RECOVERY OR HIATUS?

As expected, last week's Indicators improved on their oversold extremes, but enough serious damage was done previously to warrant a cautious outlook for now. With the averages still below their 200-day MAs and horizontal support lines such as the SPX's 1163 ravaged, today's rally could be a short-covering corrective rally, rather than a new Bull market with Summer coming on.
The McClellan Oscillator rallied back from -55 to the zero line, but the Summation depth of -437 is well above a -1000 oversold level. Market letters have snapped back to semi-complacency but the Nova/Ursa ratio has slipped into the high teens - a reliable Bullish sign. Another positive sign is the Bullish per cent having worked its way down to 53.
With today's (Monday) large gains slipping away in the final hour, I would adopt a "Show Me" stance until Volume and Trend improve.

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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RECOVERY OR HIATUS?

TAXTIME:

At least part of recent market softness has to be due to last minute Income tax funding before the Friday deadline. Despite the many previously mentioned reasons for another selloff, many of the Sentiment Indicators are lining up for a decent rally in the near future. Usually, when I decide to take a vacation before my summer class starts, the market rallies bigtime - like Jesse Livermore did when the market sagged (take a cruise), that is what I plan to do next week, so the column will be a little disjointed, timewise.The Indicators that are currently on or near a Buy point are: the CBOE put/call ratio at 64, although the ISE one jumped up on last Friday's action. The VIX quieted down to 12.6; newsletter surveys are giving a huge Buy signal with I.I.'s Bull/Bear harkening back to last Aug. numbers, below 50% vs. 29.2 Bears; recent Consensus,Inc.'s 35% and AAII's 27.7 vs. 43.9 (inverted, yet) also are extreme. Plenty of cash still abounds, the public is outshorting the Specialists increasingly at 2.26 to 1, and the DJIA dividend rate is at a new high 4.7%.
I would still like to see the Bullish percent fall to about 50% of stocks on a Buy signal (now at midrange 65) and the Nova to Ursa Rydex ratio into the teens from its current 24.

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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TAXTIME:

CASH IS KING:

The two Sentiment Indicators that stand out this week are the Mutual Fund Cash (IBD's figures) at a record high 5.6%, and the AAII Bull/Bear ratio of 28 to 51; both are multi-year highs, and both are Bullish for the markets. With the 3 indices right at or above the 200-day MA and previous Support levels we are still at that CMJ (Critical Market Juncture) that tells us whether we rebound against all odds or break through back into the previous 11-month Trading Range of 9,800/10,400 DJIA.The CBOE and ISE put/call ratios are still helping the Bull case, and the Advance/Decline actually did turn around last week to the positive side, making the McClellan Oscillator bounce off its bounded low. Finally, the Public to Specialist shorting reached a high of 2.15 (5-year high is 2.57), and the odd-lot shorts rose from 7.9M to 10.8M last week - a statistic I usually haven't followed since options became available to the little guy.

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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CASH IS KING: