, bonus, IRA, etc. money fueling it) as shown by over 10 to 1 new highs for 2 weeks, and cumulative A/D breadth also screaming up. Then everything all of a sudden looks toppy: the McClellan Summation Index is over its normal resistance range (although it's been up to 1500 before) at 686; newsletter surveys are rampantly bullish at 56 for the I.I., 59 bulls (up from 29 last week) vs 19 bears (down from 40) on the AAII; Market Vane hit a record 73 bulls!Barron's chart of Smith/Barney's Panic - Euphoria Index is still slightly under water (-0.30) at -0.35 but fading fast. It's right at the level of the last 3 previous tops, as is the Bullish Per Cent at 73 ( % of stocks on Buy signals). Finally, Barron's reports that hedge fund managers are more long now than 98% of the last 5 years; also in record numbers - Nasdaq long futures.Speaking of Barron's, they grudgingly put out last year's Roundtable results of stock picks by their 12 dwarfs (gurus). As I said in my last Marina Times column: "He who cuts his own wood is twice warmed", meaning one should do their own research on stocks, as borne out by the results! Only 1 of the 12, Meryl Witmer was successful in their picks - 4 for 4, up double-digits. Those who shorted got killed! So much for expert advice.

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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JANUS, THE TWO-FACED GOD:

HO! HO! HO!:

Technically the Santa Claus rally, like USC's football team, broke its string of successive (8 of 8) years of rallying higher in '05 - the last 4 days and first 2 of the next year. In the spirit of the record, however, it was only 3 points lower ( 10,880 vs. the 10,883 close Dec.23), the Nasdaq and S&P 500 did close higher, and that was one heck of a rally, albeit a few days late, to a new nearly 5 year highs! Alas, the bigger perfect record of never a down 5th year over 13 decades bit the dust.
Thanks to nanotechnology and Globalization, a new polling parameter is emerging, as reported by James Surowiecki in his best-seller - The Wisdom Of Crowds. Pooh-poohing the findings of such notables as LeBon (The Crowd), Mackay (...Madness of Crowds), and even Baruch, Thoreau, and Nietsche, he posits convincingly that vast numbers of diverse opinions bring about best results, citing the Iowa Election Market, Britain's Tradesports.com, "Millionaire's" Lifeline, and the Las Vegas oddsmakers who put money where their votes are. We're even starting to see signs in Bush's meeting with prior Sec'ys of Defense (not all "Yes men"), and IBM's polling of 320,000 employes in 175 countries by e-mail for antithetical opinions and suggestions.
This week's Sentiment numbers are also poles apart suggesting, at best, volatility: some Bearish signals ameliorated - ISEE call/put ratio, McClellan Oscillator changing direction from below the zero line, Burke's I.I spread narrowing 8 points, and the Advance/Declines and New Highs/Lows exceptionally strong (nearly 8:1). Most Bullish was the inverted AAII survey with only 29% Bulls and 40% Bears!
However, there are also several toppy Indicators in the mix: Although the McClellan Oscillator changed to positive, it also shot up to its Resistance level of @50, as did the Bullish per cent at 72. There may be some Resistance to breaking through the 11,000 DJIA level this week. Finally, the Nasdaq to NYSE Volume hit a recent, speculative high at 132, and the Public to Specialist shorting fell off appreciably - 5.66 down to 4.37, over 20%.

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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HO! HO! HO!:

BAH! HUMBUG!:

What a year-end , breaking both a decade- and century-long record! The 8 of 8 Santa Claus rallies ended (although we do have the first 2 days of January to make it back); but the big loser was the 5th year of the decade, always with the Dow Jones up at least 10% since the 1880s. Actually the S&P 500 and Nasdaq were up for the year, but they weren't around then. I hope this isn't a harbinger of doom for '06, which usually isn't too hot in the 4-year Kinchin, or Presidential, cycle.
So much for small, anecdotal sampling. The NORC, or National Opinion Research Center, usually demands 1500 polling units to validate a survey, which they throw up on a Bell Curve using 2% Standard Deviations which contains 95% of the results.With last year's lack of Volatility (see the VIX) putting the Dow at the lowest year-over-year change since WWII at .61%, we might expect a Bollinger Band blowoff, up or down. Odd lot short sales are screaming to new records, way more than doubling last year's numbers. Some of these numbers have to be taken with a year-end scrambling grain of salt.Any chartist looking at the year-end massacre would expect more blood in the streets to come. And although there has been some complacency after the fall rally, a few Indicators are flashing extremely Bullish:
At Bullish extremes are the CBOE put/call ratio (61), although the ISE Exchange (Int'l Options) is simultaneously Bearishly over 200 (219); the McClellan Oscillator plunged down through the zero line, to -8 (Bearish), yet the AAII Bulls to Bears is almost dead even (Bullish) at 37 to 36; the Panic/Euphoria Index (a combination of Sentiment Indicators) is Bullish at -.60, the Public to Specialist at 5.66 is just off its highs, while the IBD short interest ratio is climbing higher to levels last seen in March of '05. Finally, the Bullish % and U. of Michigan Confidence are toppy. This dichotomy of signals could bode for high volatility or Trading Range uncertainty.

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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BAH! HUMBUG!:

YOU SNOOZE, YOU LOSE:

Recent columns have dealt with Closed-End Bond Funds, especially munis, that sell off at year-end and are bought back after the new year. Last Friday, on the Nightly Business Report, the CEF guru - Thomas Herzfeld - was interviewed about these and, although he echoed my comments, he did have different funds to recommend: symbols JQC,HTD,PIF,SCD,PBF,EVG, and HIX. Also, in Barron's over the holiday weekend, Bill Gross of PIMCO also made mention of this tax-loss occurrence, citing his own funds (which are not at a discount) and VKA, which is.This anomaly occurs again , usually in the March/April timeframe, so one should use their Technical tools for entry and exits, although 6% tax-free isn't a bad hold.
Not much changed in the Sentiment picture during the quiet week, with some improvement by the CBOE put/call ratio to 62, the McClellan Oscillator moving up through the zero line to 16; the AAII Bears improved a bunch up to 28.2, as the Bulls pulled back to 41.
The real standout was Public to Specialist shorting which shot up to a 12-month, even 5-year high of 5.68 - unless this is some kind of glitch number by IBD. It could also reflect yearend window dressing, but it shares the caution with the CBOE number.
Happy New Year - here's hoping for the Santa Claus rally this week and into next.

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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YOU SNOOZE, YOU LOSE:

HOME IN THE RANGE:

That elusive 11,000 level in the DJIA still is not in the cards so far this year, as we bump our heads on that cieling. Maybe the Holiday spirit(s) are making us too complacent as the I.I. survey reaches another high for the Bulls at 58.8 with the Bears at 21.6; While the AAII slipped a bit, the Market Vane Bulls remained at 70.The CBOE put/call ratio is down to 53, while the VIX touches 10 - the most complacent in a decade.
The McClellan Oscillator dropped down through the zero line (Bearish) to -21 - would like to see it reach the -50 level for a rally. The Bullish per cent is toppy at over 71The ISEE option call/put ratio ended the weekat 186, but rose on Monday to 233 (ouch)!
Odd-lot shorting does remain double last year even though earnings surprises and estimates are hugely positive for the week.Let's hope we at least get the Santa Claus rally between Xmas and New Year like we have for the past 8 out of 8 years!Happy Holidays to all!!!

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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HOME IN THE RANGE:

RED CHRISTMAS (WHOOPS-HOLIDAY):

IBD's Short Interest ratio on the NYSE is 5.26, quite Bullish. Although it set up the October rally with the new high of over 6, the previous '05 new high was only 3.47 back in April's market bottom. 5-year high is still 6.78. NYSE Public to Specialist shorting is still high, but dropping, at just over 3.

But dangerously complacent, precluding an immediate rise are the CBOE Equity put/call ratio at 61, and the Inv.Intell. Bull/Bears spread still widening at 56.2 vs. 21.9. Similarly, the Mkt Vane Bulls hit 70 for the first time in a while, as the AAII surveys also recorded dreaded complacency at 19 Bears with Bulls at 49.5.
For what it's worth, the Univ. of Michigan Confidence survey shot up nearly 10% to 88.7 - Ah! Christmas... The Rydex Funds Nova/Ursa is relatively high at 23, the same topping level reached last late July which ended the Spring Rally. Further danger is seen by the Bullish per cent Pt.& Fig. chart breaking 70 - the % of stocks on a Buy signal. Still not topped out, but flying the yellow flag.
The final Bearish nail is the ISEE call/put ratio, over the Bearish level of 200 at 211 ( remaining at 213 on Monday, the 12th). Finally, Barron's reports that with a large number of corporate Insiders selling, the most vulnerable is the Retail group with 6 to 10 times normal - shoppers! let's get out there and spend!!!

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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RED CHRISTMAS (WHOOPS-HOLIDAY):

DECEMBER 2 - A WEEK THAT WILL GO DOWN...

in the stock market, according to Tom McClellan - and he was right. He called the Nov. 28 top of the recent rally in his newsletter , and although he said the cyclical bottom would occur Dec. 5, today's rally doesn't convince me until a preponderance of Sentiment Indicators turn more negative.
Although NYSE Short Interest is double that of a year ago, complacency still runs rampant especially in the Bullish Per Cent Pt. & Figure chart at 68, nearing a topping zone; I.I., or Investor's Intelligence, measure a 55.8% Bullish to 21.1% Bear ratio (as does the AAII survey), a large spread. The Rydex Nova/Ursa climbs higher, to 23, still in a medium range boding well for longer term. Worst of all is the McClellan ratio-adjusted Oscillator coming off its toppy 51 last week to only +27 Friday - hardly a bottom.
Holding fast are the IBD short interest ratio and Public/Specialist at nicely high levels, and Mutual Fund Cash took an upturn at 4.6%.
Hopefully, once this Institutional year-end Selling is over, the rally will resume, culminating in a Santa Claus rally between Christmas and New Year's, as it has for 8 of the last 8 years. What should really clear things up in the financial markets is the fact that the number of Economists has increased 30% to 30,000 in the U.S. Former Pacific Coast Exchange Lee Korins once described an Economist as one who was good with numbers but didn't have the charm or charisma to become an accountant!

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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DECEMBER 2 - A WEEK THAT WILL GO DOWN...