"WITCH" WAY WEDNESDAY?:

This Wednesday, Hallowe'en, the Fed will announce its rate cut - not at the usual Tuesday 11:15 PST time. Some feel much of the reaction has already occurred, and the Indicators are just as ambivalent.
Although the CBOE put/call ratio is still somewhat high (Bullish), the ISEE - still in a newly revised range - is off the charts at 246 calls to puts! And the AAII Bears are far from hibernation as they invert the ratio 48 to 31 Bulls.
Corporate insider selling is way down from 43 to 13 to 1 over buyers (they are still buying their own Financial stocks but also selling them, along with Tech stocks).
Money Market inflows are still setting new record highs, at $35B last week. Market breadth, especially in the OTC area, is suspect considering the recent rally - new lows outpaced new highs, the Bullish Per Cent is still falling on a Sell signal given in Oct., and the Nasdaq to NYSE Volume (speculative warning) is at a 5-year high at 183.
Here are the weekly numbers:

Mktsentiment. 10/26 /2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13806………..13522…………14093..............7286
Nasdaq………. 2504…………2725……….. 2805.............1114
S&P500…….. 1535…………1500…………1561………..776
CBOE Eq. put/call …66……………65……………91…..........46-1/03

VIX ………. 19.6…………..22.9…………….44.. 9/02........10.0-7/05

ISEE-call/put ……. 246?................122……………246………..118
All Equities (ETF)
McClel Osc…………-2…………….-56………91-5/04.........(81)-5/04
McClelSum………280……………..440…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..….56.5………… 62………..62.9-12/04......35-6/06
Bear:………… 22.9………….19.6………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……31.3/48.2….42.0/35.7……..n/a n/a
MarketVane Bulls….63……………65…………. 74..............24
UBS investor confidence..70………68………178……………53
(monthly change)
IBD: Short Interest- …8.56………8.76….……8.95………. 4.0
Public/NYSE Spec.-….6.96……….7.88…..……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ………44.24………..50./33.3
Bullish%- 59……….....62…………88 -2/04......46-8/04
*Insider corporate sellers..13:1……43:1…
Sectors: Most Buyers: Finance
Most Sellers: Tech, 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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"WITCH" WAY WEDNESDAY?:

THE BLACK SWAN:

Not the Australian wine, but an excellent book by Nassim Taleb about improbable events. Its 3 characteristics are: it is unpredictable, it has massive impact, and, most of all, looks very logical after the fact - examples are the Crash of '87, 9/11, the success of Google, and the past two weeks, when I have been on vacation without access to Barron's, IBD, CNBC, and e-mail.
After recouping 3 weeks of statistics, the following shows a high probability of the downturn occurring, even despite the expected mid-October cycle.
Here are some indications which lit the caution light in early October: the ISE call/put index hit a near high 164; the A/D on the NYSE was 2600 to 900, with further speculation from new highs/lows at 500 to 70. The McClellan Oscillator hit @ +50 and the Inv.Intell. Bulls reached 60 to 21 Bears; Nasdaq Volume to NY was a recent high of 179 and CEO insider selling rose to 43:1. Record amounts went into Money Market funds, and the IBD short interest rose to a record 8.95.
Here are last weeks stats:

Mktsentiment. 10/19 /2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13522……….14093…………14093..............7286
Nasdaq………. 2725…………2805……….. 2805.............1114
S&P500…….. 1500…………1561…………1561………..776
CBOE Eq. put/call …65……………58……………91…..........46-1/03

VIX ………. 22.9…………17.7…………….44.. 9/02........10.0-7/05

ISEE-call/put ……. 122……………164……………177………..118
All Equities (ETF)
McClel Osc…………-56……………12………91-5/04.........(81)-5/04
McClelSum………440………………280…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 62…………60.2………..62.9-12/04......35-6/06
Bear:………… 19.6………….21.5………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……42.0/35.7……..54.6/25.8……..n/a n/a
MarketVane Bulls….65……………69…………. 74..............24
UBS investor confidence..68……….73………178……………53
(monthly change)
IBD: Short Interest- …8.76……..8.95nh….……8.95………. 4.0
Public/NYSE Spec.-….7.88…..…7.89…..……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ………50./33.3…….…36/40
Bullish%- ……….62……………...80……….…88 -2/04...... 46-8/04
*Insider corporate sellers..43:1………na
Sectors: Most Buyers: none
Most Sellers: healthcare

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

THE BLACK SWAN:

BYE, BYE:

Readers please be advised that for technical reasons, this column will not be updated for the next two weeks whilst I am on vacation (although I'll have my laptop, not all the research necessary to post). Giving a small talk last weekend at GGU on Sentiment allowed me to organize some matrices on the efficacy and order of importance of several Indicators, which I shall present when I return. Despite the recent parabolic runup, this is always a good time of year to be flat the market, or at least hedged.
Here are some small sampling factoids of interest:
Over the last 42 months, the number of times the SPX did not close at or below the expiration close by the end of that month: 6 (2 times in the past 2 years).
Over the last 30 months, number of times the SPX did not close at or higher than the Tuesday close before expiration (3 days before): 3
Times that the last day of a Quarter was negative over 13 quarters: 12
Times the DJIA was up the 4th Quarter over the past 27 years: 24.

This week's Indicators of Interest:
The McClellan Summation (cumulative Oscillator readings) went up throught the zero line this week - some view this as a positive. The Inv.Intell. and Market Vane surveys stretched to somewhat complacent. Both the Consumer Confidence and UBS Investor Optimism dropped to recent lows. Insider (officers) selling increased to 32:1, still Buying the Financials and Selling the Techs.
Public shorting shot up to 11 vs. what Specialists remain, and mutual funds suffered redemptions to money market funds.

Mktsentiment. 9/28/2007 Last Week..... .5Yr.HI...... LOW

DJIA ………. 13895……….13820………14001..............7286
Nasdaq………. 2701…………2671……….. 2707.............1114
S&P500…….. 1526…………1525…………1557……..776
CBOE Eq. put/call …66……………60…………… 91…..........46-1/03

VIX ………. 18…………….19…………….44.. 9/02........10.0-7/05

ISEE-call/put ……. 134……………151……………177………..118
All Equities (ETF)
McClel Osc…………27……………39………91-5/04.........(81)-5/04
McClelSum………62………………-60…………..1568-6/03.......(917)

Newsletter Surveys:
Inv.Intel -Bull:…..…. 55.6…………53.9………..62.9-12/04......35-6/06
Bear:………… 25.6………….27………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……49.4/34.2……..39.2/31.7……..n/a n/a
MarketVane Bulls….64……………64…………. 74..............24
UBS investor confidence..68……….73………178……………53
(monthly change)
IBD: Short Interest- …8.66……..7.77….………8.66………. 4.0
Public/NYSE Spec.-….11.09.88…..……18.25……….1.0
Birinyi Blogger
Bull/Bear Poll ………22.6/53.2…….…22.6/53.2
Bullish%- ……….63……………...62……….…88 -2/04...... 46-8/04
*Insider corporate sellers..32:1………28:1
Sectors: Most Buyers: Finance
Most Sellers: 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

BYE, BYE: