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

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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

Subscribe in a reader

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

Subscribe in a reader

106 DEGREES OF PERSPIRATION: