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
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