SPECIAL TREATMENT:

Occasionally, Sentiment Indicators come and they go - as Charles Gasparini of WSJ reports, the Specialist shorting may be one that goes!. He claims that around Labor Day this year, the last of the floor Specialists on the NYSE will have folded their tents, thanks to John Thain's inevitable (?) electrifying of the exchange.
Although new highs dominated new lows last week 3:1, even on the Nasdaq which doesn't consist of 50% non-common ( preferred, ETFs, etc.) stocks, the Selling Volume on Friday was huge - 2.6B on the NYSE, 3.5B on the Nasdaq.
Advance/Decline breadth, exactly 2:1 decliners, was the most issues down since late Feb., the last major selloff. Short interest is again a record at 8 days to cover on the NYSE, and IBD's number is also a new high at 7.82.
Despite the ugly week, surveys were for the most part bullish, with Inv.Intell. Bears at their lowest level since July 2004, at 18+; even the AAII reversed positions to 43:33.
Finally, corporate Insider sold at a 61 to 1 ratio, with Tech sellers 100 to 1 over buyers.
Here are the numbers:
Mktsentiment. 6/22/2007......5Yr.HI........ LOW

DJIA ………. 13360...........13668...........7286
Nasdaq………. 2588............2627.............1114
S&P500…….. 1502............1536............776
CBOE Eq. put/call ….62............87-5/04........46-1/03

VIX ………. 15.7..........44 9/02........10.0-7/05

ISEE-call/put ……. 127...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………-35...............91-5/04.........(81)-5/04
McClelSum…………… 248..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..53.3...........62.9-12/04......35-6/06
Bear:………… 18.9 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ………43.2/33.7....n/a n/a
MarketVane Bulls…. 71......... 74..............24
IBD: Short Interest- ….7.82nh……7.82………. 4.0
Public/NYSE Spec.-…..6.59………13.15……….1.0
Birinyi Blogger
Bull/Bear Poll …………35.2/29.4
Bullish%- ……….…75...............88 -2/04...... 46-8/04
*Insider corporate sellers 61:1
Sectors: Most Buyers: Healthcare, Finance (25 sellers:1)
Most Sellers: Tech (100 sellers: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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SPECIAL TREATMENT:

COGNITIVE DISSONANCE:

The above is defined as the frustration of accepting new facts that disagree with the current comfortable belief, sometimes known as Contrary Opinion. In Barron's recent Other Voices, Kevin Duffy writes about some disturbing facts on today's market:
- Strategists at the 12 major firms are in unanimous agreement for higher stocks, the first time since 2000.
- Money market balances are at all-time low (21%) of assets; the ICI reports only 3.7% cash in Equity Funds, below the 3.9% record in 1972.
- Assets in Bear funds and short ETFs vs all Mutual Funds are 1 to 1,000.
- The Finance Sector is 22% of the S&P 500 and corporate profits from financial activity is double that number.
On the other hand, Goldman Sachs reports that 18 of the S&P 500 stocks are in merger/buyout mode with $23B (almost all cash) deals at risk in Supply.
Some Sentiment extremes this week include the Bearish ISEE indicator at 173; I.I. survey complacent at 56.7 Bulls to only 21.1 Bears, although the AAII inverted to cautious.
Corporate Insider Selling dropped from a high 97:1 last week to only 24:1, with Tech sellers 320:1.
Here are the numbers:
Mktsentiment. 6/15/2007......5Yr.HI........ LOW

DJIA ………. 13639...........13668...........7286
Nasdaq………. 2627nh............2627.............1114
S&P500…….. 1533............1536............776
CBOE Equity put/call 58............87-5/04........46-1/03

VIX ………. 13.9..........44 9/02........10.0-7/05

ISEE-call/put ……. 173...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………13...............91-5/04.........(81)-5/04
McClelSum…………… 289..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..56.7...........62.9-12/04......35-6/06
Bear:………… 21.1 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ………37.3/43.7....n/a n/a
MarketVane Bulls…. 66......... 74..............24
IBD: Short Interest- ….7.58……7.66………. 4.0
Public/NYSE Spec.-…. 7.26………13.15……….1.0
Birinyi Blogger
Bull/Bear Poll …………50/23.3
Bullish%- ……….…76...............88 -2/04...... 46-8/04
SentimentTrader
Short/longtermBULL/BEAR. N(neutral)/N

*Insider corporate sellers 24:1
Sectors: Most Buyers: Healthcare, Energy (10:1)
Most Sellers: Tech (320:1)

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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COGNITIVE DISSONANCE:

JUNE SWOON:

Like the man said, every time breadth goes negative while the market makes new highs, the next month is down (avg. 2%). It happened 4 times over several decades, and 4 times in May. Today, Monday, the DJIA is at 13,464 - 50% rally from last week's decline is 13,471.

However, of the last 25 months, option expiry week (or, 3 days prior to the third Friday), 21 have been UP weeks, 3 DOWN, and 1 FLAT.

The number 1 culprit for the inevitable correction wan the 10-year Treasury breaching 4.75%, which predicted all the major selloffs the past 3 years - also extreme was the % above the 200-day MA on the DJIA: previous selloff levels were 8%, 5.2%, 6.7%, and 7.4% - this time it was 10% above! The resulting bottom was from 0 to 5% BELOW the 200MA -we've only reached a +3% above, so far.

The majority of sentiment indicators did not see last week's decline coming, in fact several are now cautiously Bullish. The McClellan Oscillator, now residing at -49 after hitting -75 is very bullish, as are the put/call ratios of ISE (rare 92) and CBOE (63) . The AAII Bull/Bear is still inverted, (bearly) at 40 vs.42, as is the Birinyi bloggers poll.
Calling for more downside is the McCellan Summation, Bullish per cent, and hugely extreme - the Corporate Insider sellin, now at 100-1, mostly in tech companies.
Here are the numbers:
Mktsentiment. 6/08/2007......5Yr.HI........ LOW

DJIA ………. 13242...........13668...........7286
Nasdaq………. 2573............2613.............1114
S&P500…….. 1507............1536............776
CBOE Equity put/call 63............87-5/04........46-1/03

VIX ………. 14.8..........44 9/02........10.0-7/05

ISEE-call/put ……. 92...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………-49...............91-5/04.........(81)-5/04
McClelSum…………… 447..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..52.2...........62.9-12/04......35-6/06
Bear:………… 22.8 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ………40.6/42.6....n/a n/a
MarketVane Bulls…. 72......... 74..............24
IBD: Short Interest- ….7.54……7.66………. 4.0
Public/NYSE Spec.-…. 7.15………13.15……….1.0
Birinyi Blogger
Bull/Bear Poll …………26.4/32.3
Bullish%- ……….…74...............88 -2/04...... 46-8/04
SentimentTrader
Short/longtermBULL/BEAR. N(neutral)/N

*Insider corporate sellers 97:1
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

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JUNE SWOON:

DON'T "FOLLOW" THE MARKET - LEAD IT!:

Especially at critical turning points Sentiment can help a trader define the risk in a market. Unfortunately, this doesn't seem to be one of those times. Most indicators appear to be boringly just as they were last week, in fact, even coming off those levels- with a couple exceptions: short interest, for whatever reasons - fear, hedging, speculating - is at record numbers with the IBD at 7.66; key corporate insider selling is high again at 43 to 1, with technology leading the pack by far (buyers' leader is the Finance group).
Despite the Asian selloff over the weekend, Birinyi's blogger Bulls reverted to bullish stance at 34:27 over Bears, although the AAII reversed this number to 33 Bulls vs. 45 Bears, which should be good for the market.
Breadth number appear strong, although nearly 50% of NYSE stocks are the un-common kind - preferred, ETFs, CEFunds, etc. A study of optionable stocks would be more accurate.
Finally, UBS Index of Investor Optimism jumped from 74 to 95 recently.
Here are the data:
Mktsentiment. 6/01/2007......5Yr.HI........ LOW

DJIA ………. 13668...........13668...........7286
Nasdaq………. 2613............2613.............1114
S&P500…….. 1536............1536............776
CBOE Equity put/call 61............87-5/04........46-1/03

VIX ………. 12.8..........44 9/02........10.0-7/05

ISEE-call/put ……. 119...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………23...............91-5/04.........(81)-5/04
McClelSum…………… 593..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..53.9...........62.9-12/04......35-6/06
Bear:………… 21.5 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ………33.3/44.8....n/a n/a
MarketVane Bulls…. 72......... 74..............24
IBD: Short Interest- ….7.66nh……7.66………. 4.0
Public/NYSE Spec.-…. 6.7………13.15……….1.0
Birinyi Blogger
Bull/Bear Poll …………34.5/27.6
Bullish%- ……….…78...............88 -2/04...... 46-8/04
SentimentTrader
Short/longtermBULL/BEAR. N(neutral)/N

*Insider corporate sellers 43:1
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

DON'T "FOLLOW" THE MARKET - LEAD IT!:

ARE H&S TOPS RELIABLE?:

By that I mean the talking heads and other experts on TV. Most are talking about the Sea of Liquidity driving the global markets, the most recent fact being the $2 Trillion of foreign Soveriegn Investment Funds, separate from Gov't Reserves which are mandated in U.S.Treasuries up until now. These extra monies, mostly in oil countries and Japan, could be moved into global equities for higher returns.
So far, the U.S. markets have underperformed global ones, but with the 10-year Treasury above 4.75% (above where Michael Santoli cites stocks have faltered the past 3 years), the stocks to bond ratio weakens.
Still, only the longer term Indicators seem toppy - Bullish per cent at 78, Market Vane at 73, even the Inv.Intell. ratio is high at 54 to 20 (the AAII Bull/Bear ratio just inverted again) . Most are mid-range with positive readings from the McClellan Osc. bouncing up off the -50 level (oversold); Birinyi's bloggers have inverted the I.I. numbers (see above); short interest is at record highs and Public vs. Specialists are wary.
Here are the numbers:

Mktsentiment. 5/25/2007......5Yr.HI........ LOW

DJIA ………. 13507...........13556...........7286
Nasdaq………. 2557............2572.............1114
S&P500…….. 1516............1522............776
CBOE Equity put/call 61............87-5/04........46-1/03

VIX ………. 13.3..........44 9/02........10.0-7/05

ISEE-call/put ……. 117...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………-26...............91-5/04.........(81)-5/04
McClelSum…………… 563..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..54.3...........62.9-12/04......35-6/06
Bear:………… 20.7 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ………37.4/38.6....n/a n/a
MarketVane Bulls…. 73......... 74..............24
IBD: Short Interest- ….7.46nh……7.46………. 4.0
Public/NYSE Spec.-…. 7.07………13.15……….1.0
Birinyi Blogger
Bull/Bear Poll …………20.0/46.9
Bullish%- ……….…78...............88 -2/04...... 46-8/04
SentimentTrader
Short/longtermBULL/BEAR. N(neutral)/N

*Insider corporate sellers 30:1
Sectors: Most Buyers: Finance
Most Sellers: Tech, Energy

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

ARE H&S TOPS RELIABLE?:

WELL, IT'S THE LIQUIDITY:

The frequency of the word "Liquidity" is currently rivalling the use of "Well," used by 99% of experts and other talking heads when beginning to answer questions on any topic (you can check it out).
After all, there are other reasons for this miraculous market rise - moderate p/es (thanks in part to stock buybacks and global profits), the fact that the U.S. market is 33% lower than global markets - thanks to Int'l sales S&P Q1 profits tripling estimates.
Mike Santoli in Barron's states that in the 95 trading days this year, 26 have seen $5B or more in M&A buyouts - on those days, the market rise was double the average - bear in mind that both the NYSE and NASDAQ markets combined only trade @ 3B shares a day.
Still, things seem to be cooling off and warning clouds are starting to appear in the breadth, Volume, and the Sentiment areas:
Divergences are starting to occur - DJIA vs. OTC; price vs. money flow and adv./decl. (1716 vs 1792 on the NYSE despite the huge runup).
Jason Goepfert of sentimentrader.com says that since 1940 this is only the 5th time new highs on the Dow occurred with negative breadth (Advance/Declines, etc.) - and it's happened 4 times this month.
While sentiment stays sluggishly in mid-range, bullish figures are rising slightly; and the Intermediate term signals such as Bullish percent, at 78%, and Market Vane at 72 warn that at least a summer correction is due.
Here are the stats:

Mktsentiment. 5/18/2007......5Yr.HI........ LOW

DJIA ………. 13556...........13556...........7286
Nasdaq………. 2558............2572.............1114
S&P500…….. 1522............1522............776
CBOE Equity put/call .57............87-5/04........46-1/03

VIX ………. 12.7..........44 9/02........10.0-7/05

ISEE-call/put ……. 129...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………-18...............91-5/04.........(81)-5/04
McClelSum…………… 675..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..54.3...........62.9-12/04......35-6/06
Bear:………… 19.6 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ………38.4/36.6....n/a n/a
MarketVane Bulls…. 72......... 74..............24

Birinyi Blogger
Bull/Bear Poll …………29.4/35.2
Bullish%- ……….…78...............88 -2/04...... 46-8/04
SentimentTrader
Short/longtermBL/BR. N(neutral)/N

*Insider corporate sellers 17:1
Sectors: Most Buyers: Tech,Finance
Most Sellers: Tech, Finance

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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WELL, IT'S THE LIQUIDITY:

TW3:

Those of you older timers like me remember a TV comedy show called TW3 - That Was The Week That Was, or wasn't as in this case. Despite some volatility towards the end of last week, not much changed on the indicator view. The SPX (500) stayed right at 1505, off its all time high of 1527; the VIX also remained the same at 12.9; the McClellan indicators dropped slightly, as did the Bullish Per Cent (1 point).
The few changes included the AAII bull/bear from inverted favoring the bears to dead even , Birinyi's bloggers went more negative at 24 vs. 44.

Upcoming FYIs: I've been asked to give a presentation on how I use T/A for Options at the SF Options group at Fort Mason this Saturday at 9 a.m.; also next week Donald DeLutis is talking before the TSAA Tuesday at GGU on the Long Wave and Economic cycle.

Here are the Sentiment numbers:

Mktsentiment. 5/11/2007......5Yr.HI........ LOW

DJIA ………. 13326...........13326...........7286
Nasdaq………. 2562............2572.............1114
S&P500…….. 1505............1505............776
CBOE Equity put/call .57............87-5/04........46-1/03

VIX ………. 12.9..........44 9/02........10.0-7/05

ISEE-call/put ……. 122...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………-2...............91-5/04.........(81)-5/04
McClelSum…………… 802..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..53.3...........62.9-12/04......35-6/06
Bear:………… 20.0 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ……….42.9/42.9....n/a n/a
MarketVane Bulls…. 74......... 74..............24

Birinyi Blogger
Bull/Bear Poll …………24.1/44.8
Bullish%- ……….…77...............88 -2/04...... 46-8/04
SentimentTrader
Short/longtermBL/BR. N(neutral)/N

*Insider corporate sellers 44:1
Sectors: Most Buyers: Finance, Consumer svcs.,Energy
Most Sellers: Tech, Finance, Consumers,

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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TW3: