BULLS DON'T HIBERNATE

This might explain why December and January are historically the 2 best months of the year, including the Christmas rally and January effect. As noted earlier in a Leuthold Group table, when the Fed raises rates, the serious decline doesn't kick in until after the fourth raise, which is expected November 10. although I distrust surveys done on small samplings, as many technical ones are, there may be some human anomaly or Nature's law which may guide us in our market forecast. The table shows a .33% market increase 7 days after the raise, and a 1.95% increase 22 days after (Dec.13). It is even more doubtful that we will hit these average percentages exactly, but coupled with the Kinchen Election cycle, the recent weakness, my hibernation effect, and several longer term Sentiment Indicators, we could see a meaningful winter rally. Also based on small sampling: there has never been a down 5th year of a Decennial Cycle in the 11 decades since 1890 (Inflation included); in fact, every rally has been of a strong, Elliott 3rd Wave nature. As the opponents of Social Security privatization argue - if the stock market isn't a gamble, why do they call them "Blue Chips"?If a rally is to ensue, there is little, if any, evidence of it in the Sentiment Indicators this past week; even after the huge selloff (mostly in the Dow 30 stocks), complacency reigns - in the ISE put/call ratio, cumulative A/D and New Highs stats, and newsletter surveys. Although below the 200-day moving averages, only the DJIA is below short term Support - if we break that this week, I'll be a believer in Kerry for the next 4 years!

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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BULLS DON'T HIBERNATE

October - the bottoming month

The McClellan Oscillator bounced up off its -50 platform to -21, while the ratio-adjusted Summation is coming off its Overbought +750 area to +783 (down from 960). Last week was the first negative Advance/Decline for the NYSE since Aug.6. One Bullish Indicator is the Nasdaq Volume to NYSE which slid under 100% to 99 last week - for the first time since the May '04 bottom which followed the sharp April decline. Also indicating a bottom is the ISE put/call ratio at a 2 month high of 158 (not extreme, however) after signalling the August 6 low of 9815 DJIA. The CBOE Equity p/c ratio is also the highest since Aug. at 79.
According to a mailer from Welles Wilder of RSI, etc. fame, per his Delta Phenomenon, the current bottom will not be put in until Dec. 15 of this year, followed by a large year-end rally into an April 15 top, then the huge decline into November 16 of '05. This is his "hidden order" of the market for the reliable 4-year cycle, which sells for $35,000 and includes shorter term turning data points.

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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October - the bottoming month

WHAT BEAR MARKET?

Looking at the 2004 Downtrend Channels in the DJIA, NASDAQ, and SPX one has to assume we are at best in a shortterm correction. How then to explain both Dow Utils and Trans are at New Highs, as are Cyclicals. CRB is at a 23-year high, Retail is 2% under a new high; Small Caps -S&P 600- is at a 10-year high - up 11% this year. Utils are up 81% since the Oct.'02 bottom, Techs up 75%, The DJIA, after rallying 78% from '02, is now up .618% of the downmove at today's 10,060.On the day before Labor Day the Dow Industrials were at 10,260 - if it is above that on Election Day, history says Bush has a 94% chance of winning the vote; 90% for Kerry if below. So quotes Barron's.As for Sentiment Indicators, my Cumulative A/D is at record highs and New Highs last week were also high at 609. The ratio-adjusted McClellan Summation is overbought at 928, and the Bullish near crossover 2 weeks ago in the Market Vane survey - 41% Bulls to 39% Bears proved to be a glitch, as we are back to 57/19. One of the most accurate Indicators - the Rydex Nova/Ursa funds ratio - is still at a Bullish 19, having called the recent July 1 top at 40, and the previous bottoms on May 20 and Aug.12 near 17 (we are still at 19 after several weeks).

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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WHAT BEAR MARKET?