THE BEAR AND THE BLACK SWAN:

It is times like these that make all the Sentiment work worth it. As much as I prefer to gather and record the data, leaving predictions to fools and deceivers, if we do not get a material rally out of these extreme oversold readings within days, I'm going to hang it up and go fishing. I do recommend using these indicators first as a cautionary tools, then as a speculative one until proven correct.
Here are some examples: the CBOE put/call is at 85 (still off the 95 multiyear high); the VIX at 27.5 is not quite breaking through the 30 level we saw in 4 previous rallies the past year; NYSE new lows are 40 to 1 (Nasdaq 20:1); the McClellan Oscillator is off its -50 buy signal of the past 3 weeks, but the Summation broke -1,000, a new low.
Not only are the AAII and Inv.Intell surveys inverted, with more Bears than Bulls, but extremely so - more than 30 and 20%, respectively. Legal insider selling is at a new low of 4:1 (with kids going away to college next month??); Bullish per cent could also be lower - 27 is a bit above the 19 low.
With $38B going into Money Market Funds last week, this could fuel a rally, as well as the foreign money that has been huge in redemptions - oil-exporting countries make $2.5T a year in revenues. As T Boone says, we're funding both sides of the War!
Finally, record short interest on the NYSE and IBD's ratio, as well as a spike in SDS volume last week (the S&P 500 double short ETF).
Here are the rest of the numbers:
MktSentiment. 7/11/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11100……….11288………..14093............7286
Nasdaq………. 2239…………2245…………2810.............1114
S&P500…….. 1239…………1262………….1561………..776
CBOE Eq. put/call …85……………77……………..92-1/08….....46-1/03

VIX ………. 27.5…………24.78…….…….44.. 9/02 bu..10.0-7/05 br

McClellan Osc……….-44…………-75……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-1060……….-800…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…27.6………..31.9……….…12/04br......35-6/06bu
Bear:………… 47.3……….44.7………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……22.2/55.2……23.9/52.1……..n/a n/a
IBD: Short Interest- 14.1…………13.46…………15.0………. 4.0
Public/NYSE Spec.-…18.4……….17…….….21bl…………..1.0br
Bullish%- ………….27………28…….…88 -2/04br.....19bu
*Insider corporate sellers.4:1…….7:1………..97…………..5
Sectors: Most Buyers: Industrials (1/2 the total)
Most Sellers: Energy

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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THE BEAR AND THE BLACK SWAN:

SELL IN MAY, SWOON IN JUNE...:

In the classic Stock Traders' Almanac the Hirsches posit that the the last day of the month and the first 4 are the best days to trade the market, with the 1st day alone besting the rest of the month combined! In my ongoing study of 3+ years, that still holds true, but the 9 through 11 days are outperforming the early 5 days.
Midway through today, the fourth trading day of July, the S&P500 is down 25 pts., after today's huge reversal, but the 1st day was up 4 pts., about its average.
Sentiment indicators are way oversold across the board, after the cascading May through today period:
Extremes include both the McClellan Oscillator at -75 and its cumulative Summation Index at a rare -800; both newsletter surveys I follow, the AAII and Invest.Intell. ,are inverted with bears outnumbering bulls, also a rarity.
Not quite as extended are the VIX at near 25 and the Bullish %, which at 28 needs to go to 16 to match previous bottoms. NYSE weekly NLs/NHs were 10:1, and the Nasdaq was 1:20!
Meanwhile, insider selling and shorting are off their extremes.
Here are the numbers:
MktSentiment. 7/4/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11288……….11346………..14093............7286
Nasdaq………. 2245…………2315…………2810.............1114
S&P500…….. 1262…………1278…………1561………..776
CBOE Eq. put/call …77……………73……………..92-1/08….....46-1/03

VIX ………. 24.78………..23.4…….…….44.. 9/02 bu..10.0-7/05 br

McClellan Osc……….-75…………..-70……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-800…………-521…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…31.9…………33.7……….…12/04br......35-6/06bu
Bear:………… 44.7………..39.3………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……23.9/52.1……31.3/52.3……..n/a n/a
IBD: Short Interest- 13.46……….13.7…………15.0………. 4.0
Public/NYSE Spec.-…17…………17.4…….….21bl…………..1.0br
Bullish%- ………….28………..33…….…88 -2/04br.....19bu
*Insider corporate sellers.7:1……8:1………..97…………..5
Sectors: Most Buyers: Finance Most Sellers: Tech

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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SELL IN MAY, SWOON IN JUNE...:

GIVE NO QUARTER:

