TAKE A HIKE

The prominent story these days in the media, other than the Hilary/Trump saga, is whether the Fed will again raise rates soon - June or July. Normally rate hikes are beneficial for stocks, providing the economy is strong - which it is NOT these days. In fact, per Barron's, rate hikes with low GDP during the years 1976, 1986, and Dec. 2015 led to double-digit declines (1983 did not). There is also the Brexit vote on the 23rd to consider. As for S&P earnings, it is rare that they decline, year over year, as they did in 2015, and even moreso 2 years in a row, which appears likely.

In another small sampling, whenever the Yield Curve flattens, i.e., the 2-year Treas yield is equal to the 10-year (due to rate hikes), we have Recessions and Bear markets, going back to 1980 (1991, 2001, and 2008). But nice rallies can precede these.

So marks the Sentiment Indicators these days. The AAII Bull/Bear survey hit a recent low (2005) of Bulls - see below-, with a decade high of Neutrals (2003) - Bullish FOR the markets. Last week saw strong Breadth, if not Volume, with the Holiday this week. $$ are still going into MMFs and out of Equity MUFs, and IPOs are slowing recent months.
Here are the numbers:

Date>		5/27/2016	5/20/2016
Indices:	DJIA	17873	17500
	NAZ	4933	4769
	SPX	2099	2052
WklyVolume (Bshs).	naz/ny….	8.6/4.2	9.3/4.6
Specul.Ratio hi=bullish		2.05	2.02
Sentiment:	put/call-CBOE	59	75
VIX>50-alltmlow=8.8		13.1	15.2
DeltaMSI-50%	MAC crossover	64%	63%
Advance/Dec-NYSE..		2482/695	1515/1653
Weekly Net:		1787	-138
Cumulative:		167170	165383
Weekly	NYSE hi/low…	241/50	277/76
New Hi's/Low's	Nasdaq h/l	190/106	115/212
McClellan	Oscillator	21	-31
McClellanSum	.+750/-1000	731	723
Newsletter	Inv.Intel -Bull	35.4	40.2
Surveys-Tues	Bear:-5yrs	24	21.7
Wed.	AAII  -Bull	17.8	19.3
	Bear	29.4	34.1
US$-WSJ		95.7	95.3
3-box rev	Bullish%-	69	67
US equity -ICI	Fund Flows	WeekLate	(2.7B)
MMF flows	Change in $B	14.2B	4.3B
MargDebt- top (300M)	monthly	March	446B
10-yr Tsy yield	hi= stock buying	1.85%	1.84%
2-yr Tsy Yield: Inflation		0.92%	0.88%
TIP (ETF)	Inflation	114.3	114.1