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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