REVERSAL OF FORTUNE:

After a very insignificant increase in Equity Fund flows the previous week, outflows returned last week to the norm from last April. The latest monthly data of ETFs show almost no change in flows from stocks, Int'l, or bonds.
Toppiness still abounds, in speculative Volume (NASD/NYSE), McClellan Oscillator, Bullish %, and the number of Bears in both the AAII and Inv.Intell. Even Barron's cover story was about defensive strategies, using dividend stocks, and the option column is still preaching covered calls.The January Barometer and Effect are both positive, but February is usually not one of the better months - especially after a 20% run up from Oct. (5% this year alone).

Date>		1/27/2012	1/20/2012
Indices:	DJIA	12660	12720
	NAZ	2816	2786
	SPX	1316	1315
NASD/NYSE	WklyVolume (Bshs)	4.0/9.1	3.3/7.8
nasd/nyse	Specul.Ratio hi=bullish	2.28	2.36
Sentiment:	put/call-CBOE	62	52
Barron's	VIX>50-alltmlow=8.8	18.5	18.3
	Advance/Dec-NYSE..	2251/905	2414/730
	Weekly Net:	1346	1684
	Cumulative:	130736	129390
Weekly	NYSE hi/low	367/25	292/36
New Hi's/Low's	Nasdaq h/l	200/39	166/43
McClellan	Oscillator	47	52
McClellan Sum	.+750/-1000	1050	810
Newsletter	Inv.Intel -Bull:tues	50	50
Surveys	Bear:-5yrs	28.7	29.8
	AAII  -Bull :wed.	48.4	47.2
	Bear	18.9	23.6
COT:Change w/w	large/small (net)k	(2)/16	(4)/19
CEOinsider	selling	28:1	25:1
BalticDryIndex	GlobalEcon	753	862
3-box rev	Bullish%-	80	78
US equity -ICI	Fund Flows	(.8B)	1 wk lag
MMF flows	Change in $B	(15B)	(13B)
MargDebt- top (300M)	monthly OCT.	267B
ETF:Eqty/Int'l/Bond	million$$ OCT.	618/245/184
2-yr Tsy Yield: Inflation		0.22%	0.25%
Euro futures	1 yr.offset-CommHedg	4.82	4.89M

ORANGE ALERT:

Interesting week for a rather calm stock market: the S&P500 broke up through the 1300 level to a double top from last July - Larry McMillan states that it is 3 Std Deviations above its 20-day MA, and just as Oct and Apr.'11 and Feb.'07, the OEX put/call Volume ratio was 2:1. The Baltic Dry Index broke below 1000 for the first time in 3 years, a global economic indicator. My cumulative A/D total broke to a new all-time high (overbought); the NASD to NYSE Volume (speculative) also hit a new high.US equity fund flows reversed to inflows for the first time since April 22 of last year -a multi-year high. As seen below, most indicators are Bearish FOR the markets.

Date>		1/20/2012	1/13/2012
Indices:	DJIA	12720	..12422
	NAZ	2786	..2710
	SPX	1315	1289
NASD/NYSE	WklyVolume (Bshs)	3.3/7.8	3.9/8.7
nasd/nyse	Specul.Ratio hi=bullish	2.36	2.23
Sentiment:	put/call-CBOE	52	59
Barron's	VIX>50-alltmlow=8.8	18.3	20.9
	Advance/Dec-NYSE	2414/730	2161/988
	Weekly Net:	1684	1173
	Cumulative:	129390	127706
Weekly	NYSE hi/low	292/36	277/50
New Hi's/Low's	Nasdaq h/l	166/43	153/89
McClellan	Oscillator	52	26
McClellan Sum	.+750/-1000	810	618
Newsletter	Inv.Intel -Bull:tues	50	51.1
Surveys	Bear:-5yrs	29.8	29.8
	AAII  -Bull :wed.	47.2	49.1
	Bear	23.6	17.2
COT:Change w/w	large/small (net)k	(4)/19	(9)/21
CEOinsider	selling	25:1	20:1
BalticDryIndex	GlobalEcon	862	1105
3-box rev	Bullish%-	78	73
US equity -ICI	Fund Flows	1 wk lag	.75B
MMF flows	Change in $B	(13B)	11B
MargDebt- top (300M)	monthly OCT.
ETF:Eqty/Int'l/Bond	million$$ OCT.
2-yr Tsy Yield: Inflation		0.25%	0.23%
Euro futures	1 yr.offset-CommHedg	4.89M	4.96M

RALPH CLARK - R.I.P:

This column is dedicated to a good friend, neighbor, and fellow investor, who passed away late last week from ALS at 81. Ralph Clark was a student of investing, at GGU and briefly with the San Francisco Bay Area Options Group. Before passing, he asked me to dispose of nearly 50 quality investment books which I intend to do at the upcoming Options monthly meeting this Saturday morning at Fort Mason, where I and other speakers will explain our experiences with my DITM investment strategy.
Last week's Sentiment numbers saw some toppy, overbought readings, creating a caution signal: my Volume ratio - NASD/NYSE is approaching a high (speculative) reading. Although only testing for a short time (2011), these levels were at previous tops in April 6, May 2, and July 22. My cum. Volume of Adv./Dec. is also toppy, going back to April. Commitment of Traders show Large Specs on the S&P going negative vs. positive for Small Specs. Most dramatic is the AAII and Inv.Intell. Bull/Bear ratios. Numbers appear below:

Date>		1/13/2012	1/6/2012
Indices:	DJIA	..12422	..12359
	NAZ	..2710	..2674
	SPX	1289	1277
NASD/NYSE	WklyVolume (Bshs)	3.9/8.7	3.2/6.9
nasd/nyse	Specul.Ratio hi=bullish	2.23	2.16
Sentiment:	put/call-CBOE	59	63
Barron's	VIX>50-alltmlow=8.8	20.9	20.6
	Advance/Dec-NYSE	2161/988	2213/947
	Weekly Net:	1173	1266
	Cumulative:	127706	126533
Weekly	NYSE hi/low	277/50	305/27
New Hi's/Low's	Nasdaq h/l	153/89	118/81
McClellan	Oscillator	26	29
McClellan Sum	.+750/-1000	618	395
Newsletter	Inv.Intel -Bull:tues	51.1	49.5
Surveys	Bear:-5yrs	29.8	30.5
	AAII  -Bull :wed.	49.1	48.9
	Bear	17.2	17.2
COT:Change w/w	large/small (net)k	21/(9)	12/5.
CEOinsider	selling	20:1	30:1
BalticDryIndex	GlobalEcon	1105	1426
3-box rev	Bullish%-	73	68
US equity -ICI	Fund Flows	1 wk lag	(7B)
MMF flows	Change in $B	11B	(1.9B)
MargDebt- top (300M)	monthly OCT.
ETF:Eqty/Int'l/Bond	million$$ OCT.
2-yr Tsy Yield: Inflation		0.23%	0.27%
Euro futures	1 yr.offset-CommHedg	4.96M	5.13M

  

JANUARY BAROMETER:

As the old saying goes (Observable, but not Actionable) : So goes the first week of January - so goes the month; so goes January, so goes the year! Of course, a la the Heisenberg principle - since the year contains the month, it has a nice running start.
Sentiment Indicators are running a little hot lately - not quite calling for a reversal, but approaching overbought conditions: The VIX is down to 20; the AAII  Bears dropped from 30 to under 20! MMF flows went negative for the first time since November. Bullish % is nearing a high level, where previous tops have occurred, although 88% is the highest high.
The herd-like media is finally all aflutter about zero interest rates penalizing prudent investors, and I have been asked to revisit my DITM covered call strategy at the upcoming SF Options Group meeting on Jan.21 at Fort Mason. After successfully testing this plan for nearly three years, giving several Bay Area talks and even writing a book on it, people are finally seeing the value of it - @10% annualized returns, WITH a Safety Net. If interested for a portion of one's assets, please visit brentleonard.com for more information.
Here are the Sentiment numbers:

Date>		1/6/2012	12/30/2011
Indices:	DJIA	12359	12217
	NAZ	2674	2605
	SPX	1277	1257
NASD/NYSE	WklyVolume (Bshs)	3.2/6.9	2.2/4.6
nasd/nyse	Specul.Ratio hi=bullish	2.16	2.10
Sentiment:	put/call-CBOE	63	67
Barron's	VIX>50-alltmlow=8.8	20.6	23.4
	Advance/Dec-NYSE	2213/947	1218/1896
	Weekly Net:	1266	-678
	Cumulative:	126533	125267
Weekly	NYSE hi/low	305/27	295/72
New Hi's/Low's	Nasdaq h/l	118/81	92/161
McClellan	Oscillator	29	24
McClellan Sum	.+750/-1000	395	240
Newsletter	Inv.Intel -Bull:tues	49.5	50.5
Surveys	Bear:-5yrs	30.5	29.5
	AAII  -Bull :wed.	48.9	40.6
	Bear	17.2	30.8
COT:Change w/w	large/small (net)k	12/5.	7/7.
CEOinsider	selling	30:1	18:1
BalticDryIndex	GlobalEcon	1426	1888
3-box rev	Bullish%-	68	..63buy
US equity -ICI	Fund Flows	1 wk lag	(4B)
MMF flows	Change in $B	(1.9B)	2.6B
MargDebt- top (300M)	monthly OCT.		269B
ETF:Eqty/Int'l/Bond	million$$ OCT.		615/262/178
2-yr Tsy Yield: Inflation		0.27%	0.25%
Euro futures	1 yr.offset-CommHedg	5.13M	5.04M

YEAR END WHIMPER:

With the S&P 500 ending EXACTLY the same as the year before -1257.6 - it signified the boring end to 2011; many of the Indicators regressed to the mean on low Volume, with the VIX at 23. Some relative extremes did include the Inv.Intell. Bulls at 50+%; my records show a 62.9% high in Dec. of '04. AAII Bulls jumped to 40% - must be the champagne! A small number of funds flowed out of equity funds into MMFs, but the ETFs remained almost unchanged month/month.
Here are closing numbers for 2011:

Date> 12/30/2011 12/23/2011 Indices: DJIA  12217 12294   NAZ  2605 2618 SPX  1257 1265 NASD/NYSE WklyVolume (Bshs) 2.2/4.6 3.8/7.7 nasd/nyse Specul.Ratio hi=bullish 2.10 2.03 Sentiment: put/call-CBOE  67 63 Barron's VIX>50-alltmlow=8.8 23.4 20.7 Advance/Dec-NYSE 1218/1896 2577/587 Weekly Net: -678 1990      Cumulative: 125267 125945 Weekly  NYSE hi/low 295/72 293/146 New Hi's/Low's Nasdaq h/l 92/161 111/257 McClellan  Oscillator 24 48 McClellan Sum .+750/-1000 240 134 Newsletter Inv.Intel -Bull:tues 50.5 48.4 Surveys Bear:-5yrs 29.5 30.5 AAII  -Bull :wed. 40.6 33.7 Bear  30.8 28.2 COT:Change w/w large/small (net)k 7/7. 0/12. CEOinsider selling 18:1 10:1 BalticDryIndex GlobalEcon 1888 1888 3-box rev Bullish%-  63buy 61 US equity -ICI Fund Flows 1 wk lag 1 wk lag MMF flows Change in $B 2.6B 14.2B MargDebt- top (300M) monthly OCT. 269B ETF:Eqty/Int'l/Bond  million$$ OCT. 615/262/178 2-yr Tsy Yield: Inflation 0.25% 0.29% Euro futures 1 yr.offset-CommHedg 5.04M 5.06M