QUANTUM SHIFT:

If anyone doubts that hedge funds/institutions rule the equities markets, versus long term mutual funds and value investors, today's round trip of nearly 400 Dow points should negate any Fundamental "fair"value model. The best, biggest and brightest of the 8,000 or so hedge funds that had their worst fund ever in July, are shaking markets intraday at rare 2% swings more and more commonly. Profit-taking from the several directional momentum plays of summer - gold, silver, energy, coal, etc. reared its ugly head as vacationers returned to the fray.
Among the sentiment indicators followed here, the Insider Trading, at 22:1, was the largest since the June swoon, and the McClellan Oscillator last week broke up through the +50 level to return to 40 by week end, possibly foretelling a short term overbought market.
Money flowed out of mutual funds, ETFs and Money Market funds, possibly to buy things (school, etc.), domestically and globally. The AAII Bulls midweek did show fear in reversing their complacency -see below:
MktSentiment. 8/29/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11543……….11628………..14093............7286
Nasdaq………. 2367…………2414…………2810.............1114
S&P500…….. 1282…………1292………….1561………..776
CBOE Eq. put/call …71…………….70……………..92-1/08….....46-1/03

VIX ………. 20.6………….18.8…….…….44… 9/02 bull..10.0-7/05 bear

McClellan Osc……….40…………17……………91-5/04 bear...(-81)-5/04bull
McClelSum……….…-275………-405…………..1568-6/03.......-1187
Newsletter Surveys:
Inv.Intel -Bull:…..…39.3…………40.7……….…63 (12/04bear)......35-6/06bull
Bear:………… 39.3…………38.4…..………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……30.7/45.5……38.1/37.3……..n/a n/a
IBD: Short Interest- na…………….na…………15.0………. 4.0
Public/NYSE Spec.-…14.6………..15.6…….….
Bullish%- ………54………….…50………….…88 -2/04br.....19bu
*Insider corporate sellers.22:1…….18:1………..97………….4
Mutual Fund Inflows: (1.2B)……..(.5B)
ETF InflowsL..(2.5B)…………..(.7B)
Money Market Inflows: (3.8B)……2B

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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QUANTUM SHIFT:

BEAR POLAR DISORDER IN OIL:

I'm not sure if drilling is the answer - it seems that refining has been the big problem, but with Conventional Wisdom saying oil should go down and Composite Operator Goldman Sachs reiterating a $150/bbl price, I'd bet on the latter!
In these dog days of lower Volume and benign neglect, regression to the mean rules, with only a few notable exceptions: the VIX, at 18.8 is in the lower zone where previous bottoms called the exact tops in Oct. '07 (9th and 31st), Dec.21, Feb.26 and May 15 -almost to the day. Although a coincident indicator, the area that it is in is the operable statistic.
Both surveys that I follow - AAII and Inv.Intell. have righted themselves to the Bullish "ON" the market (not FOR); insider trading has risen to 18:1 sales to buys.
Seasonally, it is a coin flip whether the Labor Day week, normally a positive (first few days + holiday), will be held back by the Democratic convention news.
Here are the numbers:

MktSentiment. 8/22/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11628……….11659………..14093............7286
Nasdaq………. 2414………….2452…………2810.............1114
S&P500…….. 1292………….1298………….1561………..776
CBOE Eq. put/call …70…………….70……………..92-1/08….....46-1/03

VIX ………. 18.8………….19.6…….…….44… 9/02 bu..10.0-7/05 br

McClellan Osc……….17………….35……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-405………-409…………..1568-6/03.......-1187
Newsletter Surveys:
Inv.Intel -Bull:…..…40.7…………31.8……….…63 (12/04br)......35-6/06bu
Bear:………… 38.4…………45.5…..………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……38.1/37.3……42.9/39.0……..n/a n/a
IBD: Short Interest- na…………….14…………15.0………. 4.0
Public/NYSE Spec.-…15.6………..15.9…….….21.9bl…………..1.0br
Bullish%- …………50…………50…….…88 -2/04br.....19bu
*Insider corporate sellers.18:1…….16:1………..97………….4
Mutual Fund Inflows: (.5B)……..(.3B)
ETF InflowsL(.7B)……………… 4.2B
Money Market Inflows: 2B………10B

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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BEAR POLAR DISORDER IN OIL:

"POOR STANDARDS-500":

Thanks to S&P, et.al., critical mis-rating of debt securities, the gloom still hangs over the global Financial sector, waiting to see if it's going to bend or break, as we head into the dangerous season, where the foreign tourists go home with their remaining dollars and our gov't wraps up its fiscal year. Still, the Sentiment Indicators remain quietly regressing to the mean after the extreme bearishness, and Tom McClellan sees the M2 offering liquidity to drive the market further up.
The Inv.Intell. survey, even more inverted to the bear side, agrees, as do the Specialists' shorting and short interest ratio, which dropped on both the NYSE and Nasdaq this week.
CEO legal Insider Selling did double last week, however (probably sending their kids to college).

Here are this week's numbers:

MktSentiment. 8/15/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11659……….11734………..14093............7286
Nasdaq………. 2452…………2414…………2810.............1114
S&P500…….. 1298…………1296………….1561………..776
CBOE Eq. put/call …70…………….67……………..92-1/08….....46-1/03

VIX ………. 19.6…………..20.6…….…….44… 9/02 bu..10.0-7/05 br

McClellan Osc……….35………….44……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-409……….-587…………..1568-6/03.......-1187
Newsletter Surveys:
Inv.Intel -Bull:…..…31.8………….34……….…63 (12/04br)......35-6/06bu
Bear:………… 45.5..……….43.6…..………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……42.9/39.0……35.6/42.4……..n/a n/a
IBD: Short Interest- 14…………..13.8…………15.0………. 4.0
Public/NYSE Spec.-…15.9……….17.6…….….21.9bl…………..1.0br
Bullish%- …………50…………47…….…88 -2/04br.....19bu
*Insider corporate sellers.16:1……8:1………..97………….4
Mutual Fund Inflows: (.3B)
ETF Inflows: 4.2B
Money Market Inflows: 10B

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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"POOR STANDARDS-500":

RALLY FORTH:

Although Sentiment is most useful at turning points, the intensity
of the Indicators can often predict the extent of the subsequent move.
After the market reversal these Indicators tend to subside back to
the mean, which is the case this week.
A few extremes include money market funds which did reverse,
with 32B going into them, setting an all-time record of $3.47T -
great fuel for investments, considering
the low rates (negative after Inflation), and the fact that they are not
even insured by FIDC nor SIPC.
Also Bullish this week, Inv.Intell. surveys are still inverted, a rara avis.
The McClellan Oscillator is bumping up against +50 again, at 44 -so we
could see a brief overbought correction this Option Expiry week.
Here are the numbers:

MktSentiment. 8/8/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11734……….11326………..14093............7286
Nasdaq………. 2414………….2310…………2810.............1114
S&P500…….. 1296…………1260………….1561………..776
CBOE Eq. put/call …67……………75……………..92-1/08….....46-1/03

VIX ………. 20.6………….22.5…….…….44.. 9/02 bu..10.0-7/05 br

McClellan Osc……….44………….40……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-587………-767…………..1568-6/03.......-1187
Newsletter Surveys:
Inv.Intel -Bull:…..…34…………..30……….…63 (12/04br)......35-6/06bu
Bear:………… 43.6……….50…..………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……35.6/42.4…..40/41.2……..n/a n/a
IBD: Short Interest- 13.8………..13.6…………15.0………. 4.0
Public/NYSE Spec.-…17.6……….20.5…….….21.9bl…………..1.0br
Bullish%- …………47…………44…….…88 -2/04br.....19bu
*Insider corporate sellers.8:1…….11:1………..97………….4
Mutual Fund Inflows: (1.1B)
ETF Inflows: 5.8B
Money Market Inflows: 32B

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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RALLY FORTH:

WHOLE LOTTA SHAKIN' GOIN' ON:

4 of the last 7 days have seen 170 pt. swings on the DJIA (daily closes), yet the Sentiment Indicators moved almost imperceptibly, just as the indices did from week's close to close. Some remain in oversold states, however, and the Money Market was the only noticable extreme - to a $9B Outflow for the first time in weeks.
From a Bollinger Band narrow quietude, this could be an harbinger of more volatility and a big move, one way or the other. As the credit situations continue towards implosion, the fickle, oversold market could just mount a summer rally, as this column predicted 2 days before the bottom -on July 14th.
For anyone who wants to get a handle on the total credit situation, I would recommend reading The Trillion Dollar Meltdown by Charles Morris. Normally I take notes on good books, such as The Demon Of Our Own Design, by Richard Bookstaber, and then synopsize these for the upcoming TSAA Review's book report (on tsaasf.org). The Morris book was so full of information I returned it to the library and went out and bought it - note taking would be impossible.
Also, to my e-mail alert subscribers I am attaching charts of Justin Mamis's Sentiment cycle as well as a chart on Consumer stress - the lowest since 1980!
Here are the Sentiment Numbers:
MktSentiment. 8/1/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11326……….11370………..14093............7286
Nasdaq………. 2310…………2310…………2810.............1114
S&P500…….. 1260………….1257………….1561………..776
CBOE Eq. put/call …75……………72……………..92-1/08….....46-1/03

VIX ………. 22.5…………22.9…….…….44.. 9/02 bu..10.0-7/05 br

McClellan Osc……….40…………37……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-767………..-967…………..1568-6/03.......-1187
Newsletter Surveys:
Inv.Intel -Bull:…..…30………….29.2……….…63 (12/04br)......35-6/06bu
Bear:………… 50…………49.4…..………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……40/41.2……..35.8/44……..n/a n/a
IBD: Short Interest- 13.6……….13.5…………15.0………. 4.0
Public/NYSE Spec.-…20.5………21.9nh…….….21.9bl…………..1.0br
Bullish%- …………44…………42…….…88 -2/04br.....19bu
*Insider corporate sellers.11:1……20:1………..97………….4
Mutual Fund Inflows: (1.3B)
ETF Inflows: 4B
Money Market Inflows: (8.8B)

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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WHOLE LOTTA SHAKIN' GOIN' ON:

ELLIOTT "WAIVE":

It is not uncommon for the first impulse wave of a new bull move to retrace sharply as much as 90% of Wave I. However, if it breaks the recent low, which is also near the high of 1998, all bets are off.
Nonetheless, this Bear Rally before more downside hasn't exhausted itself, in percentage points or in time, according to the dozen or so similar rallies over decades of Bear markets. Many of the indicators have backed off very oversold areas, leading to end-of-month profittaking. The McClellan Oscillator shot up through the 50 level to near 70 (overbought) before settling down for the week at +37; and its concomitant Summation broke up into negative triple-digit territory from over -1,000; public to specialist shorting and NYSE short interest hit new highs. Both ETFs and traditional mutual funds saw Billions in redemptions; newsletter surveys improved, but still remain inverted (bullish FOR the market).
This week I have deleted the indicator of most legal insider sales/buys by sector, but have discerned that the overall rate of this selling in the 10 sectors is quite revealing: looking at the tops and bottoms over the past 2 years (more sampling would be preferable), 6 of the 7 bottoms saw overall ratios at between 4 and 8 to 1 (with one at 12:1) - as for the tops, 8 of 9 were between 18 and 43 to 1, with one outlier at 5:1, although that was a declining top. This unusual statistic bears watching.
Here are the numbers:

MktSentiment. 7/25/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11370……….11496………..14093............7286
Nasdaq………. 2310…………2282…………2810.............1114
S&P500…….. 1257…………1260………….1561………..776
CBOE Eq. put/call …72……………79……………..92-1/08….....46-1/03

VIX ………. 22.9………….24.0…….…….44.. 9/02 bu..10.0-7/05 br

McClellan Osc……….37…………15……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-967………-1187…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…29.2………..27.8……….…12/04br......35-6/06bu
Bear:………… 49.4……….48.9…..………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……35.8/44…….25.0/58.1……..n/a n/a
IBD: Short Interest- 13.5………..13.4…………15.0………. 4.0
Public/NYSE Spec.-…21.9nh……18.45…….….21.9bl…………..1.0br
Bullish%- …………42………..34buy…….…88 -2/04br.....19bu
*Insider corporate sellers.20:1…….8:1………..97………….4

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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ELLIOTT "WAIVE":

SENTIMENT RULES ! TW3: STOCKS,OIL,$

The secret to using Sentiment or Contrary Opinion to track the market is to allow that the public is usually right all the way up or down to the extremes. In the case of TW3 - That Was The Week That Was - the perfect storm of various indicators, both sentiment and breadth, was conclusive in its change of direction call. How far it extends depends, of course, on the balance of supply vs. demand - one way is to watch the IBD (Investor's Business Daily) signal of a followup day, 4 or so days later to confirm a material rally. And, of course, the amount of Volume on both up and down days.
Last week's indicators backed off for the most part from the sometime record extremes. The Bullish per cent went on a Buy signal of a 3 Pt.& Figure boxes (6%) rally. Although naked shorts is the topic du jour, total record shorting has to be a consideration, even though it is mostly used by institutions for hedging. 150 of the most heavily shorted stocks in the S&P1500 rose 15% while the least shorted rose only 2%.
A large part of potential supply includes the $3.5T that has gone into Money Market Funds, which not only yield 1/2 of the Inflation rate, they are not even insured by FDIC. And the New Low/ New High ratio last week was cathartic at 46 vs 1361.

Here are last week's stats:

MktSentiment. 7/18/2008 Prev. Week.....5Yr.HI......LOW

DJIA ………. 11496……….11100………..14093............7286
Nasdaq………. 2282…………2239…………2810.............1114
S&P500…….. 1260…………1239………….1561………..776
CBOE Eq. put/call …79……………85……………..92-1/08….....46-1/03

VIX ………. 24.0………….27.5…….…….44.. 9/02 bu..10.0-7/05 br

McClellan Osc……….15………….-44……………91-5/04 br...(-81)-5/04bu
McClelSum……….…-1187……..-1060…………..1568-6/03.......-917

Newsletter Surveys:
Inv.Intel -Bull:…..…27.8……….….27.6……….…12/04br......35-6/06bu
Bear:………… 48.9……..…..47.3…..………… 38.2-3/03.......16-6/03

AAII-Bull/Bear ……25.0/58.1……...22.2/55.2……..n/a n/a
IBD: Short Interest- 13.4………….14.1…………15.0………. 4.0
Public/NYSE Spec.-…18.45……….18.4…….….21bl…………..1.0br
Bullish%- ………….34buy……..27…….…88 -2/04br.....19bu
*Insider corporate sellers.8:1………4:1………..97…………..4
Sectors: Most Buyers: Finance, Tech
Most Sellers: Healthcare, 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

Subscribe in a reader

SENTIMENT RULES ! TW3: STOCKS,OIL,$