RUN FOR COVER!

Welcome to your new job, Ms. Yellen! Hardly the best way to start your first day on the job, with Mr. Market dropping like a rock. With all hubris aside, it is comforting to know that the investment strategy(s) I have been extolling for the past 5 years - Deep-In-The-Money COVERed Calls, and more recently, LEAP Strangles (OTM puts and calls) are doing splendidly in this environment.
With the DJIA down over 1200 points so far in 2014 (SPX down over 100), a report card of my 27 fully invested positions show 8 DITM positions, only one Under Water; of the 19 Leaps, 7 are still in the call-away area (max profit), 9 in the sweet spot, between the put and call strangle, and only 3 precious metal stocks Under Water, with 2016 as the expiry date. Having missed the unexpected 30% runup in stocks last year, it did provide a cushion or hedge against the inevitable.

Sentiment extremes include the record margin interest, updated last week to $445B, huge Insider selling (see below) 215 sales, with only 40 of the from ESOP exercises by officers and board members; 40 is also the number of sales by 10% holders. Coincidentally, the per cent of AAII Bears surpassed Bulls last week (a/o Wednesday), historically more reliable than the Inv. Intell. Bull/Bear survey.
Also in the monthly update was ETF totals, with Equity up over $1T; Int'l and Bond ETFs were frozen.
For more commentary, please visit: http://www.examiner.com/stock-market-in-san-francisco/brent-leonard

Here are the numbers:

  

Date>		1/31/2014	1/24/2014
Indices:	DJIA	15698	15879
	NAZ	4103	4128
	SPX	1782	1790
WklyVolume (Bshs).	naz/ny	10.9/3.7	8.6/3.1
Specul.Ratio hi=bullish		2.95	2.77
Sentiment:	put/call-CBOE	57	61
VIX>50-alltmlow=8.8		18.4	18.14
Advance/Dec-NYSE..		1451/1756	1088/2130
Weekly Net:		-305	-1042
Cumulative:		153800	154105
Weekly	NYSE hi/low	138/171	366/91
New Hi's/Low's	Nasdaq h/l	214/102	412/59
McClellan	Oscillator	-31	-31
McClellanSum	.+750/-1000	443	622
Newsletter	Inv.Intel -Bull:tues	53.1	57.6
Surveys	Bear:-5yrs	15.3	15.1
	AAII  -Bull :wed.	32.2	38.1
	Bear	32.8	23.8
COT:SPX w/w	large/small (net)k	7/8k	7/21k
COT:gold  comm.hedg	long-short.000	(65K)	(46k)
CEOinsider	selling	31:1	70:1
off.&bd b/s.vs.	10% holder b/s	215:40	200:70
3-box rev	Bullish%-	70	79
US equity -ICI	Fund Flows	WeekDelay	WeekDelay
MMF flows	Change in $B	(1.8B)	6.4B
MargDebt- top (300M)	monthly	445B
ETF:mthlyEqty/	Int'l/Bond-$B	1028/399/246
2-yr Tsy Yield: Inflation		0.34%	0.35%

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

RUN FOR COVER!