Monday, December 12, 2005

RED CHRISTMAS (WHOOPS-HOLIDAY):

IBD's Short Interest ratio on the NYSE is 5.26, quite Bullish. Although it set up the October rally with the new high of over 6, the previous '05 new high was only 3.47 back in April's market bottom. 5-year high is still 6.78. NYSE Public to Specialist shorting is still high, but dropping, at just over 3.

But dangerously complacent, precluding an immediate rise are the CBOE Equity put/call ratio at 61, and the Inv.Intell. Bull/Bears spread still widening at 56.2 vs. 21.9. Similarly, the Mkt Vane Bulls hit 70 for the first time in a while, as the AAII surveys also recorded dreaded complacency at 19 Bears with Bulls at 49.5.
For what it's worth, the Univ. of Michigan Confidence survey shot up nearly 10% to 88.7 - Ah! Christmas... The Rydex Funds Nova/Ursa is relatively high at 23, the same topping level reached last late July which ended the Spring Rally. Further danger is seen by the Bullish per cent Pt.& Fig. chart breaking 70 - the % of stocks on a Buy signal. Still not topped out, but flying the yellow flag.
The final Bearish nail is the ISEE call/put ratio, over the Bearish level of 200 at 211 ( remaining at 213 on Monday, the 12th). Finally, Barron's reports that with a large number of corporate Insiders selling, the most vulnerable is the Retail group with 6 to 10 times normal - shoppers! let's get out there and spend!!!

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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