DECENT OR DESCENT?:

Although several Sentiment Indicators are signalling a long-anticipated decline to the recent rally, it probably won't start immediately. What with the Santa Claus rally (last week of the year), lots of money from bonuses and other year-end contributions looking for a home -some of it mandated- plus any January effect out there, it could be days or weeks before we see demand weaken.
Most eye-catching is the Citicorp/Smith Barney Panic/Euphoria Index found in Barron's. Last week it zoomed up to -.33, just below the waterline out of the Panic zone. Rejiggered once already, it probably needs another adjustment, since it's spent more time under water than Shamu the Whale. Still, it has been a fairly reliable sign, the last time near -.30 was in May; before that the March period and the summer of '05, when it first appeared - all market tops, except for one backfire. Market bottoms at -0.70 have also been quite reliable.
Other signs of overextension include the McClellan Summation Index coming down off a high 1,000 level, although the Oscillator at -44 is near an oversold state. Bullish per cent, the number of stocks on Buy signals, is also at a lofty level.
Finally, the newsletter survey are mixed, with the Investors' Intelligence spread wide at 58.8 Bulls and only 20.6 Bears; meanwhile, the AAII again inverted, with more Bears than Bulls, usually a positive sign for stocks. Mutual funds have had outflows since November, usually a Bullish sign as they again miss out.

Here are the numbers:

Mktsentiment. 12/22/2006......5Yr.HI........ LOW

DJIA ………. 12343...............12342...........7286
Nasdaq………. 2401...................2460............1114
S&P500…….. 1410.................1427............776
CBOE Equity put/call 59.................87-5/04........46-1/03

VIX ………. 11.36...............44 9/02........10.3-7/05

ISEE-call/put ……. 102................299-12/04.......82-4/02
(>200/Bearish)..

McClel Osc.(+75/-100)……-44............91-5/04.........(81)-5/04
McClelSum.(+750/-1153nh) 922......1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..58.8.................62.9-12/04......35-6/06
Bear:………… 20.6..................38.2-3/03.......16-6/03

AAII-Bull/Bear ……. 39.1/42.5.....n/a n/a
MarketVane Bulls…. 72................ 73..............24

Barron's Panic/
Euphoric Master Idx…. -0.33........-0.24 4/06.....-0.75 11/05

Bullish%- ………77........................88 -2/04...... 46-8/04

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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DECENT OR DESCENT?:

THE END IS NEAR:

As the end of 2006 approaches there is another "end" that begs paying
attention to: Closed-End Funds, specifically municipal bond funds.
As Thomas Hershfeld, the guru of CEFs, discovered years ago, many of them
selloff at year end. Why this is could be that some states, such as
Florida, Washington, Texas, that have no Income tax but rather Asset
tax, drive investors to sell their funds into Money Market Funds at
yearend, then rebuy the tax-frees in Jan/Feb.
By examining charts of, for example, RFA, MFL,MFT, MYF, even California's
MUC,one notices sharp downmoves. What is nice is that unlike stocks they
are unlikely to belly up, and they pay anywhere from 4-6% monthly
tax-free while you wait. You can then decide either to take profits or receive the dividends until they weaken, which they do again in the April/May period and also the June/July span (see charts for entry/exit).
Incidentally, Hershfeld will be on Nightly Business Report this Friday, and guess what he'll be talking about?
Although still Bullishly under water, the longer term master indicator from Barron's - Citi's Panic/Euphoria Index- at -0.48 is still the highest it's been since last July's V-spike period and May's cascade.Although the ISEE call/put ratio closed the week at a benign 136, today's
post-expiration range has it screaming up past the 200/bearish range to 220, intraday, a possible short term anomaly.Both the McClellan Summation and Bullish Per Cent remain Intermediate overbought, although the Oscillator is just in negative territory. Finally, the Mutual Fund outflows were huge - $9B, although $10B came back into ETFs (per AMG Data); and the Bears in the AAII dropped precipitously from 41.6% to 20.6% over the week.

Here are the numbers:

Mktsentiment. 12/15/2006......5Yr.HI........ LOW
DJIA ............... 12445...........12342...........7286
Nasdaq………. 2457............2460............1114
S&P500…….. 1427............1409............776
CBOE Equity
put/call....... 60.............87-5/04........46-1/03
VIX ………. 10.........44 9/02........10.3-7/05
ISEE-call/put ……. 136...........299-12/04.......82-4/02(
>200/Bearish)
McClel Osc.(+75/-100)……-12...........91-5/04.........(81)-5/04
McClelSum.(+750/-1153nh) 1081.....1568-6/03.......(726)-5/04
Newsletter Surveys:
Inv.Intel -Bull:…..…..59.6...........62.9-12/04......35-6/06
Bear:………… 21.3.........38.2-3/03.......16-6/03
AAII-Bull/Bear ……. 41.3/20.6.....n/a n/a
MarketVane Bulls…. 71......... 73..............24
Barron's Panic/Euphoric Master Idx…. -0.48........-0.24 4/06.....-0.75 11/05
Bullish%- ………79...............88 -2/04...... 46-8/04

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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THE END IS NEAR:

IF PAST IS PROLOGUE:

To my knowledge, since WWII only one time has there been a 4-year
Presidential cycle that until this year did not sell off in a vicious
V-Spike, and that was in 1986. It did, however, make up for its delay in
1987 with a record point selloff after James Baker , then Sec'y of State
(and now a name currently in the news), went to Germany and demanded that
they revive their economy or the U.S.would "let the Dollar slide!".
This week BOTH Fed Head Bernanke and U.S.Treasury chief Paulson are on a
mission to China to discuss China's economy, fair trade, and the Dollar-pegged Yuan (too bad Condoleeza isn't going (it would be a first - sending "rice" to China). Considering we've had 100 trading days without any major correction, this Sea of Tranquility must be getting a bit tired, even though we are headed for the Conventional Wisdom's period of a Santa Claus rally and possible January Effect (although there may be no losing stocks to sell for tax purposes this year!).
If a NYSE new high/low ratio of 936 to 21 isn't indicative of a mania
(even though many of these are foreign ADSs, preferred and ETFs), then a
rise in UBS Investor Optimism from 79 to 93 and a rash of corporate Insider
Selling might tip us off to impending weakness.
The McClellan ratio-adjusted (for CEFs, etc.) Summation Index is also sky high at an
overbought 1127; stock charts Bullish Per Cent is also at an elevated
78%, and the Investors' Intelligence surveys of 100 advisory letters has
a Bullish reading just under 60, with 62 being the 5-year high.
Suspiciously, the AAII ratio is Bullishly inverted, an event as rare as a
three-star movie on the Lifetime channel.

Here, then, is this week's grid:
Mktsentiment. 12/08/2006......5Yr.HI........ LOW
DJIA 12307...........11577...........7286
Nasdaq 2437............2243............1114
S&P500 1409............1325............776
CBOE Equity put/call 60.............87-5/04........46-1/03
VIX 12.........44 9/02........10.3-7/05
ISEE-call/put 148...........299-12/04.......82-4/02
(>200/Bearish)
McClel Osc.(+75/-100) -6...............91-5/04.........(81)-5/04
McClelSum.(+750/-1153nh) 1153...........1568-6/03.......(726)-5/04
Newsletter Surveys:
Inv.Intel -Bull:62/28 ..59.8...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 23.9.........38.2-3/03.......16-6/03
AAII-Bull/Bear 38.9/41.6.....n/a n/a
MarketVane Bulls 73......... 73..............24
Barron's Panic/Euphoric
Master Idx -0.48........-0.24 4/06.....-0.75 11/05
Bullish%- 78...............88 -2/04...... 46-8/04

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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IF PAST IS PROLOGUE:

"JANUS" EFFECT:

Janus is the two-faced god for which January is named; since Jeff Hirsch, scion of the late Yale Hirsch and proprietor of the Stock Traders' Almanac, has announced that the January effect of smaller stocks selling off by funds (only to be bought back later) is coming early this year. He figures mid-December. Maybe this dualism is why we have such a bifurcation in Sentiment signals lately:
Investors' Intelligence survey of 100 advisory letters, reported by Michael Burke's Chartcraft each week, shows an elevated Bullish number of 57.5% and a lowly 22.3% from Bears; on the other hand, the AAII - gleaned from postcards sent out each week, shows a very rare inversion of Bulls/Bears at 40/47, respectively - a Bullish signal.
Public to Specialist shorting has dropped dramatically from 7.26 in Sept. to 4.0 (Bearish), but short interest has declined (down 5.5% on the Nasdaq from October).
The CBOE Equity put/call ratio is at a high level of 61, yet frenetic liquidity has driven the McClellan Summation to recent record high breadth of 1056, the same with the Bullish per cent number at 78 (number of stocks on a Buy signal), a top only superceded once, in 2003.
Likewise, the VIX posted a very rare recent sub-10 number, while the Barron's/ Citicorp Panic/Euphoria master Indicator is still cautiously rising, as is the Rydex Nova/Ursa ratio.
Until these dichotomies are resolved, market direction is uncertain, even with the best time of the calendar year just ahead. Here is the grid of Sentiment Indicators:

Mktsentiment. 12/01/2006......5Yr.HI........ LOW

DJIA 12194...........11577...........7286
Nasdaq 2413............2243............1114
S&P500 1396............1325............776
CBOE Equity put/call 54.............87-5/04........46-1/03

VIX 11.6.........44 9/02........10.3-7/05

ISEE-call/put 121...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 8...............91-5/04.........(81)-5/04
McClelSum.(+750/-1056nh) 1056...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 ..57.5...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 22.3.........38.2-3/03.......16-6/03

AAII-Bull/Bear 40.29/47.5.....n/a n/a
MarketVane Bulls 70......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.52........-0.24 4/06.....-0.75 11/05

Bullish%- 78...............88 -2/04...... 46-8/04

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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"JANUS" EFFECT:

BLACK FRIDAY, BLACK MONDAY:

Whatever shoppers are buying it ain't stocks today! The market's uncharacteristic parabolic Fall rally has finally taken a rest - down slightly on a shortened Friday market and more on Monday, as the Dollar descends to a 20-month low.
Whether it's hedgehogs taking profits, mutual funds tax-balancing, Japan carry-trade unwinding, or even Iceland krona dumping - technicians look to the charts for price, volume, momentum shifts; and of course, sentiment excesses.
Standouts last week included the AAII survey, which went to EVEN (41.9% of both Bulls and Bears) a rara avis. At rarefied levels are both the McClellan Summation and my cum.Advance/Decline number; also extreme is the NYSE New Hi/New Lo statistic at 663 to 28. The other meaningful survey - the Investors' Intelligence - spread to another high number ranging from 58.5 Bulls to 22.3 Bears. Finally, the Bullish per cent figure of stocks on Buy signals reached just under 78, a recent high.
Despite the tremendous liquidity out there, how high is high?

Mktsentiment. 11/24/2006......5Yr.HI........ LOW

DJIA 12280...........11577...........7286
Nasdaq 2460............2243............1114
S&P500 1400............1325............776
CBOE Equity put/call 54.............87-5/04........46-1/03

VIX 10.8.........44 9/02........10.3-7/05

ISEE-call/put 106...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 12...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 1051...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 58.5...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 22.3.........38.2-3/03.......16-6/03

AAII-Bull/Bear 41.9/41.9.....n/a n/a
MarketVane Bulls 73......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.57........-0.24 4/06.....-0.75 11/05

Bullish%- 77...............88 -2/04...... 46-8/04

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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BLACK FRIDAY, BLACK MONDAY:

'TIS THE SEASON:

Normally, the November through January Holiday period is the best one for stocks, adjusting for a slight hiccup for year-end mutual fund/institutional selling. But it usually follows a cathartic selloff during the September-October months.
This year would be a hard act to follow, after the 15% rise in the Dow this Fall. With no sign of weakness, and cash coming from carry-trade, lower oil (now $55/bbl.), huge international M&As reducing shares and raising prices, money coming out of housing, as well as commodity and oil stocks, cash is pouring in like a drunken sailor would spend his voyage pay.
And with ETFs growing from 30 to 290 since 1999, the $34B pouring into new ones this year, that has to buy sector and index stocks, the end is not in sight yet; especially with growth funds underperforming the SPX by 4%, they're throwing money in the game with desperation.
Yet, it is hard to buy into this euphoria without some correction (we all know that once we do, the correction will start - Murphy's Law). Tempering our judgment are some lofty Sentiment Indicators this week:The McClellan ratio-adjusted Summation Index has again crossed up over 1,000; the Investors' Intelligence survey widened its Bull/Bear spread to 56.4 vs. 22.3, with most other statistics subsiding into the Holiday.
Finally, the Bullish per cent PNF chart is at a very high 77 level (number of stocks on Buy signals).
Here are the numbers this week:

Mktsentiment. 11/17/2006......5Yr.HI........ LOW

DJIA 12342...........11577...........7286
Nasdaq 2445............2243............1114
S&P500 1401............1325............776
CBOE Equity put/call 54.............87-5/04........46-1/03

VIX 10.0.........44 9/02........10.3-7/05

ISEE-call/put 118...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 105...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 1008...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 56.4...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 22.3.........38.2-3/03.......16-6/03

AAII-Bull/Bear 46.6/30.5.....n/a n/a
MarketVane Bulls 73......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.56........-0.24 4/06.....-0.75 11/05

Bullish%- 77...............88 -2/04...... 46-8/04

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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'TIS THE SEASON:

HOUSECLEANING:

Now that the public has decided that a Woman's place is in the House, it's time to make some minor changes in the Sentiment Indicators: since the Commitment of Traders' gave no signal other than coincident, it has been replaced by Mutual Fund flows from AMG Data. Although Intermediate to Long term, it does reflect a contrary result, causing the public to be historically 180 degrees wrong at both tops and bottoms. Also being tracked are ETF flows.
Despite the shocking results,( both Barron's and the Iowa ElectronicMarkets.com had the Republicans winning the Senate), not much changed in either the Indicators or the market direction. Despite Demos profligate spending prognosis, the housing reversal, a slower Economy, etc., money seems to slosh in from Japanes yen-carry trade, etc. raising all boats.
Although the Transports cannot make a new yearly, not even monthly, high to confirm the Dow Theory, the Industrials do set records, paced by multi-national firms enjoying global increased profits.
Mktsentiment. 11/10/2006......5Yr.HI........ LOW
DJIA 12108...........11577...........7286Nasdaq 2389............2243............1114S&P500 1380............1325............776CBOE Equity put/call 62.............87-5/04........46-1/03 VIX 10.8.........44 9/02........10.3-7/05
ISEE-call/put 135...........299-12/04.......82-4/02(>200/Bearish)
McClel Osc.(+75/-100) 5.............91-5/04.........(81)-5/04McClelSum.(+750/-1000) 921...........1568-6/03.......(726)-5/04
Newsletter Surveys:Inv.Intel -Bull:62/28 52.1...........62.9-12/04......35-6/06Bear:43.2/16.1--5yrs 26.0.........38.2-3/03.......16-6/03
AAII-Bull/Bear 50.6/26.5.....n/a n/a MarketVane Bulls 73.............73..............24
Barron's Panic/Euphoric Master Idx -0.59........-0.24 4/06.....-0.75 11/05
Bullish%- 75...............88 -2/04...... 46-8/04

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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HOUSECLEANING:

SNAPBACK:

After 6 straight down closes on the SPX (S&P500) one would expect a snapback, shortcovering rally, especially with Election Day looming tomorrow. After several months of observing the Commitment of Future Traders, no correlation to the market is apparent based on the net changes of the Small Trader, the Large Speculator, or even the Commercial Hedges; therefore it is being dropped from the matrix.
Another observation - although New Highs/New Lows data is not really Sentiment, it is an important Technical measure; lately it has been huge to the upside ( 733 to 29 the prior week, 516 to 55 last week on the NYSE). Upon examination, many of the issues are either ADSs (foreign stocks) or Closed End Funds and Preferred stocks.
The only Sentiment Indiicators worthy of note last week were the McClellan Oscillator zooming down to -32 from +7 , bringing the Summation below 1,000 but still overbought; the Investor's Intelligence survey widened its spread further to 53.7 Bulls vs. 28.4 Bears a complacent difference; the AAII backed off from its Bullish stance.
Meanwhile record short interest and impending favorable months indicate the Bull is just resting, not over - although the Election results could cause a stir, and the Kinchin 4-year cycle could still kick in if funds/hedgehogs want to dump stocks.

Mktsentiment. 11/3/2006......5Yr.HI........ LOW

DJIA 11986...........11577...........7286
Nasdaq 2330............2243............1114
S&P500 1364............1325............776
CBOE Equity put/call 63.............87-5/04........46-1/03

VIX 11.1.........44 9/02........10.3-7/05

ISEE-call/put 117...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) -32...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 929...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 53.7...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 28.4.........38.2-3/03.......16-6/03

AAII-Bull/Bear 43.8/36.9.....n/a n/a
MarketVane Bulls 73......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.61........-0.24 4/06.....-0.75 11/05

Bullish%- 74...............88 -2/04...... 46-8/04

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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SNAPBACK:

THE PAUSE THAT REFRESHES:

After a 4-month straightup Dow, it seems like we may at least go sideways, at least until after the elections next week. Whether the excess liquiduty that has confounded seasonal history came from lower oil/gas, a renewal of Japan's carry-trade, or corporate share buybacks, it seems the housing crash has not hurt stocks, as of yet.
With the levelling off, some of the excessive sentiment readings have backed off, such as the CBOE put/call ratio, VIX, Panic/ Euphoria,Specialist shorts,and AAII survey.Still indicating a potential downturn are the McClellan Summation, now crossing over 1000, Bullish per cent at a high of 74, and finally, the Nova/Ursa waking up from its single-digit bullishness up to the 15 mark it saw at May's top. Here are the numbers:

Mktsentiment. 10/27/2006......5Yr.HI........ LOW

DJIA 12090...........11577...........7286
Nasdaq 2350............2243............1114
S&P500 1377............1325............776
CBOE Equity put/call 61.............87-5/04........46-1/03

VIX 10.8.........44 9/02........10.3-7/05

ISEE-call/put 161...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 7...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 1005...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 52.7...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 30.1.........38.2-3/03.......16-6/03

AAII-Bull/Bear 52.2/30.4.....n/a n/a
MarketVane Bulls 73......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.57........-0.24 4/06.....-0.75 11/05

Bullish%- 74...............88 -2/04...... 46-8/04

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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THE PAUSE THAT REFRESHES:

MEA CULPA:

As evident, I was unable to update this blog this week due to my vacation, sans my heavy laptop. I was able to retrieve the data, as viewed below.
The October Surprise continues to defy traditional October selloffs (word is many funds did it early this year); and so the rubber band stretches further. NYSE new his/lows were outrageous at 650 to 24, with the NAZ a weaker copy; the McClellan Summation also pushes the envelope at 935.
Also nearing optimal levels are the AAII and Invest.Intell. surveys (see below), and the Bullish per cent.Here is the Matrix:
Mktsentiment.blogspot 10/20/2006......5Yr.HI........ LOW

DJIA.................................. 12002...........11577...........7286
Nasdaq.................................. 2342............2243............1114
S&P500............................. 1368............1325............776
CBOE Equity
ratio ...................................60.............87-5/04........46-1/03
VIX ................................10.63.........44 9/02........10.3-7/05
ISEE-call/put ................. 146...........299-12/04.......82-4/02(>200/Bearish)
McClel Osc.(+75/-100) ...9...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 935............1568-6/03.......(726)-5/04
Newsletter Surveys:
Inv.Intel -Bull:................... 52.2...........62.9-12/04......35-6/06
Bear:................................ 30.........38.2-3/03.......16-6/03
AAII-Bull/Bear 54.2/29.8.....n/a n/a
MarketVane Bulls 72......... 73..............24
Barron's Panic/Euphoric -0.65........-0.24 4/06.....-0.75 11/05
Bullish%- ........................ 72...............88 -2/04...... 46-8/04

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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MEA CULPA:

TO THE MOON, ALICE:

So when does this parabolic upthrust end? We all know the bricks in the Wall of Worry -interest rates, Iraq, economy, housing. In stark contrast to the seasonal normal, the markets have ignored history (so far), and as if there were a deus ex machina lifting all boats ( Hedge funds, ETFs -whose inflows were $6B last week, although without them equity flows were negative-, or the Republicans?).
NYSE new highs to lows were 558 to 25, and my own cumulative A/D reached all-time highs of 83,805. Still, NYSE Volume remains between 1.2B and 1.5B shares, not at all heavy. Although the DJIA is making new highs (although well off its 2000 inflation-adjusted highs) other Indices, such as the NYSE and Nasdaq comps are bumping up on last April/May's highs, a Resistance area.
As for the Sentiment readings, they're as wacky as I've ever seen them. Most show evidence of the past strong runup, but have entered the "toppy" zone - such as the McClellan Summation Index at 835; also, the Bullish per cent at 71 nears previous recent tops.
The Bull/Bear spread for the Investors Intelligence has gone from 4 in August to 22, at 52/30; likewise the AAII flip-flopped from an inverse 37/46 to 49/37, as the Market Vane climbs to a toppy 72. Conversely, the Citi Panic/Euphoria master indicator is Bullish at -0.67, as are the Specialist to Public shorts and short interest.
Here are the indicators:

Mktsentiment.blogspot 10/13/2006 4Yr.HI LOW
DJIA 11960 11577 7286
Nasdaq 2357 2243 1114
S&P500 1365 1325 776

CBOE Equity
put/call ratio 60 87-5/04 46-1/03

VIX 10.75 44 9/02 10.3-7/05

ISEE-call/put 147 9-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 24 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 835 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 52.2 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 30.4 38.2-3/03 16-6/03

AAII-Bull/Bear 49/37.8 n/a n/a
MarketVane Bulls 72 73 24

Barron's Panic/
Euphoric Master Idx -0.67 -0.24 4/06 -0.75 11/05

Bullish%- 71 88 -2/04 46-8/04

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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TO THE MOON, ALICE:

CONVENTIONAL STUPIDITY:

One of the most reliable technical signals has acceded to the media curse - that of September being the cruelest month for the market and, for 50 years, October in the 4-year Presidential cycle always does a V-Spike selloff before rallying into yearend.
Somebody forgot to tell the markets, which have gone straight up since August (maybe the spike came early this year -during the summer).
Sentiment Indicators on the whole do not show signs of an immediate turndown, although it is always prudent to be cautious this time of year, as Mutual Funds begin their yearly adjustments.
The Dow 30 keeps making new highs ( although no other Indices are), which means buy-and-holders of 7 years ago are finally even again, except for Inflation. Not so for the four-letter words/stocks! They're not even halfway back.
Last week's breadth, as measured by new highs and Advance/Declines is getting stronger. The Panic/Euphoria index is very bearish (great for the markets) at -0.68, and the AAII Bull/Bear survey numbers actually inverted:37.8 vs. 46.7.
The Investor's Intell. and Market Vane, however, tell a different story. Both the Bullish per cent (still on a strong Buy signal) and the Nasdaq Comp are approaching the top of their range from last winter. The McClellan Summation is also quite high.

Mktsentiment.blogspot 10/06/2006 ..... 4Yr.HI ...... LOW
DJIA 11850 11577 7286
Nasdaq 2299 2243 1114
S&P500 1349 1325 776

CBOE Equity put/call ratio 66 87-5/04 46-1/03

VIX 11.5 44 9/02 10.3-7/05

ISEE-call/put 110 9-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 6 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 768 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 49.5 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 33.3 38.2-3/03 16-6/03

AAII-Bull/Bear 37.8/46.7 n/a n/a
MarketVane Bulls 70 73 24

Barron's Panic/
Euphoric Master Idx -0.68 -0.24 4/06 -0.75 11/05

Bullish%- 68 88 -2/04 46-8/04

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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CONVENTIONAL STUPIDITY:

BLAH,BLAH,BLAH:

Here we are on the first day of the new week, month, and quarter - even a new fiscal year for the Federal Government, and we flatline the market. The market is usually up 74% of the time on the first day of the month, and our newly high DJIA cannot even close on the plus side.
Now that Sept. defied Conventional Wisdom by rallying into the EOQ, does that invert all other rationale, including the 4-year cycle?
With a new high the Bulls are returning, in the form of UBS Confidence rising from 53% to 74; the AAII gap widened further (with the Inv.Intell. unchanged); not yet Bearish are the put/call ratios, Bullish per cent -63- , and Barron's Panic indicator, while the Trannies and Utils are not confirming the Dow Industrials, nor are most of the other indices ( the NAZ hasn't even come back to 50% of its 5000 mark).
Here are the Indicators as we enter the final quarter:

Mktsentiment.blogspot 9/27/2006 4Yr.HI LOW
DJIA 11679 11577 7286
Nasdaq 2258 2243 1114
S&P500 1335 1325 776

CBOE Equity
put/call ratio 66 87-5/04 46-1/03

VIX 12. 44 9/02 10.3-7/05

ISEE-call/put 80 9-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) -2 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 739 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 47.4 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 33.7 38.2-3/03 16-6/03

AAII-Bull/Bear 51.3 /32.9 n/a n/a
MarketVane Bulls 71 73 24

Barron's Panic/
Euphoric Master Idx -0.64 -0.24 4/06 -0.75 11/05

Bullish%- 63 88 -2/04 46-8/04

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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BLAH,BLAH,BLAH:

CALM BEFORE THE CALM:

With just a few days until the end of the 3rd Quarter, the Indicators are unusually benign, with a couple of exceptions.
Although the (small sample) statistic that 15 out 18 of the last post-expiry weeks in
September were down (make that 16 of 19, now) held true, it was rather minimal. And although the index charts look like they are rolling over, momentum oscillators included, the Bullish per cent remains on a Buy signal, and New Highs vs. New Lows have also been strong.
The McClellan charts both show negative action, with the Summation high and toppy - the Oscillator -20 and descending.
Newsletter surveys became more negative with wider spreads between Bulls and Bears, and the Market Vane hit 70 (Bulls).
My newly followed indicators, the commitment of traders, is going crazy: the previous week the Commercial Hedgers net change rose 10-fold over normal, and this past week it doubled that to the downside, while the change of small and large traders fell heavily.
Possibly this portends the widely anticipated V-spike typical of the Sept.-Oct. period in a
mid-election year.Below are the Indicators:

Mktsentiment.blogspot 9/22/2006 4Yr.HI LOW
DJIA 11508 11577 7286
Nasdaq 2218 2243 1114
S&P500 1314 1325 776

CBOE Equity 67 87-5/04 46-1/03
put/call ratio

VIX 12.6 44-9/02 10.3-7/05

ISEE-call/put 130 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) -20 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 709 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 47.4 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 33.7 38.2-3/03 16-6/03

AAII-Bull/Bear 47.8/34.2 n/a n/a
MarketVane Bulls 70 73 24

Barron's Panic/
Euphoric Master Idx -0.63 -0.24 4/06 -0.75 11/05

Bullish%- 56 88 -2/04 46-8/04

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

Subscribe in a reader

CALM BEFORE THE CALM:

CALM BEFORE THE CALM:

With just a few days until the end of the 3rd Quarter, the Indicators are unusually benign, with a couple of exceptions. Although the (small sample) statistic that 15 out 18 of the last post-expiry weeks in September were down (make that 16 of 19, now) held true, it was rather minimal. And although the index charts look like they are rolling over, momentum oscillators included, the Bullish per cent remains on a Buy signal, and New Highs vs. New Lows have also been strong.
The McClellan charts both show negative action, with the Summation high and toppy - the Oscillator -20 and descending.
Newsletter surveys became more negative with wider spreads between Bulls and Bears, and the Market Vane hit 70 (Bulls).
Both the Panic Master Indicator and the public shorting remain cautiously negative.
My newly followed indicators, the Commitment of Traders, is going crazy: the previous week the Commercial Hedgers net change rose 10-fold over normal, and this past week it doubled that to the downside, while the change of small and large traders fell heavily. Possibly this portends the widely anticipated V-spike typical of the Sept.-Oct. period in a mid-election year. Below are the Indicators:

Mktsentiment.blogspot 9/22/2006 4Yr.HI LOW
DJIA 11508 11577 7286
Nasdaq 2218 2243 1114
S&P500 1314 1325 776

CBOE Equity 67 87-5/04 46-1/03
put/call ratio

VIX 12.6 44-9/02 10.3-7/05

ISEE-call/put 130 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) -20 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 709 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 47.4 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 33.7 38.2-3/03 16-6/03

AAII-Bull/Bear 47.8/34.2 n/a n/a
MarketVane Bulls 70 73 24

Barron's Panic/
Euphoric Master Idx -0.63 -0.24 4/06 -0.75 11/05

Bullish%- 56 88 -2/04 46-8/04

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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CALM BEFORE THE CALM:

USUAL SUSPECTS:

In trends, either up or down, one can usually find, among the indicators that are regressing to the mean, a few standout extremes -some more reliable than others. Notable thoughts this week are that the markets' rallies have pushed them up close to new all time highs (DJIA) or at least previous highs of last May (SPX). So what are the odds of each of the 3 options - continuing higher, levelling off, or heading back down?
The Nasdaq (weakest of the 3 main Indices) has almost reached the beginning of the Nov.'05 distribution Trading Range and is also at its 200-day MA (per IBD chart). Since Michael Santoli has revealed in Barron's that 15 of the last 18 September post-expiration (option) weeks have ended down, and the 50-year history of the 4-year Kinchin cycle is unmarred in its reliability of Fall selloffs, I would say that at least a pause here is definitely in order.
Also, a very reliable visual indicator I use, the IBD put/call Volume line on the chart page, has spiked up, usually resulting in at least a cessation of the up move.However, being a two-handed analyst, a case can be definitely made for a sideways TR occurring:
Several Sentiment Indicators are showing Bullish strength by their negativity, including Public to Specialist shorting (see grid below), short interest, which may be due to other complicated causes, but still has to be unwound; Commercial Hedgers' changes of longs was an incredible 310,000 -ten times its average change, although Large Speculators declined for the first time in weeks.
Although market surveys are regressing to neutral readings, the UBS and U of Michigan Confidence numbers are at lows, and the Smith/Barney Panic master indicator is still at a Bullish -.61, so complacency hasn't exactly set in enough for a "Septic Tank"!

Mktsentiment.blogspot 9/15/2006 4Yr.HI LOW
DJIA 11560….. ……11577……. 7286
Nasdaq 2235 2243 1114
S&P500 1325 1325 776

CBOE Equity 65 87-5/04 46-1/03
put/call ratio

VIX 11.7 44-9/02 10.3-7/05

ISEE-call/put 70 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 12 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 727 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull: 45.8 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 35.4 38.2-3/03 16-6/03

AAII-Bull/Bear 48/37.4 n/a n/a
MarketVane Bulls 68 73 24

Barron's Panic/
Euphoric Master Idx -0.61 -0.24 4/06 -0.75 11/05

Bullish%- . 57 88 -2/04 46-8/04

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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USUAL SUSPECTS:

106 DEGREES OF PERSPIRATION:

Returning from vacation at Palm Springs, where I found the casinos way cooler than the golf courses, I find the Big Boys are Back also - and are they selling! Although the absolute worst time to trade is early Monday morning (where the weekend warriors/worriers panic), it appears that for what it's worth, the last 2 weeks ETFs have been gaining buyers while regular mutual funds have been selling.
The July/August rally showed great strength in breadth, although on weaker Volume, but seems to have peaked, at least temporarily, at the top of the old Trading Range. Conventional Wisdom that September is the cruelest month is almost too rampant to believe, so let's look at the Sentiment Indicators:
The CBOE Equity put/call ratio is still healthily high at 68, not the 76 panics which occurred twice during the course of the 2-month rally. NYSE short interest is at record high levels- 6.94!
The McClellan Oscillator, a measure of advance/decline action, topped out before the decline at 45 and now is at a neutral -4, while its Summation rolled over at 682.
Finally, a couple more signals belying an ongoing Sept. selloff include a huge increase in change of Commercial Hedgers purchase ( a new signal for my quiver), and the Bullish Per Cent, or stocks on a Buy signal, which is actually itself on a BUY signal, with more than 3 2-point boxes up on a Point & Figure chart (6% reversal move).
Here is the matrix of Indicators:

Mktsentiment.blogspot 9/8/2006 4Yr.HI LOW
DJIA 11392 11577 7286
Nasdaq 2165 2243 1114
S&P500 1302 1325 776

CBOE Equity 68 87-5/04 46-1/03
put/call ratio

VIX 12.9 44-9/02 10.3-7/05

ISEE-call/put 125 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) -4 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 682 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 43.2 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 33.7 38.2-3/03 16-6/03

AAII-Bull/Bear 43.0/29.9 n/a n/a
MarketVane Bulls 68 73 24

Barron's Panic/
Euphoric Master Idx -0.68 -0.24 4/06 -0.75 11/05

Bullish%- .82%/12% 57 88 -2/04 46-8/04

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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106 DEGREES OF PERSPIRATION:

SAME OLE, SAME OLE:

I will be on vacation next week - will try to catch up ASAP.
Although coming off a flat to down market last week, the bulls still dominate in the sentiment area: NASDAQ short interest is again in record territory; the CBOE put/call jumped higher last week to 69 from 60 (although the ISEE call/put also jumped on Friday - not a good sign).Now at 151 it needs to go to 200 to be bearish. Most others below remained the same, or backed off slightly.
Mktsentiment.blogspot 8/25/2006 4Yr.HI LOW
DJIA 11284 11577 7286
Nasdaq 2140 2243 1114
S&P500 1295 1325 776

CBOE Equity 69 87-5/04 46-1/03
put/call ratio

VIX 12.3 44-9/02 10.3-7/05

ISEE-call/put 151 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 4 91-5/04 (81)-5/04
McClelSum.(+750/-1000)` 467 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 40.0 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 34.7 38.2-3/03 16-6/03

AAII-Bull/Bear 39.4/37.4 n/a n/a
MarketVane Bulls 66 73 24

Barron's Panic/
Euphoric Master Idx -0.71 -0.24 4/06 -0.75 11/05

Bullish%- 54 88 -2/04 46-8/04

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

Subscribe in a reader

SAME OLE, SAME OLE:

TW3: or, THIS WAS THE WEEK THAT WAS

Reminiscent of the TV comedy news show many years ago, last week certainly was unusual, although considering this time of year, light Volume whipsawing and option expiry one could expect something.
As any veteran trader knows, there is quite a difference between Analysis and Trading - you can be right on one and wrong on the other. Last week's blog called for a rally based on oversold Sentiment numbers, but the rally might also be due to the fact that I went totally flat to go on vacation after being soured on all Sectors .
I also wrote about the Trading Range from 10,700 to 11,300 on the DJIA, which seems to have again bounded price action, as the post-expiration Monday reverses almost all of last week's moves with profit-taking.
Looking ahead, the only powerful sign is the Barron's Panic/Euphoria master indicator down to a Bullishly low -0.75, the area of previous major lows. Most others have backed off from the week before's extremes, with the McClellan Oscillator bumping up to the +50 Resistance level.Both the VIX and CBOE Equity put/call ratio dropped precipitably, as did the Public shorting ratio.Nimble trading or keeping the powder dry seems to be the order of the day, at least until Labor Day.
Mktsentiment.blogspot 8/18/2006 4Yr.HI LOW
DJIA 11381 11577 7286
Nasdaq 2163 2243 1114
S&P500 1302 1325 776

CBOE Equity 60 87-5/04 46-1/03
put/call ratio

VIX 11.6 44-9/02 10.3-7/05

ISEE-call/put 77 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 45 91-5/04 (81)-5/04
McClelSum.(+750/-1000)` 393 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 40.9 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 36.6 38.2-3/03 16-6/03

AAII-Bull/Bear 30.5/35.8 n/a n/a
MarketVane Bulls 64 73 24

Barron's Panic/
Euphoric Master Idx -0.75 -0.24 4/06 -0.75 11/05

Bullish%- (.82%/12%) 54 88 -2/04 46-8/04

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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TW3: or, THIS WAS THE WEEK THAT WAS

LET'S GET READY TO RALLY!:

Since November 2005 the DJIA has risen less than 200 points - a 1-day climb. It has moved sideways( except one moment of irrational exuberance last May) in a 600 point Trading Range from 10,700 to 11,300. As always, the question is whether this has been Re-accumulation or Distribution.
The fact that we broke some major technical Support Trendlines, including a rising diagonal trend in May, coupled with the worst time of year, historically, for stocks, the Intermediate picture looks bleak.
Short term, however, many Sentiment Indicators have been stretched to the Positive levels, including the Citicorp Panic Index at -0.68, the lowest in several months, and at a level where previous rallies started ( last Spring and last Fall).
Also short term is the CBOE put/call ratio at 76, and the Inv.Intell. survey, narrowing even farther to 40 Bull and 37 Bears.

Mktsentiment.blogspot 8/11/2006 4Yr.HI LOW
DJIA 11088 11577 7286
Nasdaq 2057 2243 1114
S&P500 1266 1325 776

CBOE Equity 76 87-5/04 46-1/03
put/call ratio

VIX 14.3 44-9/02 10.3-7/05

ISEE-call/put 112 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) -7 91-5/04 (81)-5/04
McClelSum.(+750/-1000)` 222 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 40.2 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 37.1 38.2-3/03 16-6/03

AAII-Bull/Bear 36.6/41.5 n/a n/a
MarketVane Bulls 62 73 24

Barron's Panic/
Euphoric Master Idx -0.68 -0.24 4/06 -0.75 11/05

Bullish%- (82%/12%) 50 88 -2/04 46-8/04.

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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LET'S GET READY TO RALLY!:

WAG THE DOG DAYS OF SUMMER:

The double bottom liftoffs, after the May deluge, came in mid-June and mid-July; preceding these were some discrete record high numbers in one statistic I follow - Public vs. NYSE Specialists' shorting. A short term indicator of Public panic, these were at 7.26 (a new high) on the June 6 week end, and 7.84 on June 30, also a new high. Last week this number jumped from 5.66 to 6.93.
Also slightly Bullish is the small narrowing of the Inv.Intell. Bull/Bear spread (more Bears, fewer Bulls) and the widening of the Inverted AAII spread (same result).
See the grid below for other minor changes:

Mktsentiment.blogspot
8/4/06 4Yr.HI LOW
DJIA 10240 11577 7286
Nasdaq 2085 2243 1114
S&P500 1279 1325 776
CBOE Equity 65 87-5/04 46-1/03put/call ratio
VIX 14.3 44-9/02 10.3-7/05
ISEE-call/put 116 299-12/04 82-4/02(>200/Bearish)
McClel Osc.(+75/-100) 30 91-5/04 (81)-5/04
McClelSum.(+750/-1000)` 200 1568-6/03 (726)-5/04
Newsletter Surveys:Inv.Intel -
Bull: 41.5 62.9-12/04 35-6/06
Bear: 36.2 38.2-3/03 16-6/03
AAII-Bull/Bear 31.5/47.2 n/a n/a
MarketVane Bulls 62 73 24
Barron's Panic/Euphoric Master Idx -0.56 -0.24 4/06 -0.75 11/05
Bullish%- (.82%/12%): 53 88 -2/04 46-8/04

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

Subscribe in a reader

WAG THE DOG DAYS OF SUMMER:

CROSSCURRENTS:

For the past few weeks that I've been watching money flow of mutual funds I've noticed that ETF Volume zigs while mutual funds zag. Per AMG Data, last week, for example, inflows were $1.4B, although ex-ETF funds it was almost a Billion outflow. I still remember shortly after I broke into this game that fund outflows were the rule for most of 1988, after the '87 Crashette, while the market was slowly rising.

Looking at the matrix below, notable extremes are: McClellan Osc. at its 50 Resistance level (52) and the Summation looks to break up thru the zero line even with the market down today.

Banking stocks and Utilities are hitting new highs and breadth last week was positive (5:1), with the weaker Nasdaq only 2:1. Odd lot shorting was up 50% from the previous week.Both the Panic Index and Bullish Per Cent slipped lower (bullish), but Market Vane is up to 62% Bulls. This could portend a slight hiatus.

Mktsentiment.blogspot 7/28/2006 4Yr.HI LOW
DJIA 11219 11577 7286
Nasdaq 2094 2243 1114
S&P500 1278 1325 776

CBOE Equity 58 87-5/04 46-1/03
put/call ratio

VIX 14.3 44-9/02 10.3-7/05

ISEE-call/put 96 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 52 91-5/04 (81)-5/04
McClelSum.(+750/-1000)`-21 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 42.2 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 34.5 38.2-3/03 16-6/03

AAII-Bull/Bear 34.9/43 n/a n/a
MarketVane Bulls 62 73 24

Barron's Panic/
Euphoric Master Idx -0.55 -0.24 4/06 -0.75 11/05

Bullish%- .82%/12% 49 88 -2/04 46-8/04

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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CROSSCURRENTS:

2nd Anniversary Revision:

As www.mktsentiment.blogspot.com enters its 3rd year of analyzing and reporting major Sentiment Indicators, it will now start adding a matrix of the most important ones, with their recent multi-year highs and lows for reference.
As you might note, most are coming off their oversold Bullish extreme levels - the exceptions being: CBOE put/call ratio still high at 71; the AAII survey showed Bulls at a low of 23.9 and Bears at 57.8. Marty Zweig's dictum of 2 times in 3 months with 9:1 up/down volume days just added a third yesterday (Monday), although today's failed followthrough is giving some back.
Only time will tell if we are just working off the Bearish sentiment or setting up a Summer rally.

7/21/2006 4Yr.HI LOW
DJIA 10868 11577 7286
Nasdaq 2020 2243 1114
S&P500 1240 1325 776

CBOE Equity 71 87-5/04 46-1/03
put/call ratio

VIX 17.4 44-9/02 10.3-7/05

ISEE-call/put 125 299-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) -14 91-5/04 (81)-5/04
McClelSum.(+750/-1000)`-151 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 42.1 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 33.7 38.2-3/03 16-6/03

AAII-Bull/Bear 23.9/57.8 n/a n/a
MarketVane Bulls 58 73 24

Barron's Panic/
Euphoric Master Idx -0.46 -0.24 4/06 -0.75 11/05

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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2nd Anniversary Revision:

1,000 POINTS OF DARK:

Since early May, the DJIA has lost nearly 1,000 points, with the Nasty Nasdaq down 13%. Despite last week's slaughter, not all Sentiment Indicators reflected a cathartic Fear or Climactic Volume - which tells me the bottom is still not in, although an oversold Summer rally could set in.
The exceptions that were showing defensive hedging/concern were mostly option related: the CBOE Equity put/call ratio at a high 76 (although the ISEE call/put was not excited, at 127 -scarcely above last week's 124), and the VIX went back up to 18 from 13.
The McClellan Oscillator went down through the zero line to - 23 (support @ -50) and the Summation remained in negative territory at -154.
Finally, market newsletter surveys backed off slightly as did the Panic/Euphoria Index, while shorting - by Public vs. NY Specialists and short interest -remained high.
Option expiration occurs this Friday, so expect volatility.

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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1,000 POINTS OF DARK:

LAZY DAYS OF SUMMER:

Like the markets, the Sentiment Indicators have backed off their extremes after the June 500 point rally on the Dow. The VIX spike retraced down to the top of the old Trading Range Resistance @ 13.97 (from 18); the CBOE put/call ratio, is down from mid-June's 73 to still a Bullish 63; also Bullish is the Panic/Euphoria master indicator at -0.58, deeply under water. Remember, this number broke above the 30 surface back in May 5, just before the steep decline.
The AAII survey is more inverted at 37.7 Bulls vs. 42.6 Bears, while the I.I. survey is returning to its more Bulls-dominant ratio, at 38.7/34.4.The McClellan Oscillator has retraced down from its extreme of 72, now at 31; the Summation accumulation is heading up to the zero line at -232.
Finally, Short Interest and NYSE Specialist to Public shorting remain high.

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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LAZY DAYS OF SUMMER:

GOOOOOOOOAALLLLL!:

So where are we headed with this market? Most technicians seem to agree with the Bear scenario, led by the prolific data of Ned Davis. After Thursday's intense shortcovering rally of over 200 pts., we seem to be in a corrective rally - at least until some of the Sentiment Indicators dig out of their holes. According to Robert Shiller's 17-year-old survey, nearly 93% of current responders believe the market will be higher by next May - Exuberant!
Although the Investors Intelligence Bulls and Bears have become untied from last week, they are still extreme at 37 vs. 36 (the AAII is still just barely inverted at 38/39); and although Advances vs. Declines on the big board were more than 3:1, the new hi's, lows were the opposite.
Big rallies from gold, commercial metals and energy (now 28% of Fidelity's funds) from oversold levels are not producing the lead changes necessary for a new Bull market to emerge.
With the holiday approaching, both the VIX and the CBOE put/call ratio subsided substantially. Markets typically rally during this period, after the late June, post-triple-witching selloff. Finally, the Bullish Per cent has climbed up to 55 - not quite a 6% buy reversal, yet.

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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GOOOOOOOOAALLLLL!:

HEDGE-EMONY:

The ability of hedge funds to control the market!
AMG Data services, which reports mutual funds money flows, cites that in the last 2 weeks, these figures emerge: June 14 - Inflows were $4B, but without ETFs- over $5B in OUTFLOWS; June 21: Outflows were over $5B; without ETFs - only $600M. Talk about zigging and zagging!With the mostly upward retracement (rally) of the past few days, many Sentiment Indicators ameliorated their drastic levels, including the McClellan Oscillator, which is back to minus 11 after breaching the -50 Support area; however, the Summation is below -500 (at 509) about where it was last October.
Both the CBOE put/call and VIX have backed off their highs-still in a positive area for the Bulls, but the ISE roared back to complacency at 133 (Monday's level was 200, not a good sign). The Bullish per cent slipped below 50 to 49, about where it was last August (46). Market surveys also show lots of pessimism with the I.I. finally lowering to a tie of the Bulls and Bears at 35.6 each, with the AAII still inverted at 34.4 vs. 41.6.
Finally, the Panic Index in Barrons' slipped farther to -0.66, deep in the Panic zone. The preponderance of these Indicators are suggesting a rally soon -even in a Bearish environment. History shows a few down days after June's Triple witching option and futures expiry, with a 9-day rally through the July 4th holiday. With the Fed's 100% expectation of hiking rates, bear in mind that the average market move between the last rate HIKE and the first CUT is a minus 7% - contrary to conventional wisdom; also remember that this is a small sampling of polling, and odds of it being exactly 7% are miniscule!

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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HEDGE-EMONY:

CMJ, OR CRITICAL MARKET JUNCTURE:

With the cathartic volatility of quadruple-witching expirations, there appears to be a Democratic/Republican-type of polarization on whether we have bottomed or not. The choices, offered by respected veteran analysts on both sides, seem to be either much farther down to go ( in this ugly month of an ugly quarter of an ugly 4th year); or stabilize at current levels which display the DJIA at its 200-day MA, and the SPX just below, while the weak Nasdaq is well below but at longterm horizontal support.
Many Sentiment Indicators argue for the latter - building a base, although whether it's to be a re-Distribution phase or Accumulation phase is yet TBD. Firstly, the Barron's Panic/Euphoric Index hit - 0.63, a prior launching level (see Feb. and last Oct.), and the VIX climbed to a recent record of 24 before retracing down to 17.2. It is doubtful that it will return to its recent range of 11-12 of the last several months.
The I.I., or Investor's Intelligence survey of Bulls and Bears continued their converging at 38.7% and 34.4 respectively - also a recent record that is Bullish. Even the Elliotticians weigh in with an A=C correction of @550 declining points each on the Dow 30. Lowry's Report's famous 90% predominance in both directions last week also gives credence to a stoppage of bloodletting, at least temporarily (weekly New highs/lows on the NYSE were 44 vs. 458).
Although the CBOE Equity put/call ratio backed off slightly with options expiration, the ISEE call/put hit a record low of 66 -very bullish for a contrarian. Like the major indices, the McClellan Oscillator was basically unchanged from last week (after a rough ride), however the Summation, at -407, is near the October '05 low. And at 48%, the Bullish per cent of stocks on Buy signals are finally in the range of previous bottoms.
It's been a long while since we've seen such a consensus of negativity like this, so in my view, left to investors and not Nations, we should have reached at least a temporary stoppage of declines.

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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CMJ, OR CRITICAL MARKET JUNCTURE:

1,000 POINTS OF RED:

That's what the Dow 30 seems to be losing this summer! Yet most of those investors who give us our Sentiment readings seem unfazed, judging from last week.
Several numbers, such as CBOE's put/call ratio, actually dropped - as did the ISE obverse call/put, and the McClellan Summation Index. The Nova/Ursa ratio reached a new low of 10, indicating that investors are rushing into the Bull fund (?), and the AAII bears actually dropped 5 points, although it is still inverted. And these numbers are usually gathered by Wednesday, the day before that 200 pt. 1-day reversal upward which otherwise distorted an ugly week.
Falling slightly, but not to oversold levels, were the Panic/Euphoria Index ( to -0.53), and the I.I. Bull/Bear spread narrowed again to under 10 - at 40 and 31.5.
The big, positive changes came from the McClellan Oscillator, dropping from overbot 50 the week before to a minus 15 (Monday saw it drop even more, to -40, nearing a normal bottoming area. Bullish per cent dropped to 51, also near a reversal point (although Oct. '04 saw it down to 11%). The most spectacular change was the Public/NYSE Specialist shorting, reaching a record high of 7.26, blowing away the old high of 6.23. Must be those hedge fund guys.

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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1,000 POINTS OF RED:

OH, RALLY?:

As ugly as today's DJIA is, at down 140 (and also the past 2 week-openers - last Monday being a holiday), there is cause for Hope, at least for a snapback rally nearterm. Not only have the DJIA and SPX found Support at horizontal trendlines AND 200-day MAs - the Nasdaq is hopelessly below everything- but several Sentiment Indicators are finally screaming BUYS:
From the top down, the CBOE Equity put/call ratio ended the week with a recent record high of 73, while its cousin, the ISEE call/put ratio ended at 109, after breaking 1.0 for the first time since October of '04. That was when the CBOE hit 79!
Market breadth was also hopeful, with the A/D very strong on the NYSE, a healthy divergence, and the NAZ dead even on new highs vs. lows.
In newsletter surveys, the Inv.Intell. narrowed its spread of Bulls vs. Bears to 42 vs. 30, while the inverted AAII ratio widened its with 50 Bears and 30 Bulls - dramatic!
The Public to NYSE Specialist shorting rose to a near record 5.75 number.

Still warning of contrary action is the McClellan Oscillator, which over-exuberantly ran to +50, often a topping point. And the Rydex fund investors are asleep, dead, or extremely wise, holding at their record low 12 in the Nova/Ursa ratio. Finally, the Bullish Per Cent chart rose slightly, but not with a 3-box PNF BU Y reversal signal as of yet.

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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OH, RALLY?:

TO THE RIGHT SHOULDER - MARCH!:

As I tell students and other advice-seekers, don't be premature in calling topping or bottoming formations. However, most indications are pointing to a H&S top IF we break the horizontal neckline and Volume confirms it at each stage.
Last week's mostly up market eased any signs of Fear or Hope ( I like Hope better than Greed): the VIX and put/call ratios backed off from positive; the McClellan Osc. actually went up through the zero line (Bullish) with th Sum. seeming to bottom out -ST- at minus 290. NYSE new hi's/lows were ugly for the week at 61:341, better than a 1:5 ratio. Also pointing upward are the extremely low Nova/Ursa fund numbers and the AAII inversion of Bears (45) over Bulls (33), althought he II (Investor's Intelligence) and Market Vane are at midrange normal.
On their way to Bullish are both the master index from Smith/Barney, called the Panic/Euphoria, as well as the Bullish per cent -now at a low 54, but not at a support level yet.
Today's (Monday) big selloff - 150 pts. - was on extremely light, post-holiday Volume, with the end of the month ahead, where funds, futures traders and other big money players square their accounts.

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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TO THE RIGHT SHOULDER - MARCH!:

BEAR WITH ME:

For most of the 20th Century, May was one of the worst months for stocks, hence the saying "Sell in May and go away". Toward the end of it, in the long Bull market, May became one of the best months. Once again the tectonic plate of semi-annual, seasonal stock behavior seems to reinforce the May 1 to October 31 period as grossly inferior to its complement.
With extended Bull markets, Intermediate and Long Term, both beginning in Octobers, interest rate hikes and concomitant housing slowdowns, oil and other commodity prices reaching records, it was no surprise that the top had to be put in.
Although with Friday's option expiry, usually a volatile time, we did seem to put in a surcease of downside action at various 200-MAs, horizontal and other support levels, we may stil not be through wringing out the excesses that liquidity has produced.
Temporary positive signs include a higher public/NYSE Specialist ratio, a VIX of 17 (20 as of Monday) reminiscent of and exceeding last October's high, and a recent record reading of the CBOE put/call ratio of 71.
Even though the newsletter surveys do not encompass the entire week, the AAII was giving a rare inverted reading with Bears at 43.6 besting the Bulls at 39.4%.The McClellan Oscillator, ratio-adjusted, plunged through the -50 line, a usual support area recently, ending the week right on it, after descending almost to -75; the Summation Index broke down through the zero line, usually a negative sign, but has not begun to mount a cruise-ship turnaround yet. And the SharpChart's Bullish Per Cent of S&P 500 Pt.& Fig. chart is at 56, not near a bottom - after having given a prescient 3-box, 6% Sell signal days ago.
Enigmatically, the Rydex Nova/Ursa investors have their eyes on a different ball, throwing more money into the funds with a low, Bullish ratio of 11. Overall, AMG reports the first Outflows of Equities in many months, after the first quarter totalling over 1/2 of the 2005 Inflows. With commodities also in the dumpster, only the Dollar and Bonds seem to be temporarily oversold and rising.

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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BEAR WITH ME:

BEAR WITH ME!:

So what are the Sentiment Indicators telling us about what happened last week? In a word - mixed, or rather not definitive as to whether there is more downside to go - which we certainly are overdue for- or whether the liquidity will keep driving the markets to new highs.
Both the "Sell in May and go away" and the Kinchen 4-year cycle argue for a sizable correction sometime in the next few weeks; despite the multi-month Bull runup, both NYSE and Naz new highs ran 2:1 last week, even with the selloff before the weekend.
And mutual fund inflows were still strong, per AMG data.
As for the indicators, the Panic/Euphoria has immersed back down under water to a neutral -.41 (out of the complacency area); the CBOE put/call ratio rose 10 points to 65 signalling worry about the near term. The McClellan Oscillator is giving an actual BUY signal by being right at the -50 level, and the Rydex Nova to Ursa ratio slipped another point to 14.
Survey newsletters remained mildly Bullish, although the Market Vane Bulls are at a high of 71. The other important sign that we could still have farther down to go is the Bullish Per Cent, which broke its 6% (or 3-boxes of 2-pt. boxes) descent stop of stocks on Buy signals.
Other technical warnings are most indices breaking the 50-day MA, and 5-year highs on margin debt (remember 2001?).

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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BEAR WITH ME!:

OFF AND RUNNING:

Occasionally I add a meaningful Sentiment Indicator that appears, after
tracking it for awhile. This week I am deleting an IBD important one
because of its unreliability and tardiness. Their Mutual Fund Cash has
suddenly been revised from 4-5%, down into the 3s, and backdated into '04.
There are several ways of measuring this and IBD's has never matched any
others I've seen, but was OK as long as it was consistent. AMG's website
only has Mutual Fund Cash FLOW, not levels.
Elsewhere, Friday's big week-ending runup gave a shot in the arm for
markets and sectors, but not to an overbought level, Sentimentally speaking.
Rich mid-East oilionaires are buying Real Estate, companies and global
stocks with their profits.Volatility is low and Sentiment is quite
neutral, if not Bullish. I.I. (Investor's Intelligence) Bears are high at
28.6, and AAII is at 33.6%. Nova Bulls to Ursa Bears are at recent lows
of 15, and all else is copacetic.
So when is this Presidential cycle low going to kick in?

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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OFF AND RUNNING:

GO AWAY IN MAY?:

Barron's Big Money Poll shows their money managers are anything but Bearish on the market outlook for the year. Last year at this time the Dow 30 was at 10,000. Now, year over year polling show that 57% are Bullish vs. 47% last year (when the Dow was 14% lower), 20% are Very Bullish vs. only 6%, and Bears number only 12% vs. 26% last year - Contrary Opinion anyone?
Although New Highs still outnumber New Lows 2:1, the cumulative A/D breadth is diverging from the upward trend of the DJIA. The McClellan Oscillator, in fact, has dropped from a toppy high of 734 in early February of this year, to a 136 last week, still above the zero line.The Oscillator remains at -2.
Although the Indices and VIX showed benign volatility, some major shifts in the end-of-month trading exhibited profit taking by hedge funds, et.al. Consumer Goods and Financials (at least banks) took over leadership from Basic Materials, Energy, and Industrials, at least temporarily.Despite rising rates, global reallocation of currencies has finally weakened the dollar, which is good for gold.
Stock Chart's Bullish Per Cent is just above 64, hanging on the lowest of 3-boxes delineating a downside reversal (3-boxes of 2 pt.boxes, or a 6% "material" stop). Poles apart are the complacent Bulls in the Smith Barney Panic/Euphoric Index and the Rydex Nova/Ursa ratio which at 16 is now as low as in October '05 (10% ago). Somebody's wrong!

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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GO AWAY IN MAY?:

SPRING FORWARD:

Just when you think this tired old Bull market has finally rolled over because of its overdue length, semi-annual seasonality, IRS and IRA contributions, and overbought conditions, we get a big 200-point spurt that reignites it. Could it be the oil rich foreigners are buying us out via equities, global real estate, etc.? Is Dubai really buying Daimler/Chrysler? It surely cannot be the locals, who are ponying up for gas and the trucked-in products that rely on it, while we get higher borrowing rates - going from 1% to 5%.
NYSE Advance/Declines zoom to 2:1 for the week bringing the oversold McClellan Oscillator back to the safe zero line at -2. Those perspicacious AAII people go Bearish on us - inverting the Bull/Bear ratio by 41 to 34, a sure Bullish import. The Bulls in the Rydex Nova/Ursa ratio are evaporating, as it moves to another recent low of 15.
On the flip side, however, we have the Panic/Euphoria Index hitting a new high of -0.19, well above water in the complacent area, and Public vs Specialists are backing away from shorting by a big % move, from 5.68 to 4.44.
So we still have no dominant signal as we stay in the upward biased Trading Range.