Now that the funny money of end-of-quarter window-dressing is over, a new quarter is upon us. Although an oversold rally is due the market, especially from the last day of a month to the 4th of the next (including a usually-positive Holiday) we could see a rally off the many Sentiment readings predictions:
The ratio-adjusted McClellan Oscillator is near its May '04 lows at -61; and the Summation is getting there at -521. The VIX in the mid-20s could get a little higher and the Bullish per cent (at 33) could go lower before we get the major bottom in the market.
Both the AAII and Inv.Intell. bull/bear ratio are bullishly inverted. Short interest and Public vs. Specialist shorting is high, although legal corporate selling has dropped, with Finance doing the most buying, Energy the selling. Energy has seen much selling since February; Finance has seen much buying even before last November.
Louise Yamada, reporting in Barron's, looks for much more downside in Financials, however. She was certainly prescient in her Gold call awhile back.
Here are the statistics:

MktSentiment. 6/27/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11346……….11842………..14093............7286
Nasdaq………. 2315…………2406…………2810.............1114
S&P500…….. 1278…………1317…………1561………..776
CBOE Eq. put/call …73……………82……………..92-1/08….....46-1/03

VIX ………. 23.4…………22.8…….…….44.. 9/02 bu..10.0-7/05 br

McClellan Osc………..-70………..-61……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-521…………..-194…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…33.7…………36.3……….…12/04br......35-6/06bu
Bear:………… 39.3…………37.4………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……31.3/52.3…….33.0/45.7……..n/a n/a
IBD: Short Interest- 13.7………..15.0nh…………15.0………. 4.0
Public/NYSE Spec.-…17.4……….13.7…….….21bl…………..1.0br
Bullish%- ………….33……….40…….…88 -2/04br.....19bu
*Insider corporate sellers.8:1…….14:1………..97…………..5
Sectors: Most Buyers: Finance Most Sellers: Energy

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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GIVE NO QUARTER:

FAUX RALLY OR FOR REAL?:

Sentiment and breadth indicators are entering the extreme area of oversold, unless a Black Swan of credit derivatives (the number "notional Quadrillions" is entering the lexicon) sabotage a needed rally.
Technician Walter Deemer reports that both the Leuthold and Lowry market indicators are projecting a bottom, $500B have gone into money market funds in the 1st quarter of 2008 ($94B went in just last week, and $22B into ETFs); and the 4-year Kinchen, or Presidential cycle also calls for a bottom. Indices are also nearing their 2008 (Jan, Mar. lows).
Most egregious is the CBOE put/call ratio now at 82, higher than last week's 79; Bullish per cent is entering its low zone at 40 (% of stocks on buy signals), although this could get down into the teens.
Although the current inversion of the AAII bull/bear survey is not uncommon, for the Investors Intelligence survey to do so is very rare.
Here are the levels:

MktSentiment. 6/20/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11842………..12307………..14093............7286
Nasdaq………. 2406…………2454…………2810.............1114
S&P500…….. 1317…………1360…………1561………..776
CBOE Eq. put/call …82……………79……………..92-1/08…..........46-1/03

VIX ………. 22.8………….21.2…….…….44.. 9/02 bu........10.0-7/05 br

McClellan Osc………..-61………..-32……………91-5/04 br......(-81)-5/04bu
McClelSum………-194……………-15…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…36.3………….43……….…12/04br......35-6/06bu
Bear:………… 37.4…………32.6………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……33.0/45.7…….31.3/53.6……..n/a n/a
IBD: Short Interest- 15.0nh…………13.8…………15.0………. 4.0
Public/NYSE Spec.-…13.7…………15.4…….….21bl…………..1.0br
Bullish%- ………….40…………44…….…88 -2/04br.....19bu
*Insider corporate sellers.14:1……..10:1………..97…………..5
Sectors: Most Buyers: Energy Most Sellers: Consumer non-durables

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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FAUX RALLY OR FOR REAL?:

WILD AND CRAZY WEEK:

There were lots of sentiment and breadth indicators showing extremes last week, so I'll point them out -top down:
Although the DJIA rose 100 points from the previous week, the Nasdaq sank 20; the CBOE put/call ratio shot up even higher to 79 (very bullish short term); the VIX did a mid-20 spike, although 4 previous larger rallies in '08 saw the spike above 30.
In the breadth area, 3 of the last 4 weeks saw 1300 to 1500 net decliners, and the new high/new low figures on both the NYSE and Nas were ugly :106/330 and 78/406, respectively. The McClellan Oscillator sank to -75 on its journey from -31 to -32, prompting the midweek rally; the Summation went negative for the first time in awhile (April 18).
The AAII survey inverted to a large 31/53 bear position, and the Nas to NY Volume ratio (speculation) rose to 9 points off its multi-year high of 177. The volume on the SDS etf (short the S&P) almost doubled its 4-week average, while flows into Money Markets saw a huge increase to $94B, 1/2 again as much as the old high in November '07, when the markets began their cascade downward. Finally, the Public to Specialist shorting jumped from 11 to 15 on the IBD scale.
Here are the full numbers:
MktSentiment. 6/13/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 12307………..12209………..14093............7286
Nasdaq………. 2454………….2474…………2810.............1114
S&P500…….. 1360…………1360…………1561………..776
CBOE Eq. put/call …79…………..74……………..92-1/08…..........46-1/03

VIX ………. 21.2………….23.5…….…….44.. 9/02 bu........10.0-7/05 br

McClellan Osc………..-32…………-31……………91-5/04 br......(-81)-5/04bu
McClelSum………-15……………..254…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…43……………44.8……….…12/04br......35-6/06bu
Bear:………… 32.6…………31.1………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……31.3/53.6…….43.5/38.0……..n/a n/a
IBD: Short Interest- 13.8…………14.38nh…………14.3………. 4.0
Public/NYSE Spec.-…15.4…………11.5…….….21bl…………..1.0br
Bullish%- ………….44………….50…….…88 -2/04br.....19bu
*Insider corporate sellers.10:1……..27:1………..97…………..5
Sectors: Most Buyers:Finance Most Sellers: Energy
Both leaders 2X nearest #2 sector

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

WILD AND CRAZY WEEK:

IN THE MARKET FOR MONEY:

$18B went into Money Market Funds last week, adding to the $45B in May. According to Ned Davis, nearly 1/4 of the $13T stock market is in MMFs/Cash, the most since 2003, and more than the 3rd highest in 20 years. Added to record short interest (much of it by institutions) this could bode for a huge rally down the road.
After last week's Selling Climax Friday, the CBOE put/call ratio rose to 74, a short term buy signal borne out in today's rally; also, the VIX spiked to a 2 months high at 23.5, and the McClellan Oscillator is at -31, slightly oversold.
On the flip side, Insider Selling by CEOs, etc. also rose to a 2 month high of 27:1, with Energy more than 1/3 of total sector sales. Bullish per cent is at 50, still on a sell signal.
Here are the numbers:

MktSentiment. 6/6/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 12209……….12638………..14093............7286
Nasdaq………. 2474………….2522…………2810.............1114
S&P500…….. 1360…………1400…………1561………..776
CBOE Eq. put/call …74…………..63……………..92-1/08…..........46-1/03

VIX ………. 23.5…………17.8…….…….44.. 9/02 bu........10.0-7/05 br

McClellan Osc………..-31………-18……………91-5/04 br......(-81)-5/04bu
McClelSum………254…………..340…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…44.8…………37.9……….…12/04br......35-6/06bu
Bear:………… 31.1…………32.2………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……43.5/38.0……31.4/45.8……..n/a n/a
IBD: Short Interest- 14.38nh…….14.3nh…………14.3………. 4.0
Public/NYSE Spec.-…11.5……….10.4…….21bl…………..1.0br
Bullish%- ………….50…………..55…….…88 -2/04br.....19bu
*Insider corporate sellers.27:1……..9:1………..97…………..5
Sectors: Most BuyersFinance Most Sellers: Energy (1/3)

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

Subscribe in a reader

IN THE MARKET FOR MONEY:

FANTASTIC VOYAGE:

Back from vacation, after impressing my family by placing first in guessing the midpoint on the flight to Maui (off by 23 seconds). Also the first time I had a cab to the airport overheat and not be able to continue.
Whle away, the market didn't overheat - more like a Linda Raschke-type 3-Up, 3-Down minicycle. After a flip-flop on the Recession % indicator, it will hit the waste bin, along with the Market Vane non-event number; circling the drain is the Birinyi bull/bear stat, as well.
Most indicators are lying in the midrange area, while the Bull/Bear surveys either narrowed (the Inv.Intell.) or inverted (AAII).
Short interest on IBD hit a new high, although as Barrons stated, much of that is used by nearly $2T in hedgefund long/short strategies.
Here are the actual numbers:

MktSentiment. 5/30/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 12638……….12479………..14093............7286
Nasdaq………. 2522…………2444…………2810.............1114
S&P500…….. 1400…………1375…………1561………..776
CBOE Eq. put/call …63……………67……………..92-1/08…..........46-1/03

VIX ………. 17.8………..19.5…….…….44.. 9/02 bu........10.0-7/05 br
Intrade.com-
Recession% 30………….30…………….76(bullish)….28(bearish)
McClellan Osc………-18………..-35……………91-5/04 br......(-81)-5/04bu
McClelSum………340…………..390…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…37.9…………47.3……….…12/04br......35-6/06bu
Bear:………… 32.2…………30.8………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……31.4/45.8……46.3/34.3……..n/a n/a
MarketVane Bulls…51……………54…………. 74br..............24bu
IBD: Short Interest- 14.3nh………13.8nh…………14.3………. 4.0
Public/NYSE Spec.-…10.4…………10.4…….21bl…………..1.0br
Birinyi Blogger
Bull/Bear Poll ………23.8/42.8……31.8/40.9
Bullish%- …………55………….55sell…….…88 -2/04br.....19bu
*Insider corporate sellers.9:1……..17:1 ………..97…………..5
Sectors: Most Buyers: Consumer Services
Most Sellers: Technology

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

FANTASTIC VOYAGE: