BORING!

Sometimes, with the aid of cycles, seasonality and sentiment, the market action can be totally predictable. Although September did not follow the pattern of down months, October did contain the typical year-end selling by mutual funds and profit taking by institutions, and hopefully, the seasonal low. Also typical is the last day and first 4 days of the months, especially Oct./Nov., which we are now seeing. With December and January the best months of the year for the market, we can only hope this will continue.
Sentiment-wise there are some hopeful signs: Odd-lot shorting is at record highs, 4 times the number year over year; and Nasdaq short interest is also at record levels, with Public/Specialist close behind. Barron's Panic Index is at a low -0.73.One of the most reliable of Indicators, the AAII Survey, has once again inverted with 46% Bearish and 32% Bullish.
The McClellan Oscillator is pushing up thru the zero line and the Summation has gone lower to -585, a support area. Finally, the CBOE put/call ratio, although off its last week highs, is still Bullish at 60, with the ISEE at low 125.
Possible negatives for the market are the mutual fund cash level, a low of 4.4% per IBD, and, of course, the usual Fundamental suspects of higher rates and oil prices, tired Bull market and economy, blah, blah, blah.

Personal note: I have been asked to again teach an online Technical Market Analysis course at Golden Gate University this Spring semester, and will give a talk on Sentiment at November's Investor's Business Daily monthly meeting, which will be in the 16th - which is the 3rd Wednesday - due to Thanksgiving occurring in the 4th week. It is Schwab headquarters on Montgomery St. at 7 p.m. for those interested.

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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BORING!

"WALL" STREET:

For a Contrarian, an ascending market requires a "Wall of Worry" so that the smart money gets in early, while the later adopters (mutual funds, retail investors) finally ride the momentum wave trying to catch the last 10%. Last week's RALLYTIME column opined that there was enough negative Sentiment around to stop the downturn - at least temporarily. One "Brick" in the wall is that there was no Selling Climax on large Volume. Other bricks include reports that although foreign investors (85% of them private) and U.S. money managers are repatriating money back to the U.S., possibly because of a rising dollar due to rising rates. Unfortunately, with the American stock market ranked 21 out of 35 in value, almost all of this money is reportedly going into BONDS - Corporate, Treasury and Agency.Sans a Selling Climax, the coming weeks ( usually the best of the year) may just "limp in" - as they say on the World Poker Tour - making for a positive close in this 5th year of the decade. Here are what my indicators are saying: The CBOE Equity put/call ratio is at a high 70 with the VIX on Friday measuring 16, up over a point. The McClellan Oscillator is -17, but the Summation is quite low at -560, previous lows this past June and August bode for good rallies within a few weeks. The Bullish per cent at 50, again is not at an extreme nadir, but is at a previous Resistance, or nesting point. Surveys of newsletters remain negative as far as the complacency Bulls vs. Bears. Both the UBS/Gallop poll of Investors' optimism and the Univ. of Michigan Confidence Index are at 5-year lows. Barron's Panic/Euphoria Index from Smith/Barney is at a low -.62; Specialist shorting vs. Public is at a 5-year high of 4.98. Finally, the Nasdaq vs. NYSE Volume does not reflect speculation and the VIX vs. VXN is unusually strong as OTC big caps mature.

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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"WALL" STREET:

COACHING/TUTORING

After 5 years of teaching Technical Anaylsis at Golden Gate Univ.'s graduate division, and 20 years of investing/brokering, I have decided to make myself available for tutoring/coaching - prompted by an exceptional investing year in a flat market (22 gains, 4 losses in my trading IRA). These sessions will be held at a comparable rate of my Trombone coach, massuese, and golf pro - $80/hour (tutoring); $50/ 1-2 hour (coaching, repairing, critiquing). Anyone interested can contact me at :leonbrnt@aol.com or 415-673-6488 Brent L. Leonard, CMT

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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COACHING/TUTORING

RALLYTIME!

Back from vacation in Southern California with family and friends, missing all the ugliness so typical of Sept./Oct. markets. For decades market lows have mostly occurred sometime in October, and although this may not be the final low of the year, several Indicators are at Pessimistic ( read Bullish) extremes - enough so to take a partial position for a year-end rally, with stops, hedges, etc.).Breadth figures, thanks to profit-taking by hedge funds, et.al, and window dressing by mutual funds selling losers, has been ugly - last week the NYSE Adv./Decl. was nearly 1 to 4 with New Highs 1 to 10 vs. New Lows, a cathartic Climax. CBOE Equity put/call numbers (and IBD's graph of same) were 76 and off the charts, respectively. Although I am leery of small samplings often used by Technicians, when several seem to "nest" together, it gets my attention: the VIX hit 16 for the first time since this year's rally started in the April/May timeframe; the McClellan Oscillator bounced off a minus 75 low last week and the ratio-adjusted Summation went negative for the first time since April. The I.I. Bullish survey's Bears hit 29 for the first time since April and the AAII Bears crossed up over the Bulls 48 to 39, a very reliable signal. UBS and Univ. of Michigan Confidence numbers are way low. Rydex's Nova/Ursa ratio hasn't hit the 15 of last week for over a year, hitting 16 last Aug. and Oct. of '04 lows. Barron's new Panic/Euphoria Index hit -.59, lowest since June's -.65 ( it was -1.0 in May). So if we're not putting in a low in the next couple of weeks, we're at least within striking distance. Failing to make it unanimous are the Bullish percent numbers ( low, but still on a Sell signal) and mutual fund cash. However, if the housing market peaks out, we may see a rush into stocks like the rush out of them in 2000, going into low interest rate mortgages. Another small sampling - in 11 of 11 decades since the DJIA was born, the market had an up year in the 5th year. Can we please make it 12 of 12?

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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RALLYTIME!