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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SPRING FORWARD:

STATUS QUO VADIS:

Easter and the Income Tax deadline isn't doing much for stocks, as they continue to meander listlessly. The DJIA was up a "hare" for the week, and the SPX and Nasdaq down a bit.
Some selling in stocks and closed end funds was due to raising cash for taxes - a possible buying opportunity for muni CEFs. Technical damage was done to the Dow and SPX with breakdowns of the 50-day MA, Horizontal and rising bottoms Trend Lines.
Most Indicators remain neutral with the exception of a couple on both sides of the market:
First the Bullish signs - the CBOE put/call ratio (and ISE call/put) added to the positive cause, as did the McClellan Oscillator with its minus 49.8 reading (-50 seems to result in short term turnarounds).
Fuel for the Bears include more complacency in the surveys with the I.I. spread increasing with its 53 to 24 reading. Finally, the Panic/Euphoria Index in Barron's hit a relatively high record of -0.24, the least negative in many months, but a far cry from +.60 needed for Euphoria.

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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STATUS QUO VADIS:

BLISSFULLY ONWARD:

Just like George W., the market is "Staying The Course" in an upward sliding Trading Range. Unsure if investors are frozen in panic or bored to complacency, the Sentiment Indicators are carved in stone.Reflecting 0 change in the Nasdaq last week and 1 point in the SPX, nothing is giving any signal of change, outside of an ugly Advance/Decline reversal, causing the McClellan Oscillator to bounce down near the -50 range, closing the week at -36.
On the negative side, the Panic/Euphoria once again popped its head above water (-0.30) at the -0.29 level - far from the Euphoria of +.60 since its recent revision. So anything above -0.3 can be hazardous, as with last August's extended decline.
For the last 5 months I have been testing both the SPX-mini and SPX Commitment of Traders for some sign of a "Tell", but have found nothing so far in this lackadaisical market. Using the change and cumulative numbers, all I found was that the SPX had a better correlation to a DJIA that rose 238 points from Christmas to now. Otherwise all were coincident, choppy reversals.
Newsletter surveys are showing a widening spread of more complacent bulls and fewer bears - not a happy sign.

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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BLISSFULLY ONWARD:

ENNUI GO!:

Despite End-Of-Quarter window dressing, and a volatile week (at least for the Blue Chips) the Sentiment Indicators are amazingly, flatline boring. Although not indicating a readiness to surge to the upside, other than first of the month surges, there is little complacency to indicate a market top, even though we are at some Resistance levels (trend channels, 5-year highs, etc.). OTC stocks seem to be stronger, as seen by a 528 to 71 new high/new low ratio. Although Volume has been weaker lately, I received an e-mail from Barron's Michael Santoli to watch out for increase due to the merger of the NYSE and Archipelago- a chartist's nightmare.

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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ENNUI GO!:

QUARTERLY CLEANUP:

Last week's Contrary signals included a sharp rise in Public/NYSE Specialist shorting to over 5.5, a level which precipitated rallies in early January and mid February this year, peaking 2/24 at 5.97 (per IBD).
Odd lot shorting also rose majorly through the week of March 10 (around 15%). The ISE call/put ratio jumped sharply up to 175, the level at Jan. and Feb.s' month end decline, although I view breaching the 200 level more serious. The CBOE put/call is still rather high/Bullish, at 63.
The ratio-adjusted McClellan Oscillator is buzzing around the zero line, but the Summation is still in the downtrend I mentioned earlier (at 552), showing the tendency to stay in a falling mode when coming off its highs (as it did last Spring and Summer).
The Bullish per cent is just below 70, needing to drop below 50 for another sustained rally.
Finally, The Panic/Euphoria Index (a Master Indicator) broke up through the surface to -0.28, the least negative since the July top.This does not bode well for the markets.

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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QUARTERLY CLEANUP:

RALLY MADNESS!:

Talk about a Wall of Worry! The mid-East is falling apart with Iran's nukes, Iraq's uncivil war, Israel now has Avian Flu, Bush and his policies have the lowest ratings yet, we're ending the Green semi-annual market cycle of plus returns, and even the planets are aligning against us - similar to 1929 and the 1989 Real Estate bust.
After 15 rate hikes and an extended bull rally, the Economy seems healthy despite the enormous deficits we pay interest on (mostly to ourselves), at least for now.Yet the triple-witching expiry ends the week with 5-year record highs. NYSE Margin debt, at $232B, is almost back to the 2000 record level of $275, mutual fund cash (per Ned Davis) is below 4% (a different number than IBD posts).
The Indicators still seem in a rut except for a couple outliers: The Advance/Decline was very positive (net 1941), as were the New Highs/New Lows, with REITs displacing Medical stocks from first place.
Inv.Intell. Bears moved up to 33%, as did the AAII. However, Market Vane's survey Bulls climbed to 70% and the Barrons Panic/Euphoria Master Indicator pulled up to the -.30 line, out of the Panic area, for only the 3rd time in many months.
Still no consensus of either extreme to act upon, just plenty of onemy out there. The number of millionaires in the U.S. is up 50% in the past 2 years, and the oil producers aren't exactly hurting either. Wyckoff might call this an UpThrust After Distribution.

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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RALLY MADNESS!:

BEWARE THE IDES OF MARCH:

Barron's magazine reports that Henry Weingarten of the Astrologers Fund is warning of impending Doom in the markets from now until June, with the Dow falling below 10,000 again and the Nasdaw down 10% below 2000; similarly, a French thinktank is calling for an 80% probability that after March 20 a significant political crisis will occur (what else is new?).
Henry W says the planets are in similar states as the Real Estate crisis in 1989 and the 1929 stock crash.
Up until now, however, ennui is the byword, with the tight Trading Range in all 3 Indices (large caps stronger than OTC stocks) being reflected in most Sentiment Indicators. The Demand side (Bullish) is supported with Survey Bears rising over 30 (II and AAII) and Bulls' complacency falling into the low 40s; CBOE puts are at a high 66 over calls. Finally, the Rydex Nova/Ursa fund ratio slipped to a nearterm low of 17 ( the lower the better, for Bulls).
The Supply side (Bears) has less evidence of conviction with shorting abating (Public vs. Specialist), and the Panic/Euphoria Master Indicator rising to -0.39, still under water to Sea level of -.30 bounding the Panic level.

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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BEWARE THE IDES OF MARCH:

IN LIKE A LION:

Usually one would expect up markets at the first part of a month when IRA contributions, Income Tax refunds, etc. flow in. Although most of the Sentiment Indicators have been boringly regressing to the mean, reflecting the steady, albeit rising, Trading Range we've been in below the 2000 all time highs on the Dow 30, a couple of longer term ones have appeared on my radar: the Bullish Per Cent, now at 67, usually falls materially after a top, as does the A/D based McClellan Summation Index, now at a high 665. Funnily enough, the NYSE Adv vs. Decls were dead even last week at 1751 to 1753, although that closed-end fund-ridden entity had 508 New Highs vs. only 71 New Lows.
But before this semi-annual "Bull" period is done there is hope for a rally with the Investors' Intelligence surveys starting to look oversold as it contracts like the Bollinger Bands, hopefully even inverting - it is now 42.6 Bulls to 30.8 with the AAII similar.
Another Bearish extreme is the Nasdaq to NYSE Volume, critically high at 153 (speculative). Recently I've been keeping track of the SPX traders' commitment but so far haven't enough sample data to find it revelatory or consistently reliable.
Only a couple of signals made major percentage moves, to the Bullish camp, they being the Barron's Panic/Euphoria Index, rising from the depths of -0.66 to -0.51; likewise, the Public shorting vis a vis Specialists, fell off from 5.97 to 4.16, nearly a third. These seem to echo the increased volatility recently imposed by the Hedge Fund crew, trying to make money after a dismal '05.

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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IN LIKE A LION:

O Really! A Rally?:

With most of the Sentiment Indicators still braindead, echoing an upward bias to a Trading Range since early November (SPX in the 1200s; NAZ in the 2200s), we have to fall back on market momentum - which currently seems strong. At least until we end the month and the first 4 days of March.
New Highs to New Lows on the NYSE were more than 10:1, and the Panic/Euphoria Index is at a low -.66, signaling positive action. Although Volume could be stronger, recent action of Financials, large cap Techs and Industrials bode well for market strength (even absent oil and gold/metals) - at least as long as IRA and income tax money holds out.
The distant clouds of sub-prime mortgage rate hikes are threatening, as are the McClellan Summation loftiness and length of the current rally from October. Otherwise little change has occurred as Indicators have reverted to the mean.

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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O Really! A Rally?:

VOLUME SPEAKS VOLUMES:

One of the more reliable Sentiment Indicators I've found, over the last four years, is the IBD's NYSE to Nasdaq Volume statistic - the ratio compares speculative trading relative to stodgier Blue Chips, even though the smaller caps have outperformed for all of this century.
Looking at almost all of the steep selloffs, they were presaged by a high number - usually 120 to 160 in favor of the OTC volume. And the 1-year and 5-year highs occurred almost to the day, as January 11 of this year (as well as Feb.2) marked a short term top, and, respectively, July 1 of '02 preceded a 1,000 point drop, albeit several weeks after the ultimate top. Looking at lesser tops in '04 and '05 confirmed this signal.
Having said that, the only other Indicators that are not benignly mid-range are Bullish: the Barron's Panic/Euphoria ratio at -.63, Public to Specialist shorting near all time highs at 5.67; and the Nova to Ursa Rydex fund ratio back into the teens.
Let momentum (and tight stops) be your guide until this clears up.

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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VOLUME SPEAKS VOLUMES:

IS OIL "TANKING"?:

Upon observing many lists of stocks by Indices, Sectors or other screens, it is apparent that program trading by Institutions and Hedge Funds is currently moving the markets, mostly down. Every stock on each list is down equally, usually fractionally, so there is no need to consult the stock fundamentals for their weakness. The meteoric rise of Oil, Gold and other precious and Industrial metals, coupled with the incessant rising of interest rates seem to have finally taken their toll on Liquidity. Whether this profit-taking is a Force Majuere or just a corrective bump in the upward road is not known at this time.
Adding to the Bullish view is the Odd-lot shorting which has doubled from a year ago, and continues to increase, in both sales and dollars. The VIX hasn't yet shown much increase, although with hedgers not making much in profits last year, we can expect more Volatility this year - also, in two weeks, trading begins in Options on the VIX Index.Both the CBOE Equity put/call and ISE call/put ratios remain high, in conflict with each other, therefore of less predictive value at this time.
As for most other indicators, such as newsletter surveys and Bullish per cent, last week's whipsaw caused little change in their regression to the mean from January's hot rally.
Finally, Michael Santoli, Barron's top columnist, comments on the Smith Barney Panic/ Euphoria Index, which is a Master Index similar to, and included in, my toolkit, and he discusses some of the components, pro and con, and whether it should be called "Panic" when it resides so long in that region (almost a year). Rather "Caution", sort of like Level Orange, might be more fitting.
Otherwise, tread carefully, as the jury is still out except for contrasting Volatility and one heck of a bottom in October, if we follow decades of the 4-year Presidential, or Kinchen cycle.

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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IS OIL "TANKING"?:

GROUNDHOG DAY:

Punxsutawney Phil seems to be saying "No Bull Market for a few more weeks" as most Sentiment Indicators just regress to the mean, backing off of the Bearish signals cast recently, resulting in the January-end profit-taking. The current 3-month Trading Range shows little intention of climbing higher, even in this friendly semi-annual timeframe.
Whether this CAUSE consolidation is a Re-Accumulation (pointing higher) or Distribution (forecasting lower) is not evident by either the Bullish per cent (still in a toppy area) or the McClellan Summation, which almost always descends after peaking at its current level. An occasional hiccup does occur about as frequently as a 3-star movie on the Lifetime Channel.
There were a couple of quixotic statistics, however, last week: the AAII Bull/Bear postcard numbers have been jumping wildly lately, actually inverting (Bullish) before last week's selloff; and during said selloff, the weekly NYSE new high/new low figures were 602 vs. 84, respectively. One other change - the IBD Mutual Fund Cash dropped to a new recent low of 4.4% going back to December.
Last November the McClellans called for a cycle low in February - I cetainly hope they are right!

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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GROUNDHOG DAY:

AS JANUARY GOES ...:

So goes the year, as the saying goes; helped, of course, by the fact that as in the Heisenberg Principle, an UP January is INCLUDED in that year. Still, with 1 day to go, the DJIA is up 200 points from the 2005 close on outstanding breadth going back to October.
Unfortunately we have been making lower lows since December - a Bearish Megaphone formation. Although we have a diverse mix of Sentiment Indicators, the outlook appears to intimate short term upthrust with clouds overhanging.
First, the good news this week, for Bulls: the AAII Bull/Bear survey ratio inverted again, with Bears at 33%, Bulls at 30. This worked OK last January 6 (for a week) but better on Oct.14 when this whole Bull got going. The problem seems to be the whipsawing in this number - Bulls from 29 to 59 to 30 this month. Also positive is the NYSE Specialist to Public shorting, near its high at 5.47.
Longer term Bearish consists of a 198 ISEE call/put ratio and 72% of stocks on BUY signals (Bullish per cent), and the McClellan Summation at 731, a toppy, overbought area. All the rest seem to be in a benign reversion to the mean as we await a new Fed Head and Bush's SOTU.

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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AS JANUARY GOES ...:

AFTER THE FALL:

Despite the volatile slide of last week, with the options markets recording the most volume ever in over 30 years, both Thursday and again on Friday, Sentiment Indicators seem quite benign; partly because some, like the Surveys which are reported on Wednesday, are a bit behind.
They did prove helpful, however, in predicting the toppiness the last 2 or 3 weeks! Ignoring reasons for the crashette that the talking heads explain away to answer-seekers - Iran's nuclear scare, earnings and projection disappointments, rising oil and gold, etc., I would posit that the main culprits for this shakeout were the above-mentioned option expiration on the 3rd Friday, some repositioning and profit-taking by hedge funds ( their net long position has been in the top 2% of the '00-'06 period); we've also bounced down off the seemingly impenetrable 11,000 Dow 30 level for the 5th time since '00 - on failed rallies almost every year.
The foremost reason was, of course, the recent high complacency exhibited by several Sentiment Indicators, such as Bullish Percent (in the low 70s), Nasdaq to NYSE Volume, the Panic/Euphoria Index, I.I. and Market Vane Bulls at 60 and 73 respectively, with the AAII close behind at 59, and lastly the McClellan Oscillator (ratio-adjusted) and Summation both at toppy levels.
As I began the column, not much has changed other than coming off the highs - possibly next week may give a better outlook: the VIX jumped to 14 from 11, the McClellan Osc. went negative to -13, and Public to Specialist shorts dropped materially, but not dramatically.
Finally, I do worry about the massive bullishness on oil stocks ( the next Bubble?), at least short term - the next victim to be taken out and shot.

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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AFTER THE FALL:

JANUS, THE TWO-FACED GOD:

January, named for Janus, can't make up its mind which way to direct the stock market. First it charges out of the chute in record numbers (with new pension, bonus, IRA, etc. money fueling it) as shown by over 10 to 1 new highs for 2 weeks, and cumulative A/D breadth also screaming up. Then everything all of a sudden looks toppy: the McClellan Summation Index is over its normal resistance range (although it's been up to 1500 before) at 686; newsletter surveys are rampantly bullish at 56 for the I.I., 59 bulls (up from 29 last week) vs 19 bears (down from 40) on the AAII; Market Vane hit a record 73 bulls!Barron's chart of Smith/Barney's Panic - Euphoria Index is still slightly under water (-0.30) at -0.35 but fading fast. It's right at the level of the last 3 previous tops, as is the Bullish Per Cent at 73 ( % of stocks on Buy signals). Finally, Barron's reports that hedge fund managers are more long now than 98% of the last 5 years; also in record numbers - Nasdaq long futures.Speaking of Barron's, they grudgingly put out last year's Roundtable results of stock picks by their 12 dwarfs (gurus). As I said in my last Marina Times column: "He who cuts his own wood is twice warmed", meaning one should do their own research on stocks, as borne out by the results! Only 1 of the 12, Meryl Witmer was successful in their picks - 4 for 4, up double-digits. Those who shorted got killed! So much for expert advice.

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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JANUS, THE TWO-FACED GOD:

HO! HO! HO!:

Technically the Santa Claus rally, like USC's football team, broke its string of successive (8 of 8) years of rallying higher in '05 - the last 4 days and first 2 of the next year. In the spirit of the record, however, it was only 3 points lower ( 10,880 vs. the 10,883 close Dec.23), the Nasdaq and S&P 500 did close higher, and that was one heck of a rally, albeit a few days late, to a new nearly 5 year highs! Alas, the bigger perfect record of never a down 5th year over 13 decades bit the dust.
Thanks to nanotechnology and Globalization, a new polling parameter is emerging, as reported by James Surowiecki in his best-seller - The Wisdom Of Crowds. Pooh-poohing the findings of such notables as LeBon (The Crowd), Mackay (...Madness of Crowds), and even Baruch, Thoreau, and Nietsche, he posits convincingly that vast numbers of diverse opinions bring about best results, citing the Iowa Election Market, Britain's Tradesports.com, "Millionaire's" Lifeline, and the Las Vegas oddsmakers who put money where their votes are. We're even starting to see signs in Bush's meeting with prior Sec'ys of Defense (not all "Yes men"), and IBM's polling of 320,000 employes in 175 countries by e-mail for antithetical opinions and suggestions.
This week's Sentiment numbers are also poles apart suggesting, at best, volatility: some Bearish signals ameliorated - ISEE call/put ratio, McClellan Oscillator changing direction from below the zero line, Burke's I.I spread narrowing 8 points, and the Advance/Declines and New Highs/Lows exceptionally strong (nearly 8:1). Most Bullish was the inverted AAII survey with only 29% Bulls and 40% Bears!
However, there are also several toppy Indicators in the mix: Although the McClellan Oscillator changed to positive, it also shot up to its Resistance level of @50, as did the Bullish per cent at 72. There may be some Resistance to breaking through the 11,000 DJIA level this week. Finally, the Nasdaq to NYSE Volume hit a recent, speculative high at 132, and the Public to Specialist shorting fell off appreciably - 5.66 down to 4.37, over 20%.

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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HO! HO! HO!:

BAH! HUMBUG!:

What a year-end , breaking both a decade- and century-long record! The 8 of 8 Santa Claus rallies ended (although we do have the first 2 days of January to make it back); but the big loser was the 5th year of the decade, always with the Dow Jones up at least 10% since the 1880s. Actually the S&P 500 and Nasdaq were up for the year, but they weren't around then. I hope this isn't a harbinger of doom for '06, which usually isn't too hot in the 4-year Kinchin, or Presidential, cycle.
So much for small, anecdotal sampling. The NORC, or National Opinion Research Center, usually demands 1500 polling units to validate a survey, which they throw up on a Bell Curve using 2% Standard Deviations which contains 95% of the results.With last year's lack of Volatility (see the VIX) putting the Dow at the lowest year-over-year change since WWII at .61%, we might expect a Bollinger Band blowoff, up or down. Odd lot short sales are screaming to new records, way more than doubling last year's numbers. Some of these numbers have to be taken with a year-end scrambling grain of salt.Any chartist looking at the year-end massacre would expect more blood in the streets to come. And although there has been some complacency after the fall rally, a few Indicators are flashing extremely Bullish:
At Bullish extremes are the CBOE put/call ratio (61), although the ISE Exchange (Int'l Options) is simultaneously Bearishly over 200 (219); the McClellan Oscillator plunged down through the zero line, to -8 (Bearish), yet the AAII Bulls to Bears is almost dead even (Bullish) at 37 to 36; the Panic/Euphoria Index (a combination of Sentiment Indicators) is Bullish at -.60, the Public to Specialist at 5.66 is just off its highs, while the IBD short interest ratio is climbing higher to levels last seen in March of '05. Finally, the Bullish % and U. of Michigan Confidence are toppy. This dichotomy of signals could bode for high volatility or Trading Range uncertainty.

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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BAH! HUMBUG!: