MARKET TOPS:

A couple of anecdotal market topping Indicators surfaced last week, too vague to be useful, however: the first was the higher incidence of large IPOs occurring at market tops over the past 10 years (e.g. GM). The other was the percentage of Harvard MBAs that migrated to Wall St after graduating - 30% was the previous top - now at 32%.

In the upcoming TSAA Review, of which I am the Editor, I am writing a piece on success, or lack of, market top Indicators over the past 3 years. During that time there were 7 reversals, tops and bottoms. The Review will contain the whole study, and will be sent out to members, with the TSAASF.ORG site carrying it at a later time.

The CBOE Equity put/call ratio was one of the most consistent, with the highs (fear-based occurring at bottoms) ranging from mid-60s to mid-90s; Lows were mid-40s to mid-60s on a weekly basis.

Another Indicator  with much success was the McClellan Oscillator (adjusted), which was mostly negative before oversold bottoms - higher at tops. Also among the best forecasters were the two surveys that I follow: Investors' Intelligence and AAII Bull/Bear ratios. These were especially effective when inverted (more Bears than Bulls).

Last but not least was the Bullish % -stocks on a Buy signal- which designated overbought and oversold conditions quite well.

Here are last week's numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11092	11203	14093	6626
Nasdaq:	2534	2518	2805	1114
S&P 500:	1189	1199	1561	683
CBOE Eq. put/call:	61	59	96-10/08	46-1/03
VIX:	22.2	18.0	90	8.8
McClellan Osc:	(29)	(20)	108	(123)
McClellan Sum:	501	608	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	55.7	56.2	63	22.21
InvestorsIntel.Bear:	21.6	20.2	54.4	16
AAII Bull:	47.4	40.0	n/a	n/a
AAII Bear:	24.7	32.5	n/a	n/a
US Equity-1 week lag	n/a	(2.8B)
Money Market Flows	15.4B	(4.1B)
Baltic Dry Index:	2170	2164	11700	663
Bullish %:	77	76	88	2
Insider Corporate Sellers:	55:1	34:1	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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MARKET TOPS:

CAPITALISM OR CAPITOL-ISM?:

GM (Government Motors) may have been the Evil of Two Lessers, and was a partial success, especially to Warren Buffet who praised it and the UAW who benefited more than bond and stock holders. In his classic book - Against The Gods -  the late Peter Bernstein posits that while geniuses were prevalent before the end of the Middle Ages (Euclid, Da Vinci, et.al), neither the Hindus and Arabs, who gave us our numbering system discovered Capitalism, or the use of Risk and Probabilities in society. Thanks to Leonardo Fibonacci (nee Pisano) and later Pascal and Fermat, civilization started using them, with the help of the printing press, resulting in exponential advances. The main reason  was that earlier societies were comfortable with the status quo, and reliance on their gods for Fate and Risk - much like cradle to grave governing has a tendency to do these days.

Like all things organic (humans, vegetation, corporations, governments, and societies) unless modified, the growth cycle and aging eventually result in destruction - death, bankruptcies, revolutions.

Although last week's volatility did not show up in the final unchanged market levels, there was not much change in the Sentiment Indicators. Standouts include AAII Bulls dropping from a high 57.6% to only 40 - the Investors' Intelligence Bulls, however, increased from 48 to 56, while their Bears dropped to a low 20%; Insider Selling dropped to still a high 34:1.

Here are the numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11203	11192	14093	6626
Nasdaq:	2518	2518	2805	1114
S&P 500:	1199	1199	1561	683
CBOE Eq. put/call:	59	57	96-10/08	46-1/03
VIX:	18.0	20.6	90	8.8
McClellan Osc:	(20)	(54)	108	(123)
McClellan Sum:	608	868	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	56.2	48.4	63	22.21
InvestorsIntel.Bear:	20.2	23.1	54.4	16
AAII Bull:	40.0	57.6	n/a	n/a
AAII Bear:	32.5	28.5	n/a	n/a
US Equity-1 week lag	n/a	(.7B)
Money Market Flows	(4.1B)	2.2B
Baltic Dry Index:	2164	24540	11700	663
Bullish %:	76	77	88	2
Insider Corporate Sellers:	34:1	79:1	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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CAPITALISM OR CAPITOL-ISM?:

HU'S ON FIRST?:

A leading magazine last week reported the Chinese Premier displaced Obama as the number 1 powerful figure in the world, to paraphrase Abbott and Costello's famous debate - this is the biggest "first" since the U.S sent Rice (Condoleezza) to China.

After a weak week in the markets, the G20 meetings seem to have reversed most of their directions, Sentiment is inconclusive: the McClellan Oscillator swung mightily from a +35 to minus 57 (oversold), yet the AAII Bulls went to a new multi-year high of 57%. Insider selling is huge , for 4 out of the past 5 weeks, although they were exactly wrong last time it exceeded 100:1 in April of '09, before the long rally.

I'm testing a variation of a new indicator -speculation- based on dividing Nasdaq Volume by NYSE, since 53% of the latter is now interest-rate type securities, whereas Nasdaq is more of the market. High readings are Bullish.

Here are last week's numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11192	11444	14093	6626
Nasdaq:	2518	2578	2805	1114
S&P 500:	1199	1225	1561	683
CBOE Eq. put/call:	57	51	96-10/08	46-1/03
VIX:	20.6	18.3	90	8.8
McClellan Osc:	(54)	35	108	(123)
McClellan Sum:	868	931	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	48.4	46.7	63	22.21
InvestorsIntel.Bear:	23.1	24.4	54.4	16
AAII Bull:	57.6	48.2	n/a	n/a
AAII Bear:	28.5	29.8	n/a	n/a
US Equity-1 week lag	n/a	(1.1B)
Money Market Flows	2.2B	(6.6B)
Baltic Dry Index:	2454	2600	11700	663
Bullish %:	77	79	88	2
Insider Corporate Sellers:	79:1	60:1	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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HU'S ON FIRST?:

DEAL OF THE (NEW) CENTURY:

As with so many events in this "Recession", this weekend's TSAA mega-seminar has not yet sold out all the seats, so a continued "discounted" fee is available through Saturday - including TSAA membership for 2011. You can see details at http://tsaasf.org.

This exceptionally diverse technical symposium includes Greg Morris (long time partner of John Murphy/Stockcharts); Tim Knight - founder of prophet.net website; Barbara Rockefeller - veteran currency trader; and Edwards/Magee editor and technician extraordinaire - Charles Bassetti. Plus lots of food during the all-day event on Saturday. You can email: hpruden@ggu.edu.

This QE2 rally is not dead yet, as shown by a record 770 new highs on the NYSE last week; but it is getting overcooked by a few Sentiment Indicators: the Bullish % is just under 80; the McClellan Summation Index just under 1,000. Newsletter Bears and CBOE put/call ratios have warned lately, but bounced back last week. Insider selling is still huge, although they were totally wrong last time they sold; money is still coming out of stock funds and Money Market funds.

Here are the numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11444	11118	14093	6626
Nasdaq:	2578	2507	2805	1114
S&P 500:	1225	1183	1561	683
CBOE Eq. put/call:	51	61	96-10/08	46-1/03
VIX:	18.3	21.2	90	8.8
McClellan Osc:	35	(14)	108	(123)
McClellan Sum:	931	859	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	46.7	45.6	63	22.21
InvestorsIntel.Bear:	24.4	24.4	54.4	16
AAII Bull:	48.2	51.2	n/a	n/a
AAII Bear:	29.8	21.6	n/a	n/a
US Equity-1 week lag	n/a	(.2B)
Money Market Flows	(6.6B)	24.6B
Baltic Dry Index:	2600	2678	11700	663
Bullish %:	79	74	88	2
Insider Corporate Sellers:	60:1	104:1	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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DEAL OF THE (NEW) CENTURY:

FORTUNATE CORRECTION:

My EIX (Edison) DITM position was called away on October 12, when I was away on vacation. I naturally assumed it was just prior to ex-dividend; it was a pleasant surprise to receive an additional dividend of $63 which was from an ex-D in late September.

So my annualized return for the 4 month holding was 9%, not 6.1%.
Although Utilities pay high dividends, their options are not that attractive for selling calls, nor is this a great environment for the Sector. Telecoms are better - VZ, T.

Standard and Poor's reports that for the decade just past, stocks' dividends comprised 84% of Total Return. Morningstar has an attractive rating for EXC -Exelon, and Leggett -LEG.

I'm anxiously awaiting the Fed's decision on QEII.later today.

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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FORTUNATE CORRECTION:

TEA (PARTY ANIMAL):

About the only thing we haven't heard from the media prior to Election Day is what to call the TEA Party: we have the Elephants and Asses, but no mascot yet for Taxed Enough Already, or Independents. As Autumn Leaves (and Winter Arrives), still no answer on the previous tax breaks due to expire. Much has been discussed - CNBC aptly named the possibility of taxing church property "APPRAISE THE LORD !". So far this young Century Congress has changed the tax structure 6 times - a headache for estate planners and tax preparers.

Although I've always thought that the stock market should be a non-"prophet" organization, technicians know we can learn from history: Pre-election years, per Ned Davis Research, have averaged 17.6% over several decades (think 2011); while a distant second is Election year at +9.5%. The best months also lie ahead - November, December and January. NDR also cites years where capital gains are hiked only rise 6.1%, vs a normal 8% (19.5% when CG are cut). Best market gains also occur with a Democratic President and Republican Congress (9.6%).

That said, some alarming Sentiment statistics occurred this past week: the AAII Bears % was the lowest since December 15 of 2006 at 20.6%, although the major top did not occur until Oct.'07 -10 months later. Previous low was 19.1% in January '06 at 19.1%, only 4 months before a minor correction. And the Bulls breached the 50% mark as well.

Another startling fact was Insider (CEO) Selling, reaching an almost record high of 104:1 over Buying, up from 28:1 the week before. Then I realized that the record of 108:1 occurred in April '09, at the beginning of the 1,000 points of "light" in the stock market - who says corporate insiders know what their companies are doing?

Here are the numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11118	11132	14093	6626
Nasdaq:	2507	2479	2805	1114
S&P 500:	1183	1183	1561	683
CBOE Eq. put/call:	61	67	96-10/08	46-1/03
VIX:	21.2	18.8	90	8.8
McClellan Osc:	(14)	(1)	108	(123)
McClellan Sum:	859	923	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	45.6	45.1	63	22.21
InvestorsIntel.Bear:	24.4	22.0	54.4	16
AAII Bull:	51.2	49.6	n/a	n/a
AAII Bear:	21.6	25.2	n/a	n/a
US Equity-1 week lag	n/a	(.2B)
Money Market Flows	(24.6B)	(17.0B)
Baltic Dry Index:	2678	2720	11700	663
Bullish %:	74	731	88	2
Insider Corporate Sellers:	104:1	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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TEA (PARTY ANIMAL):