HEDGE TRIMMING

There are two major fears I have for the near future, one is physical, the other mental: it has been a long time since we've had even a minor earthquake in the Bay Area; it is also been years since the stock market has had a meaningful correction. It is likely that the longer it takes, the larger it will be, although the USGS assured us that it would most likely be several small ones - that was before they discovered another "linking" fault between the two in the East Bay!

With the FED manipulative "put" now mostly taken away (QE), anything can happen, as we saw in May of 2010 thanks largely to a rogue trader in London. In this week's Barron's, Steve Sears - the option guy- mentions large Volume in weekly options, especially the VIX and SPY (mostly by hedge funds); if they were to unwind, the butterfly wings might start another cascade  down.

Just as it is wise to take precautions for a quake - bottled water and canned food, battening down shelves- it is prudent to be ready to hedge equity positions if the market starts to fall. All market drops  eventually end in a V-Spike, so they can be a great Buying opportunity, by staging in/ selling put options. There are also Inverse ETFs to hedge with, even triple-strength ones.

This week - Wednesday- the TSAA society is hosting an expert in ETFs from Factset.com at Golden Gate U. - see tsaasf.org for details.

Some markets hit new highs last week, but today's one-day reversal is not healthy. Charts most often do tend to retest breakouts before resuming their uptrends- I hope that is the case here!

Sentiment data was quiescent last week, although commercial traders' shorts on Oil and Gold expanded greatly (see below). CEO Insider Selling jumped, but that is not a very good short term signal. Large traders in the SPX are mostly long, while small traders are still short - a good contrary sign. Here are the numbers:

Sentiment:	put/call-CBOE	61	65
VIX>50-alltmlow=8.8		12.3	13.9
Advance/Dec-NYSE..		2215/1009	1285/1942
Weekly Net:		1206	-657
Cumulative:		168248	167042
Weekly	NYSE hi/low…	266/42	258/34
New Hi's/Low's	Nasdaq h/l	313/112	294/102
McClellan	Oscillator	13	-20
McClellanSum	.+750/-1000	568	536
Newsletter	Inv.Intel -Bull	52.5	50.5
Surveys-Tues	Bear:-5yrs	15.2	13.9
Wed.	AAII  -Bull	31.5	32.1
	Bear	23.2	22.8
COT:SPX w/w	large/small (net)k	11k/(14k)	10k/(8k)
COT:gold  comm.hedg	long-short.000	(105k)	(104k)
COT:OIL comm.hedg	long-short.	-325	-280
US$-WSJ		86.4	86.8
CEOinsider	selling	49:1	16:1
off.&bd b/s.vs.	10% holder b/s	.160:25	.150:20
3-box rev	Bullish%-	74	74
US equity -ICI	Fund Flows	WeekDelay	(5.7B)
MMF flows	Change in $B	(6.9B)	(39B)
MargDebt- top (300M)	monthly
ETF:mthlyEqty/	Int'l/Bond-$B
2-yr Tsy Yield: Inflation		0.51%	0.51%
TIP (ETF)	Inflation	115.02	115.49

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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HEDGE TRIMMING

FED UP

Perhaps the cause of this new found Volatility in the markets in 2015 is that the Fed finally stopped driving them UP, forcing prudent investors into riskier assets. Even at triple the 2009 index levels, 300 points down, then up, seems pretty material. Maybe the Fed finally decided that, although the first ZIRP (Zero Interest Rate Policy) was needed, the multi-year extension was not effective. To diet is good, but to starve one's self to death is counter-productive!

After two market crashes since 2000, people want to avoid stocks and increase savings due to lower rates; if people are $aving, they are not $pending, ergo corporations are not expanding! Thus a sluggish Economy!

Last weeks flip-flops in Sentiment included the NYSE Advance/Decline - +900 to -600; therefore the McClellan Oscillator went from +20 to -20 as well, although the NYSE New Highs to Lows were almost 10:1 (see below). Commercial shorts in Gold expanded again, so no rise in sight; this week I also added COT OIL traders, with a heavily short position, and the US $, in a Wall St journal Index (not the basket one usually sees, which topped out recently. Finally, MMF (money market) flows were hugely negative. $$ flowing into ETFs outnumber managed mutual funds 15 to 1!

Here are the numbers:

Date>		4/17/2015	4/10/2015
Indices:	DJIA	17826	18057
	NAZ	4931	4995
	SPX	2081	2102
WklyVolume (Bshs).	naz/ny….	8.5/3.9	8.1/3.7
Specul.Ratio hi=bullish		2.18	2.19
Sentiment:	put/call-CBOE	65	56
VIX>50-alltmlow=8.8		13.9	12.9
Advance/Dec-NYSE..		1285/1942	2072/1155
Weekly Net:		-657	917
Cumulative:		167042	167699
Weekly	NYSE hi/low…	258/34
New Hi's/Low's	Nasdaq h/l	294/102
McClellan	Oscillator	-20	23
McClellanSum	.+750/-1000	536	495
Newsletter	Inv.Intel -Bull	50.5	50.4
Surveys-Tues	Bear:-5yrs	13.9	14.2
Wed.	AAII  -Bull	32.1	28.7
	Bear	22.8	24.2
COT:SPX w/w	large/small (net)k	10k/(8k)	10k/(9k)
COT:gold  comm.hedg	long-short.000	(104k)	(108k)
COT:OIL comm.hedg	long-short.	-280
US$-WSJ		86.8
CEOinsider	selling	16:1	22:1
off.&bd b/s.vs.	10% holder b/s	.150:20	.160:30
3-box rev	Bullish%-	74	71
US equity -ICI	Fund Flows	WeekDelay	(1.3B)
MMF flows	Change in $B	(39B)	0
MargDebt- top (300M)	monthly
ETF:mthlyEqty/	Int'l/Bond-$B
2-yr Tsy Yield: Inflation		0.51%	0.56%
TIP (ETF)	Inflation	115.49	113.95

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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FED UP

APRIL: Shower me the Money

No guarantees of future results of course, but it was reported that the 10 days following Income Tax Day has been positive for the stock market -so I checked. Going back to 2005 this is true, if only a few S&P points some years. Whether it is because of refunds, previously mentioned stock Buybacks as earnings season starts, one can only guess. Barron's also speaks of ETFs having to buy stocks- also a positive factor.

