BLACK SWAN OR TURKEY?:

In his famous book Nassim Taleb talks about the complacency a turkey feels, being well fed, even massaged, comfortable surroundings, etc. Then, on Thanksgiving Day, things change dramatically!
How nice the stock market proceeds, not a negative Advance/Decline ratio since the week of Feb.5, setting new cumulative A/Ds on my charts - New highs hitting the 900s for the first time in memory.
Meanwhile, Insider Selling, although down from the near-record 91 last week, only fell to 51:1. Money Market Funds lost another $35B but less than $1B went into domestic equities' funds. In the past y/y to March, $410B went into bond funds while only $18B went into stocks.

The Rydex Nova to Ursa (the bear) ratio broke up through the 1 level for the first time, up to 1.27; and the Bullish percent is right at record levels. 

The only question seems to be: is the correction going to be severe, or moderated as if by unseen forces?

Here are the exact numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11204	11018	14093	6626
Nasdaq:	2530	2481	2805	1114
S&P 500:	1217	1192	1561	683
CBOE Eq. put/call:	51	42	96-10/08	46-1/03
VIX:	16.6	18.4	90	8.8
McClellan Osc:	20	-29	108	-100
McClellan Sum:	1218	1241	1568	-1514
Newsletter Surveys
InvestorsIntel.Bull:	53.3	51.1	63	22.21
InvestorsIntel.Bear:	17.4	18.9	54.4	16
AAII Bull:	38.1	48.5	n/a	n/a
AAII Bear:	34.3	29.7	n/a	n/a
Nova/Ursa Mutual Funds:	0.86	0.94	2.2	0.56
US Equity-1 week lag	n/a	-.5B
Money Market Flows	-35B	-51B
ETF equity:Monthly Totals	Feb.750B	Jan.731B
Baltic Dry Index:	3006	3009	11700	663
Bullish %:	87	87	88	2
Insider Corporate Sellers:	52:1	91:1	108:1	2.4:1

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

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BLACK SWAN OR TURKEY?:

NEWS-WEAK:

One of the surest, albeit infrequent, Sentiment Indicators predicting a top in the market (at least short term) is the complacent Bullishness of a magazine cover, usually Businessweek, per Paul Macrae Montgomery. This time it was Newsweek that shouted it out. Too soon to tell, as Monday's price action seems to digest Friday's selloff from Goldman/option expiry causes.

In heuristic fashion, every analysts is calling for at least a 10% run up in the next few months - even the credible ones. Short term, however, breadth and Sentiment are calling for a respite in this Too-Strong-To Fail market.

The outstanding Indicator is the CEO Insider selling ratio, at 91:1 last week, almost at its record high of last year. This small sampling has a 100% success rate in calling for at least a brief Trading Range, if not a downturn. Bullish % is 1 point away from its high, and the Inv.Intell. Bulls broke 50, at 51.1%, with Bears remaining under 20%.

Money flew out of MMFs at a $50B rate, and Volume was high last week - although the Wednesday up thrust outgained Friday's selloff. New highs ran up to 950 (vs. 18 NLs).

Here are the numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11018	10997	14093	6626
Nasdaq:	2481	2454	2805	1114
S&P 500:	1192	1194	1561	683
CBOE Eq. put/call:	42	48	96-10/08	46-1/03
VIX:	18.4	16.1	90	8.8
McClellan Osc:	-29	3	108	-100
McClellan Sum:	1241	1241	1568	-1514
Newsletter Surveys
InvestorsIntel.Bull:	51.1	48.9	63	22.21
InvestorsIntel.Bear:	18.9	18.9	54.4	16
AAII Bull:	48.5	42.9	n/a	n/a
AAII Bear:	29.7	30.4	n/a	n/a
Nova/Ursa Mutual Funds:	0.86	0.94	2.2	0.56
US Equity-1 week lag	n/a	2B
Money Market Flows	-51B	-18B
ETF equity:Monthly Totals	Feb.750B	Jan.731B
Baltic Dry Index:	3009	2922	11700	663
Bullish %:	87	86	88	2
Insider Corporate Sellers:	91:1	45:1	108:1	2.4:1

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

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NEWS-WEAK:

WHAT'S THAT HUGE SUCKING SOUND?:

According to Barron's, Institutions started entering stock mutual funds about 8 weeks ago, early adopters to the retail, or individuals, who entered 3 weeks ago. The ICI group shows only a couple Billion $ in early March from individuals, then flat to negative since. With few alternatives to zero rates, it appears that the several Trillions are getting antsy for higher return, with bonds now a crowded trade.

Market breadth, measured by advance/declines and new highs vs. new lows, has been incredibly strong recently: another new all time high in my cumulative A/D and weekly NY h/l of 888 to 13. The past 6 weeks totals have been 4,673 new highs to 85 new lows!

Nearly every analyst has predicted much higher targets on the stock market - credible and otherwise. Most are based on Fundamental valuations - p/e ratios, projected earnings on an improving economy, idle money, etc. Technically there are some short term yellow flags waving wildly: CEO selling rose to 45:1; both the VIX and the Inv.Intell. Bears are near a multi-year low; the Bullish % -number of stocks on Buy signals, and Nova/Ursa funds ratios are near recent highs, signaling complacency. Even the CBOE equity put/call ratio is near a multi-year low. The past 3 times the AAII Bulls were this high resulted in 1 sideways range in March, and two sharp corrections at the first of this year.

There's nothing like a rainy Monday to call for a look into past research - a couple of interesting factoids are presented here:

• Since 1913, according to IBD, there have been 23 Post election years;in 15 of them there were Bear markets, or shortly after, as in 1987, with the delay causing more severity. 2 of the 8 Bull markets were the go-go '90s which led to the current malaise.
• More optimistically, of the 15 major rate hikes since 1928, only 4 have rendered negative results from first hike to last - 2 of which were in the 1974 period

Here are last week's numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	10997	10927	14093	6626
Nasdaq:	2454	2410	2805	1114
S&P 500:	1194	1178	1561	683
CBOE Eq. put/call:	48	51	96-10/08	46-1/03
VIX:	16.1	17.5	90	8.8
McClellan Osc:	3	-1	108	-100
McClellan Sum:	1241	1221	1568	-1514
Newsletter Surveys
InvestorsIntel.Bull:	48.9	48.3	63	22.21
InvestorsIntel.Bear:	18.9	19.1	54.4	16
AAII Bull:	42.9	41.3	n/a	n/a
AAII Bear:	30.4	27.5	n/a	n/a
Nova/Ursa Mutual Funds:	0.94	0.85	2.2	0.56
US Equity-1 week lag	n/a	-65Million
Money Market Flows	-18B	-30B
ETF equity:Monthly Totals	Feb.750B	Jan.731B
Baltic Dry Index:	2922	2991	11700	663
Bullish %:	86	84	88	2
Insider Corporate Sellers:	45:1	28:1	108:1	2.4:1

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

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WHAT'S THAT HUGE SUCKING SOUND?:

HAIR OF THE DOG:

Despite having owned a bar in San Francisco for nearly 20 years, I never was convinced that the best way to cure a hangover was to imbibe more - the pain of excess still has to be felt and endured! Likewise, the government continues to artificially bail out imprudent investors, individual and commercial. For example, housing credits for people who never could have afforded homes expires at the end of this month - will it be renewed? Banks are right back to their nonbank investing, only with government money instead of investors. Autos and retail stores are again offering zero down payments. Isn't this the Japanese model all over?

The stock market proceeds suspiciously onward like a CD, as talking heads put a positive spin on every new economic number, although it does look like it is improving (with or without Stimulus). Most indicators are midrange, with a couple exceptions. The Inv. Intell. Bears broke down through 20 for the first time since the minicrash of January 22; the Nova/Ursa ratio at 0.85 is the highest since September 25 - there was a small hiccup right after, but it was in the middle of a longer rally. Breadth is incredibly strong - new highs again in my cumulative A/D; the Bullish % approaches new highs, and money flows from Money Market Funds, with a lot left in them.

Here are the weekly numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	10927	10850	14093	6626
Nasdaq:	2410	2415	2805	1114
S&P 500:	1178	1174	1561	683
CBOE Eq. put/call:	51	554	96-10/08	46-1/03
VIX:	17.5	17.8	90	8.8
McClellan Osc:	-1	-19	108	-100
McClellan Sum:	1221	1258	1568	-1514
Newsletter Surveys
InvestorsIntel.Bull:	48.3	48.9	63	22.21
InvestorsIntel.Bear:	19.1	20.5	54.4	16
AAII Bull:	41.3	32.4	n/a	n/a
AAII Bear:	27.5	34.7	n/a	n/a
Nova/Ursa Mutual Funds:	0.85	0.67	2.2	0.56
US Equity-1 week lag	n/a	-1.B
Money Market Flows	-30B	-4B
ETF equity:Monthly Totals	Feb.750B	Jan.731B
Baltic Dry Index:	2991	3098	11700	663
Bullish %:	84	83	88	2
Insider Corporate Sellers:	28:1	19:1	108:1	2.4:1

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

HAIR OF THE DOG: