FIRST CUT IS THE DEEPEST:

Whether Uncle Ben cuts rates 1/2 point or two 1/4 points, economists and analysts end-to-end will still not reach an opinion about market direction - as usual, the technicals: Price, Volume, Trend momentum, are the things to watch. In a small sampling of rate cuts over almost 40 years, Laszlo Birinyi observes that 7 of 9 resulted in up markets shortly after, although (nota bene) there was an 18% decline in 2001. The average gain for 3 months was 5.5%; after 6 months , over 12% - and the seasonal timing is on its favor.
Implied Volatility in options is already at a 4-year high, and Tuesday's news on rates and broker earnings could even widen that.
In apprehension of this, trading volume has receded and sentiment indicators have regressed from their Bullish position a bit. Although still young, the revised ISEE call to put ratio seems to correlate pretty well, as its high 177 level preceded the decline of 2 weeks ago and its swing to 118 has seen a slow market rise; the opposite CBOE put/call ratio remains Bullishly high at 68, off its 71 mark.
The AAII and I.I. surveys have swung back to neutral/complacent; the Birinyi bloggers, in early testing, seem to be more prescient than contrary - their new high of 50 negative certainly "Bears" watching, as does the huge decline in Public shorting. Money continues to flow back into money market funds, and CEO insider selling has picked up again.
Here are all the numbers:

Mktsentiment. 9/14/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13442……….13113………14001..............7286
Nasdaq………. 2602…………2565……….. 2707.............1114
S&P500…….. 1484…………1453…………1557……..776
CBOE Eq. put/call …68…………..69………… 91…..........46-1/03

VIX ………. 24.9…………26.2………44 9/02........10.0-7/05

ISEE-call/put ……. 118………….177………..177………..118
All Equities (ETF)
McClel Osc…………31……………21………91-5/04.........(81)-5/04
McClelSum………-246………….-370…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 48.3………..42.9………..62.9-12/04......35-6/06
Bear:………… 31.0………….37.4………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……40/35.3………38.4/42.4……..n/a n/a
MarketVane Bulls…. 58………….59…………. 74..............24
UBS investor confidence..73………..87……………178……………53
IBD: Short Interest- …7.41…………7.0….………8.25………. 4.0
Public/NYSE Spec.-…..7.85…………12.9…..……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ……26.9/50…………31.3/40.6
Bullish%- ………...54……………52……….…88 -2/04...... 46-8/04
*Insider corporate sellers..22:1………30:1

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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FIRST CUT IS THE DEEPEST:

SURGIN' FOR GOLD:

The link below has a very clear and concise technical readout on gold, which traditionally acts well in Sept., especially if we're up to our ears in credit issues:
http://headlinecharts.blog.com/
With $6 to $8T in global securitized residential mortgages out there somewhere(?) getting ready to reset from bending to breaking the homeowners/speculators (according to Stephanie Pomboy of Market Maven), and the Dollar index breaking below $80, it's no wonder that gold broke $700. Last January Louise Yamada audaciously called for $1000 gold - we may see it yet.
On top of that, Barron's notes that the mortgage rates are tied to the LIBOR rate, which has been rising due to fear.
Despite Friday's dramatic sellof and today's followthrough, not much in the way of indicators is in extremis. Both the ISE call to put ratio and the Market Vane bulls rose materially, and Tom McClellan thinks the breadth washout is setting up for a late Sept. rally. The AAII is still nicely inverted, but I would still hedge any equity investment for the next few weeks. I wonder what effect the Specialists' upcoming disappearance will have on stocks - I'm sure they'll be grabbing all they can as they circle the drain!
Here are the stats:

Mktsentiment. 9/7/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13113……….13357………13668..............7286
Nasdaq………. 2565…………2596……….. 2707.............1114
S&P500…….. 1453…………1474……….. 1557……..776
CBOE Eq. put/call …69…………..71………… 91…..........46-1/03

VIX ………. 26.2…………23.4………44 9/02........10.0-7/05

ISEE-call/put ……. 177…………..135………..177………..133
All Equities (ETF)
McClel Osc…………21……………..63………91-5/04.........(81)-5/04
McClelSum………-370………………-569…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 42.9………….41.7………..62.9-12/04......35-6/06
Bear:………… 37.4………….37.4………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……38.4/42.4……..40.3/46.3……..n/a n/a
MarketVane Bulls…. 59…………….53…………. ………74..............24
UBS investor confidence..73………..87……………178……………53
IBD: Short Interest- …7.0…………….6.42………8.25………. 4.0
Public/NYSE Spec.-…..12.9…………10.3……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ……31.3/40.6………..27.2/36.3
Bullish%- ………...52……………49……….…88 -2/04...... 46-8/04
*Insider corporate sellers..30:1……..10.2:1
Sectors: Most Buyers: Finance/Tech
Most Sellers: Tech, Healthcare

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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SURGIN' FOR GOLD:

TRY TO REMEMBER...:

When the media gets too far on one side of an issue, such as September being historically the worst month of the year for securities, leave it to the markets to fool most of the people most of the time. With few exceptions (coming off a very strong oversold condition), Sentiment Indicators are still mostly positive, at least very short term - until mid-Sept. when we get the Surgin' General's Iraq report, the FOMC decision, brokers' Q2 earnings, and option expiration. We also get more recent housing, credit, and employment data. Since only 40 of the 10,000 hedge funds control 60% of stocks (per WSJ's Charles Gasparino), these big boys could continue to shake things up like a puppy with a rag doll.
This week the UBS Investor Confidence poll was added to the indicators primarily due to its sudden decline from 87 to 73 - it fell to 53 in August of '06 the start of this recent rally. The UBS survey is a Gallup poll of 800 investors with a minimum of $10,000 in equity assets.
Other Bullish extremes include the CBOE Equity put/call ratio again with a 7-handle at 71; the Bullish Per cent is still at a multi-year low of 49, on a Buy signal (it had hit 12 and 16 respectively in '01 and '02); finally, the AAII survey is still inverted, with more Bears than Bulls, and corporate insider buying remains positive.
Here are the results:

Mktsentiment. 8/31/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13357……….13378………13668..............7286
Nasdaq………. 2596…………2576……….. 2707.............1114
S&P500…….. 1474…………1479……….. 1557……..776
CBOE Eq. put/call …71…………..64………… 91…..........46-1/03

VIX ………. 23.4…………20.7………44 9/02........10.0-7/05

ISEE-call/put ……. 135…………..133
All Equities (ETF)
McClel Osc…………63……………..69………..91-5/04.........(81)-5/04
McClelSum………-569………………-747…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 41.7………….40.6………..62.9-12/04......35-6/06
Bear:………… 37.4………….37.4………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ………40.3/46.3……41.3/46.1…..n/a n/a
MarketVane Bulls…. 53…………….54…………. ………74..............24
UBS investor confidence..73………..87
IBD: Short Interest- …6.42…………….6.25………8.25………. 4.0
Public/NYSE Spec.-…..10.3…………18.25nh……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ……27.2/36.3………..43.3/33.3
Bullish%- ………...49……………49……….…88 -2/04...... 46-8/04
*Insider corporate sellers.10.2:1……...6:1
Sectors: Most Buyers: Finance
Most Sellers: Tech, Healthcare

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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TRY TO REMEMBER...:

SURGIN' GENERAL:

With apologies to IBD for borrowing the General Petraeus line, let me be the first to brand the current rally in the market the Surge Rally, just as we had rallies prior to other Gulf War announcements. This rally, however, after a long, tired Bull Run won't have the legs to make it through much of September; historically the last 3 days of August and Labor Day are usual UP days, but the last week in September is usually "circling the drain" into October. Especially with the news from recent statistics on housing, credit, and the FOMC, etc. due mid-month.
The extremes reported here last week certainly carried us through a nice retracement rally off oversold conditions, with the 91 put/call reading, huge Public shorting while Specialists and key employees took the long side (they are still selling healthcare and tech, while buying finance stocks).
The McClellan Summation hit a new recent low of -917 at its nadir, but now the Oscillator is overbought at +69. However, the AAII newsletter survey remains inverted and the I.I. finally caught up to almost parity of Bulls and Bears. The Bullish Per Cent bottomed out and gave a 3-box (pt.& fig.) BUY signal.
Meanwhile money continues to flow into the various ETFs, but the average investor, who was never really into mutual funds, bailed out again last week, and Money Market Funds, despite the credit scare, soared to $76B -please see below:

Mktsentiment. 8/24/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13378………13079 …........… 13668..............7286
Nasdaq………. 2576………..2505………. ...... 2707.............1114
S&P500…….. 1479………..1445……… ....... 1557……..776
CBOE Eq. put/call …64…………91nh………….…. 91…..........46-1/03

VIX ………. 20.7……….29.99……….44 9/02........10.0-7/05

ISEE-call/put ……. 133………..105
All Equities (ETF)
McClel Osc……69……………….-20………………64.91-5/04.........(81)-5/04
McClelSum……-747…………..-917nl…………...1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 40.6………..43.8……….........62.9-12/04......35-6/06
Bear:………… 37.4………… 32.6……….. 38.2-3/03.......16-6/03

AAII-Bull/Bear ………41.3/46.1…..42.2/45.6……n/a n/a
MarketVane Bulls…. 54…………. 52…………. ………74..............24
IBD: Short Interest- …6.25……….6.17………8.25………. 4.0
Public/NYSE Spec.-…..18.25nh……15.89nh……..18.2579……….1.0
Birinyi Blogger
Bull/Bear Poll ……43.3/33.3……..43.3/33.3
Bullish%- 49………39nl……….…88 -2/04...... 46-8/04
*Insider corporate sellers..6:1……….6:1
Sectors: Most Buyers: Finance
Most Sellers: Tech, Healthcare

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

Subscribe in a reader

SURGIN' GENERAL:

Cramer Emptor:

Those of us who enjoy schadenfreude must have liked the James Cramer cover story in Barron's this weekend, about with all his antics and wisdom, his picks have underperformed all major indices.
This week shook loose a lot of Indicators from their August stupor. Technician John Roque states that although stocks above their 200-MA number only 30%, they slid to 15 and 16 in this decade's prior corrections; however, Bullish Per Cent slid below its 2001 low of 38 (to 36-closing the week at 39), a major Buy signal. Major indices dropped below their 200-EMA, but closed at or near them on Friday.
The CBOE Equity put/call ratio jumped to a new high (nh) of 91 -most Bullish- while the ISEE call to put ratio is again re-revised, as we await meaningful data there. Washout new lows on the NYSE were 65 to 1284, a 20:1 ratio.
Newsletter surveys, out before the week's end, were mixed: the I.I was unchanged while the AAII inverted to 42 vs 45, normally a Buy signal; Market Vane dropped nicely to 52, while insiders selling was low, at 6:1. Just looking over the last 2 months the Birinyi bloggers seem to have it more right than the contrary above newsletter. Public shorting was huge at a record 15.89 for each Specialist, and I started tracking Money Market Funds behind the rumor that short term CP had a lot of CDOs, auto loans, etc., but their inflows were the highest YTD, at $42B. ETFs were also heavily bought, although mutual funds showed slight outflows for the week.
With Sept. and Oct. looming, it might be wise to tiptoe in while seeing if this credit crunch will bend but not break!
Here are the stats:
Mktsentiment. 8/17/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13079……..13239 …… 13668..............7286
Nasdaq………. 2505……….2544……… 2707.............1114
S&P500…….. 1445………1453………. 1557……..776
CBOE Eq. put/call …91nh………….65…………. 91…..........46-1/03

VIX ………. 29.99……….28.3………..44 9/02........10.0-7/05

ISEE-call/put ……. 105
All Equities (ETF)
McClel Osc……-20………………-31…………-64.91-5/04.........(81)-5/04
McClelSum……-917nl…………....-667…….…….-1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 43.8………..43.8……….........62.9-12/04......35-6/06
Bear:………… 32.6……….. 31.5…………38.2-3/03.......16-6/03

AAII-Bull/Bear ………42.2/45.6……45.8/39…....n/a n/a
MarketVane Bulls…. 52………….58………… ………74..............24
IBD: Short Interest- …6.17……….6.65………….8.25………. 4.0
Public/NYSE Spec.-…..15.89nh……..9.07……….…15.89……….1.0
Birinyi Blogger
Bull/Bear Poll ……43.3/33.3…….35.3/41.2….
Bullish%- ………39nl……….…50...........88 -2/04...... 46-8/04
*Insider corporate sellers..12:1….7:1……..
Sectors: Most Buyers: Finance
Most Sellers: Tech, Healthcare

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

Subscribe in a reader

Cramer Emptor:

NINJA LOANS:

According to an article in Barron's, NINJA stands for NoIncome, NoJob, or Assets! That seems to be the primary cause of this market meltdown, although something else would have eventually provoked it. It is hard to believe that the word CREDIT is derived from the Latin Credo , or BELIEF. As usual, technicians disagree about the immediate future, with Tom McClellan calling for a multi-week bounce due to the 20-week cycle (which bottomed on July 30 exactly 20 weeks from the March 14 low); on CNBC today, veteran Phil Roth sees a 20-25% Bear market ahead and backs it up with high selling Volume (low buying), most stocks and the smaller caps below the 200MA - although the S&P 500 and DJIA bounced exactly up off it. However, horizontal Resistance looms ahead on these indices.
It is hard to imagine that, what with a 400-point down day, we finished the week positive. The newsletter surveys, usually put out on Wednesday, were barely changed, prior to Bloody Thursday. Extremes were seen in the VIX at 28+, McClellan Summation, now -667, and the Bullish per cent at horizontal suppport of 47 (however, giving a 3-box sell signal).
ETF inflows were huge, at 10B, although mutual funds showed a slight outflow.
Here are the stats:

Mktsentiment. 8/10/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13239…….........13181 ……... 13668..............7286
Nasdaq………. 2544……….......2511………. .... 2707.............1114
S&P500…….. 1453………........1433............... 1557……..776
CBOE Eq. put/call …65………….......77 .87-5/04........46-1/03
.
VIX ………. 28.3………..25.16..................44 9/02........10.0-7/05

ISEE-call/put ……. n/a………….67.......................67....................28.

McClel Osc……-31………………-64.................91-5/04.........(81)-5/04
McClelSum……-667…………….-525..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..43.8………..47.2.......62.9-12/04......35-6/06
Bear:………… 31.5…………26.4.........38.2-3/03.......16-6/03

AAII-Bull/Bear ………45.8/39…….45.9/40…....n/a n/a
MarketVane Bulls…. 58………… 56......... ………74..............24
IBD: Short Interest- ….6.65………7.23…….….8.25………. 4.0
Public/NYSE Spec.-…..9.07……….8.05………13.15……….1.0
Birinyi Blogger
Bull/Bear Poll ……35.3/41.2….20.0/34.3
Bullish%- ………47……….…50...........88 -2/04...... 46-8/04
*Insider corporate sellers..12:1….7:1……..
Sectors: Most Buyers: Finance
Most Sellers: Tech, Healthcare

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

Subscribe in a reader

NINJA LOANS:

CMJ-CRITICAL MARKET JUNCTURE:

JASON - July to November- is often a miserable time for the stock market (even with Congress on vacation -and just about everyone else), but this year seems to be even more ugly. It is decision time; whether to sanely observe one's benchmark stops, or avoid that frequent -Why do I always sell out at the bottom? Even with 3-day filters of broken support levels, damage is getting severe, especially in the OTC (non-global) stocks. Should one "cut-and-run", or stay the course?
It could take weeks before the loan default mess that affects financial stocks, hedge funds, private equity, even foreigners with Trillions of dollars in national wealth reserves, plays out. Luckily, the stock market looks ahead. The Russell 2000 is over 12% from its double-top recent highs; the Nasdaq Comp is at its 200-EMA; the S&P 500, with its global stocks, has barely broken horizontal support and the 200-EMA, and only by a couple days.
Hopeful Sentiment signs are emerging, although as with oscillators, they can remain oversold for awhile: the Bullish Per Cent is near its low of 46 with a 50 reading; the McClellan Oscillator, although off its lows of last week, is under water at -64, with its concomitant Summation Index way overcooked at -525 .
Surveyed Bears have risen up with the Inv.Intell. at 26 from a complacent record low of 18 just last week. Finally, the CBOE put/call ratio is at a high of 77, and public shorts and short interest are high.
Here are the facts:
Mktsentiment. 8/3/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13181........... 13265 …… 13668..............7286
Nasdaq………. 2511............ 2562 2707.............1114
S&P500…….. 1433.......... 1458............... 1557776
CBOE Eq. put/call ….77...........72 .87-5/04........46-1/03

VIX ………. 25.16……24.17. ..................44 9/02........10.0-7/05

ISEE-call/put ……. 67…………35.......................67....................28.

McClel Osc……-64………-103.................91-5/04.........(81)-5/04
McClelSum……-525……….. -215 ..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..47.2…………53.9.......62.9-12/04......35-6/06
Bear:………… 26.4………. 18.0 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ………45.9/40…44.2/36.8…....n/a n/a
MarketVane Bulls…. 56………..64......... ………74..............24
IBD: Short Interest- ….7.23………7.82…….….8.25………. 4.0
Public/NYSE Spec.-…..8.05……….6.85………13.15……….1.0
Birinyi Blogger
Bull/Bear Poll …………20.0/34.3.. 20.0/34.3
Bullish%- ……….…50…………54...........88 -2/04...... 46-8/04
*Insider corporate sellers..7.1……..7:1………
Sectors: Most Buyers: Finance
Most Sellers: Tech

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

Subscribe in a reader

CMJ-CRITICAL MARKET JUNCTURE: