A revisit of Jake Bernstein's 1991 classic - "Cycles of Profit" - has charts of U.S. stocks back to the French Revolution - 1790 - showing major Bear markets which always retest the ultimate lows (some higher, some lower), with the 1841 low retested some 16 years later. More recent lows (1990, 1974) took about 4 years. Since we have moved up 11,000 points since 1982 and 8000 since 1994, Fibonacci retracements of .382 and .500, respectively, would land us in the mid-7000 area. Although we have never had a down 5th year in 11 decennial cycles, the months before and after could be rough.
This week's exceptional Sentiment numbers are few, with a new high in the DJIA Dividend Yield of 3.46% boding well longer term; another recent high is the IBD short interest percent, at 6.39, almost to a 5 year high of 6.78, and above January's market top of 6.1. Bearish numbers include the VIX at 14.3, cumulative A/D, reflected also in the toppy McClellan Summation, although the Oscillator just slipped into negative territory at -13. And the Nova/Ursa Index, at 17, remains very Bearish as investors put their money where ther mouth is.
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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