BREAKOUT OR FAKEOUT

Monday, October 26, 2015

BREAKOUT OR FAKEOUT

After a much-needed stock market correction in August and September, October is looking pretty good; the sharp upthrusts Thurs. and Fri. broke into current Resistance, despite overbought Breadth (Advances over Declines). Rather startling: the S&P 500 was up 1% Friday, and HALF the rise was just 3 stocks (thanks to Capitalization-weighting, not Price-weighting). Google (Alphabet), Microsoft and Amazon. Other reasons are probably short-covering of a high number of Bears, and the failure of the Gov't to issue some short term Treas. due to the debt ceiling dilemma - cash lying around.

After spending (wasting?) $$ on SPY Puts to hedge for the fearful October, I now use the TVIX which "should" rise if markets tank, although I expect the year end to be positive. Cannot be too careful with retirement $$.

Despite last week's Volatility, most Sentiment Indicators are right in the medium area - see below

Date>		10/23/2015	10/16/2015
Indices:	DJIA	17646	17215
	NAZ	5031	4886
	SPX	2075	2033
WklyVolume (Bshs).	naz/ny….	9.4/4.5	8.5/4.4
Specul.Ratio hi=bullish		2.09	1.93
Sentiment:	put/call-CBOE	71	73
VIX>50-alltmlow=8.8		14.4	15
Advance/Dec-NYSE..		1933/1299	1753/1477
Weekly Net:		634	276
Cumulative:		162045	161411
Weekly	NYSE hi/low…	228/136	131/74
New Hi's/Low's	Nasdaq h/l	225/211	153/141
McClellan	Oscillator	39	55
McClellanSum	.+750/-1000	373	187
Newsletter	Inv.Intel -Bull	37.5	36.5
Surveys-Tues	Bear:-5yrs	31.3	31.2
Wed.	AAII -Bull	34.8	34.1
	Bear	24	27.1
US$-WSJ		88	87
CEOinsider	selling	.26:1	.106:1
3-box rev	Bullish%-	63	53
US equity -ICI	Fund Flows	week delay	(1.4B)
MMF flows	Change in $B	1B	11.0B
MargDebt- top (300M)	monthly	454B	SEPT
ETF:mthlyEqty/	Int'l/Bond-$B	1202/465/324	AUG.
2-yr Tsy Yield: Inflation		0.65%	0.61%
TIP (ETF)	Inflation	111.3	111.3

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