JUNE SWOON:

Like the man said, every time breadth goes negative while the market makes new highs, the next month is down (avg. 2%). It happened 4 times over several decades, and 4 times in May. Today, Monday, the DJIA is at 13,464 - 50% rally from last week's decline is 13,471.

However, of the last 25 months, option expiry week (or, 3 days prior to the third Friday), 21 have been UP weeks, 3 DOWN, and 1 FLAT.

The number 1 culprit for the inevitable correction wan the 10-year Treasury breaching 4.75%, which predicted all the major selloffs the past 3 years - also extreme was the % above the 200-day MA on the DJIA: previous selloff levels were 8%, 5.2%, 6.7%, and 7.4% - this time it was 10% above! The resulting bottom was from 0 to 5% BELOW the 200MA -we've only reached a +3% above, so far.

The majority of sentiment indicators did not see last week's decline coming, in fact several are now cautiously Bullish. The McClellan Oscillator, now residing at -49 after hitting -75 is very bullish, as are the put/call ratios of ISE (rare 92) and CBOE (63) . The AAII Bull/Bear is still inverted, (bearly) at 40 vs.42, as is the Birinyi bloggers poll.
Calling for more downside is the McCellan Summation, Bullish per cent, and hugely extreme - the Corporate Insider sellin, now at 100-1, mostly in tech companies.
Here are the numbers:
Mktsentiment. 6/08/2007......5Yr.HI........ LOW

DJIA ………. 13242...........13668...........7286
Nasdaq………. 2573............2613.............1114
S&P500…….. 1507............1536............776
CBOE Equity put/call 63............87-5/04........46-1/03

VIX ………. 14.8..........44 9/02........10.0-7/05

ISEE-call/put ……. 92...........299-12/04.......58 - 3/9/07
(>200/Bearish)

McClel Osc……………-49...............91-5/04.........(81)-5/04
McClelSum…………… 447..........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:…..…. ..52.2...........62.9-12/04......35-6/06
Bear:………… 22.8 .........38.2-3/03.......16-6/03

AAII-Bull/Bear ………40.6/42.6....n/a n/a
MarketVane Bulls…. 72......... 74..............24
IBD: Short Interest- ….7.54……7.66………. 4.0
Public/NYSE Spec.-…. 7.15………13.15……….1.0
Birinyi Blogger
Bull/Bear Poll …………26.4/32.3
Bullish%- ……….…74...............88 -2/04...... 46-8/04
SentimentTrader
Short/longtermBULL/BEAR. N(neutral)/N

*Insider corporate sellers 97:1
Sectors: Most Buyers: Finance
Most Sellers: Tech

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JUNE SWOON: