THE C OF LIQUIDITY: CREDIT

The rationale for the invincibility of this market - endless amounts of liquidity from M&A, stock buybacks, hedge funds, private equity, ad nauseum, is beginning to be too commonplace. And several sentiment indicators are starting to flash caution signs. Those readers who receive my weekly e-mail alerts and tsaasf.org readers can observe a matrix of 5-year levels of indicators at market tops - a few are reaching that level now:
The CBOE Equity put/call ratio is 56, down 10 points from last week; the McClellan Summation Index is above 900, and the bull/bear surveys are being stretched toward complacency after triggering the recent bull move. In fact the Market Vane hit a new high of 74, and the Bullish per cent has risen to 77. Although Insider selling has backed off to 17:1, record short interest (up another 5% on the NYSE), specialist shorting and IBD's short interest are high also.

Here are those numbers:

Mktsentiment. 4/20/2007..5Yr.HI....LOW

DJIA ………. 12961...........12767...........7286
Nasdaq………. 2526............2515............1114
S&P500…….. 1484............1455............776
CBOE Equity put/call .56............87-5/04........46-1/03

VIX ………. 12.07..........44 9/02........10.0-7/05

ISEE-call/put ……. 125...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………13...............91-5/04.........(81)-5/04
McClelSum…………… 902..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..52.7...........62.9-12/04......35-6/06
Bear:………… 25.3 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ……….46.9/29.6....n/a n/a
MarketVane Bulls…. 74......... 74..............24

Birinyi Blogger
Bull/Bear Poll …………34.3/31.2
Bullish%- ……….…77...............88 -2/04...... 46-8/04

*Insider corporate sellers 17:1
Sectors: Most Buyers: Finance, Energy
Most Sellers: Consumers, Tech, Healthcare,Finance

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 C OF LIQUIDITY: CREDIT

When IRS Eyes 'R Smilin':

It's that taxing time again - Tuesday for Federal Income Taxes (due to D.C. holiday), but today for state taxes. IRS 2004 stats show that the top 1% of income earners receive 20% of income, but pay 40% of taxes; the bottom 50% earned 15% of total income but paid only 3% of total taxes - their Tax Freedom Day is January 29. So far no one is selling stocks to pay their taxes, as the market rises 100 points.
Last week's data showed very little change despite the expected positive action. NYSE new highs to lows remains at 10:1, and though @ 1/3 of these stocks are preferred, ADSs, or ETFs, most are still "stocks". As Jason Trennert points out in Barron's, things still look rosy as Supply of stocks diminishes with LBOs, M&As and stock buybacks by corps. holding cash but not using it for CapEx. Some are even borrowing via bonds, a la carry trade, to buy stocks, as Earnings Yield of 6.5% exceed low bond rates of 4.7%.
At some point this rally will roll over as the Dollar weakens along with the Economy - clouds on the horizon include some toppiness in market surveys, Bullish per cent, margin and short interest.
Here are the Sentiment numbers:

Mktsentiment. 4/13/2007......5Yr.HI........ LOW

DJIA ………. 12612...........12767...........7286
Nasdaq………. 2491............2515............1114
S&P500…….. 1452............1455............776
CBOE Equity put/call .66............87-5/04........46-1/03

VIX ………. 12.2..........44 9/02........10.0-7/05

ISEE-call/put ……. 122...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………17...............91-5/04.........(81)-5/04
McClelSum…………… 834..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..49.5...........62.9-12/04......35-6/06
Bear:………… 27.5 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ……….40.9/38.0....n/a n/a
MarketVane Bulls…. 72......... 73..............24

Birinyi Blogger
Bull/Bear Poll …………34.3/31.2
Bullish%- ……….…73...............88 -2/04...... 46-8/04

*Insider corporate sellers 19:1
Sectors: Most Buyers: Industrials, Tech
Most Sellers: Consumers, Tech

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

When IRS Eyes 'R Smilin':

MONEY MAKES THE MARE GO:

What drives the stock market -Sentiment or Liquidity? In this case, both look favorable for the short run. Barron's states Private Equity is sitting on $300B cash, or $1T if levered to Reg T. margins. That, with loads of MMF cash is chasing fewer shares, as KKR, Citi and Tracinda get in the buyout mood.
Breadth also looks strong as Barron's cumulative A/D chart goes straight up (my cum A/D just broke 100,000 for the very first time). Although the two 9:1 Up/Down Volume days recently are still in play, last week only saw between 1:1 to 4:1 over the 4 days.
Although a few indicators such as McClellan Oscillator and Bullish % are edging up to a short term toppy area, Notable Numbers include an inverse AAII Bull/Bear ratio of 32:39 (rare Bullish stat).
I found disagreement in a couple data sources: Barron's Insider Trading chart from Thomson (with exceptions in the fine print) show a Bullish "under 12" reading, but the parent Co., WSJ itemized a 28:1 Selling ratio of Key employees. Also, Schaeffer's CBOE put/call shows 53 a/o Friday - CBOE shows 63, still down from the prior week.
Here are the numbers:
Mktsentiment. 4/6/2007......5Yr.HI........ LOW

DJIA ………. 12560...........12767...........7286
Nasdaq………. 2471............2515............1114
S&P500…….. 1443............1455............776
CBOE Equity put/call .63............87-5/04........46-1/03

VIX ………. 13.2..........44 9/02........10.0-7/05

ISEE-call/put ……. 126...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………30...............91-5/04.........(81)-5/04
McClelSum…………… 755..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..50.6...........62.9-12/04......35-6/06
Bear:………… 25.6 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ……….32.3/39.8....n/a n/a
MarketVane Bulls…. 71......... 73..............24

Birinyi Blogger
Bull/Bear Poll …………33.3/30.0
Bullish%- ……….…72...............88 -2/04...... 46-8/04

*Insider corporate sellers 28:1

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

MONEY MAKES THE MARE GO:

SPRING HOPES ETERNAL:

Possibly a contrarian indicator, mutual fund inflows for both stocks and bonds were huge for January and February, per ICI. Weekly Declines beat out Advances by 400, but NY new highs were 8:1. Key insider selling again rose to 30:1 over buyers (doubling last week), with Techs, Consumer Services and Energy leading the way - leading buyers were in the Energy (also) and Finance sectors.
Standard & Poors Tech Analyst - Arbeter, sees a 16% rise this summer, with April historically being the best month of the year, per Stock Trader's Almanac. Nota bene, the 9-1 Up/Down Volume factor twice recently.
Nasdaq short interest rose 12% last month to a record. Plenty of bricks abound in the Wall of Worry. One number I regard as suspect is the recent IBD Public to Specialist shorting almost doubling its old high to 12.4 - this may be a bad number, and one to shelve for awhile.
Here are the weeklies:
Mktsentiment. 3/30/2007......5Yr.HI........ LOW

DJIA ………. 12354...........12767...........7286
Nasdaq………. 2422............2515............1114
S&P500…….. 1421............1455............776
CBOE Equity put/call .72............87-5/04........46-1/03

VIX ………. 14.64..........44 9/02........10.0-11/06

ISEE-call/put ……. 94...........299-12/04.......68 - 3/9/07
(>200/Bearish)

McClel Osc……………0...............91-5/04.........(81)-5/04
McClelSum…………… 660..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..48.4...........62.9-12/04......35-6/06
Bear:………… 27.5 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ……….43.9/33.1....n/a n/a
MarketVane Bulls…. 70......... 73..............24

Birinyi Blogger
Bull/Bear Poll …………30.3/30.3
Bullish%- ……….…71...............88 -2/04...... 46-8/04

*Insider corporate sellers 30:1

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

SPRING HOPES ETERNAL: