RIDDLE ME THIS

Why is the stock market like a football passing game?

Answer: Only three things can happen - and only one of them good!
Stock markets (or individual stocks) can go Up, Down, or Sideways (UNCH); passes (even deflated ones) can be Caught, Incompleted, or Intercepted.

What a greeting from the stock market coming back from vacation! While helplessly on the road Friday, it gave the indication that it would resume today - did it ever. The rebound was impressive, whether it was from the Fed (as China is wont to do), short covering, or -from Barron's- increased stock But Backs. 60% of the S&P 500 stocks used them this year, versus 30% in 2011.

In his newsletter, master Technician John Murphy said the October 2014 lows had to hold to avoid a rout - today the SPX and Nasdaq did hold, the DJIA (30) did not. It has been nearly 4 years since we've had a meaningful correction in stocks, so this could be a blessing in disguise, however painful. Technically, in a Presidential (4 year) cycle, the pre-election year (2015) is by far the best performer - up 16% on average - we now have a ways to go to get there. 

Traditionally, JASON (July thru November) is the worst half of the year, with August, Sept., and Oct. the three worst - Nov. and Dec. are usually the best, along with January. Veteran analyst Laszlo Birinyi has called for 3200 on the SPX (500) within a couple years - that's a leap!!!

Sentiment - wise, the VIX leapt up to a rare 28 last week, and Advancing/Declining stocks (breadth) was dismal, as were the new highs to lows. One of my fave short term indicators - the McClellan Oscillator shot down through the -50 line: to -71, usually a BUY signal; better late than never. Money has been flowing into MMFs (money markets) for over a month now, and last week's Volume was huge, considering the heavy hitters were supposed to be on vaca (I guess the HFT computers were not).
STAY TUNED

Date>		8/21/2015	8/14/2015
Indices:	DJIA	16459
	NAZ	4706
	SPX	1970
WklyVolume (Bshs).	naz/ny….	9.6/4.5	8.8/4.1
Specul.Ratio hi=bullish		2.13	2.15
Sentiment:	put/call-CBOE	84	74
VIX>50-alltmlow=8.8		28	12.8
Advance/Dec-NYSE..		384/2878	1890/1362
Weekly Net:		-2494	528
Cumulative:		160295	162789
Weekly	NYSE hi/low…	143/697	164/379
New Hi's/Low's	Nasdaq h/l	153/468	151/339
McClellan	Oscillator	-71	20
McClellanSum	.+750/-1000	-392	-370
Newsletter	Inv.Intel -Bull	37.7	40.2
Surveys-Tues	Bear:-5yrs	18.4	18.6
Wed.	AAII  -Bull	26.8	30.5
	Bear	33.3	36.2
COT:SPX w/w	large/small (net)k	13k/(33k)	N/A
COT:gold  comm.hedg	long-short.000	(30k)	N/A
COT:OIL comm.hedg	long-short.	(214k)	N/A
US$-WSJ		87.8	N/A
CEOinsider	selling	.15:1	N/A
off.&bd b/s.vs.	10% holder b/s	discont.
3-box rev	Bullish%-	44	51
US equity -ICI	Fund Flows	weekDelay	(2.3B)
MMF flows	Change in $B	11.0B	8.3B
MargDebt- top (300M)	monthly	505B	JUNE:
ETF:mthlyEqty/	Int'l/Bond-$B	1250/514/314	JUNE:
2-yr Tsy Yield: Inflation		0.62%	N/A
TIP (ETF)	Inflation	112.2	v

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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RIDDLE ME THIS

BREAKOUT OR FAKEOUT?

In this silly season where the Big Players are on vacation, volatility abounds! After 7 straight down days this week starts with a huge rally, although  Volume is not really confirming it as the large Volume last week confirmed the downside. Also Bearish was the recent Breadth (advance/declines, new lows/highs) and technical downtrend. MMF (money market flows have been huge the past two weeks, just as they were a month ago at this time, when the DJIA fell off its 18k high.

Although most Sentiment Indicators last week were Frozen!, the leap in CBOE put/call ratio bode for a pop today, as did the McClellan Oscillator; also the Bullish % - stocks on a BUY signal- is at the October 2014 (Crash) low, which ended in a large uptrend! Longer term, market veteran Laszlo Birinyi came on TV to predict a 3000 S&P 500 in two years!! That is about 50% higher than now (2100) - a few more days such as today will get there.

Speaking of vacation - I shall be enjoying the beachfront near San Luis Obispo next week - so no commentary. Here are last week's numbers:

Date>		8/7/2015	7/31/2015
Indices:	DJIA	17373	17689
	NAZ	5043	5128
	SPX	2077	2103
WklyVolume (Bshs).	naz/ny….	9.9/4.4	9.6/4.5
Specul.Ratio hi=bullish		2.25	2.13
Sentiment:	put/call-CBOE	78	63
VIX>50-alltmlow=8.8		13.4	12
Advance/Dec-NYSE..		1138/2099	2102/1135
Weekly Net:		-961	967
Cumulative:		162261	163222
Weekly	NYSE hi/low…	215/555	182/600
New Hi's/Low's	Nasdaq h/l	246/427	172/440
McClellan	Oscillator	-10	18
McClellanSum	.+750/-1000	-338	-338
Newsletter	Inv.Intel -Bull	42.2	43.3
Surveys-Tues	Bear:-5yrs	17.5	17.5
Wed.	AAII  -Bull	24.3	21.1
	Bear	31.7	40.7
COT:SPX w/w	large/small (net)k	7k/(17k)	7K/(13K)
COT:gold  comm.hedg	long-short.000	(15K)	(15K)
COT:OIL comm.hedg	long-short.	(242k)	(244K)
US$-WSJ		88.8	n/a
CEOinsider	selling	.17:1	n/a
off.&bd b/s.vs.	10% holder b/s
3-box rev	Bullish%-	51	52
US equity -ICI	Fund Flows	weekDelay	(5.2B)
MMF flows	Change in $B	21.3B	UNCH
MargDebt- top (300M)	monthly	JUNE:	505B
ETF:mthlyEqty/	Int'l/Bond-$B	JUNE:	1250/514/314
2-yr Tsy Yield: Inflation		0.73%	0.67%
TIP (ETF)	Inflation	112.1	112.6

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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BREAKOUT OR FAKEOUT?

FOOL'S GOLD??

There is absolutely no reason on earth to own gold - that's why, as a Contrarian, I like it around these levels! An old Wall St. maxim is "When everyone is looking one way, look the other" Gold is an Inflation hedge - there is none in sight for the foreseeable future; it pays no dividend, in fact, costs money to harbor. With all the calamities around the globe - Greece, China, Brazil, etc. it only goes DOWN. Countries needing cash for debt, are selling gold, used as collateral for other assets; finally, a stronger dollar (with imminent rising rates) will only hurt gold's price, measured in $$.

While riding it down, I decided to hedge it with JDST, DZZ, even looked at $GVZ, the gold Vix, but have had bad luck using the VIX to hedge the market - VXX futures calls, longterm VIX calls!
Even with Larry McMillan's recent talk at UC Extension solely on the VIX.

So what happened to the stock market? The Traders' Almanac, run by another recent local speaker -Jeffrey Hirsch-  used to say " the market rises more on the first trading day of the month than all other days combined! Not a good sign!!!! Another former TSAA speaker - Tom DeMark- as well as a chart from John Mauldin's newsletter- has compared the China bubble market crash to 1929 - a tight correlation, with 14% to go (TDM). Gunslingers can use the ASHR ETF puts to play this.

Last week's Sentiment Indicators showed no signs of today's decline - the AAII Bear/Bull ratio swung heavily to the Bear side - a Bullish FOR the market signal; A longer term signal from corporate Insider Selling to Buying swung from 180:1 to 16:1 (college funding??).
Recent signs, however, have shown a decay in market breadth - advance/declines, new highs/lows, etc. Market declines always precede this weakness, but these weakness don't always result in a market decline (??). As shown below, New Lows on the NYSE reached 600.

Here are the numbers:

Date>		7/31/2015	7/24/2016
Indices:	DJIA	17689	17568
	NAZ	5128	5088
	SPX	2103	2079
WklyVolume (Bshs).	naz/ny….	9.6/4.5	9.5/4.1
Specul.Ratio hi=bullish		2.13	2.32
Sentiment:	put/call-CBOE	63	69
VIX>50-alltmlow=8.8		12	13.7
Advance/Dec-NYSE..		2102/1135	645/2610
Weekly Net:		967	-1965
Cumulative:		163222	162255
Weekly	NYSE hi/low…	182/600	245/626
New Hi's/Low's	Nasdaq h/l	172/440	287/403
McClellan	Oscillator	18	-43
McClellanSum	.+750/-1000	-338	-282
Newsletter	Inv.Intel -Bull	43.3	49
Surveys-Tues	Bear:-5yrs	17.5	15.6
Wed.	AAII  -Bull	21.1	32.5
	Bear	40.7	25.6
COT:SPX w/w	large/small (net)k	7K/(13K)	9k/(16k)
COT:gold  comm.hedg	long-short.000	(15K)	(21k)
COT:OIL comm.hedg	long-short.	(244K)	(257k)
US$-WSJ		n/a	88.5
CEOinsider	selling	n/a	.16:1
off.&bd b/s.vs.	10% holder b/s		discont.
3-box rev	Bullish%-	52	53
US equity -ICI	Fund Flows	week delay	(3.2B)
MMF flows	Change in $B	UNCH	16.2B
MargDebt- top (300M)	monthly	505B	JUNE:
ETF:mthlyEqty/	Int'l/Bond-$B	1250/514/314	JUNE:
2-yr Tsy Yield: Inflation		0.67%	0.69%
TIP (ETF)	Inflation	112.6	112.1

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

Subscribe in a reader

FOOL'S GOLD??