On the downside, every Rainbow must have Rain to produce it! Viewing the PBS program of the 1929 Crash, there are some similarities: It ran up 8 years after WWI (we are up 6 so far, tripling the March '09 low); Blind pools manipulated markets (HFTs?); the Economy slowed, but stocks rose.
Margin buying was at record levels.

Luckily there were warning signs - Corrections- which should be paid to attention to; either hedging or exiting.

The big difference between then and now, however, is the Sentiment. Everyone was in the markets then - shoeshine boys, cab drivers, etc. Last week, again, my Indicators only showed tepid levels:
With all markets barely below record levels, Volume last  week was average, as was the ratio of Nasdaq Volume to NYSE (speculative); option put to call ratio and the VIX were quiet; but Gold shorting by the Commercial traders (hedgers) went back up - not a good sign.

Here are the numbers:

Date>		4/10/2015	**4/2/2015
Indices:	DJIA	18057	17763
	NAZ	4995	4886
	SPX	2102	2066
WklyVolume (Bshs).	naz/ny….	8.1/3.7	**6.9/3.2
Specul.Ratio hi=bullish		2.19	2.16
Sentiment:	put/call-CBOE	56	69
VIX>50-alltmlow=8.8		12.9	14.7
Advance/Dec-NYSE..		2072/1155	2145/1070
Weekly Net:		917	1075
Cumulative:		167699	166782
Weekly	NYSE hi/low…		261/57
New Hi's/Low's	Nasdaq h/l		237/125
McClellan	Oscillator	23	12
McClellanSum	.+750/-1000	495	380
Newsletter	Inv.Intel -Bull	50.4	54.5
Surveys-Tues	Bear:-5yrs	14.2	14.2
Wed.	AAII  -Bull	28.7	35.4
	Bear	24.2	32
COT:SPX w/w	large/small (net)k	10k/(9k)	6k/(3k)
COT:gold  comm.hedg	long-short.000	(108k)	(81k)
CEOinsider	selling	22:1	25:1
off.&bd b/s.vs.	10% holder b/s	.160:30	.160:30
3-box rev	Bullish%-	71	70
US equity -ICI	Fund Flows	WeekDelay	(3.3B)
MMF flows	Change in $B	0	(47B)
MargDebt- top (300M)	monthly		465B
ETF:mthlyEqty/	Int'l/Bond-$B		1280/457/320
2-yr Tsy Yield: Inflation		0.56%	0.48%
TIP (ETF)	Inflation	113.95	114.05
			**Holiday

 

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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APRIL: Shower me the Money

GREEN VS. BROWN

Governor Jerry "Brown's" final legacy might be his necessary mandate to turn every household's lawn from green to brown, considering our prolonged drought. To his credit, however, he managed to help save my "watering" hole - Capp's Corner in North Beach- from being leased-out, since he lunches there monthly with his St. Ignatius H.S. buddies and supposedly pressured the landlord to be reasonable.

Also seemingly healthy (judging by today's action) is the stock market, now up nearly 200 points after a lousy employment number on Good Friday. Last week's numbers, ending on Thursday, showed reversals in breadth indicators - advance/declines, and the McClellan Oscillator, with increased New Highs. Other reversals include the  CEO Insider selling to much lower selling; and a large swing in MMF (money market) flows -from plus $17B to negative $47B!!

Lastly, the monthly figures for ETF assets came out - all at record inflows - stocks, bonds, and overseas investing. Here are the numbers:

Date>		**4/2/2015	3/27/2015
Indices:	DJIA	17763	17712
	NAZ	4886	4891
	SPX	2066	2061
WklyVolume (Bshs).	naz/ny….	**6.9/3.2	9.0/3.8
Specul.Ratio hi=bullish		2.16	2.37
Sentiment:	put/call-CBOE	69	66
VIX>50-alltmlow=8.8		14.7	15.1
Advance/Dec-NYSE..		2145/1070	1212/2014
Weekly Net:		1075	-802
Cumulative:		166782	165707
Weekly	NYSE hi/low…	261/57	367/77
New Hi's/Low's	Nasdaq h/l	237/125	274/130
McClellan	Oscillator	12	-12
McClellanSum	.+750/-1000	380	357
Newsletter	Inv.Intel -Bull	54.5	56.6
Surveys-Tues	Bear:-5yrs	14.2	14.1
Wed.	AAII  -Bull	35.4	38.4
	Bear	32	24.4
COT:SPX w/w	large/small (net)k	6k/(3k)	10k/3k
COT:gold  comm.hedg	long-short.000	(81k)	(53k)
CEOinsider	selling	25:1	74:1
off.&bd b/s.vs.	10% holder b/s	.160:30	160:40
3-box rev	Bullish%-	70	70
US equity -ICI	Fund Flows	WeekDelay	(4.5B)
MMF flows	Change in $B	(47B)	17B
MargDebt- top (300M)	monthly	465B	445B
ETF:mthlyEqty/	Int'l/Bond-$B	1280/457/320	1219/424/308
2-yr Tsy Yield: Inflation		0.48%	0.60%
TIP (ETF)	Inflation	114.05	113.42
		**Holiday

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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GREEN VS. BROWN