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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