LOCK THE DOORS !:

Don't call Congress back! Technical studies show the markets do much better when Congress is out of session (of course, this is mostly due to Holidays). MIT studies also show that not only do persons with positive attitudes lead happier and healthier lives, but are better at investing - with sharper intuition. And Felix Salmon of Reuters notes that longer term investors should welcome corrections such as these - for dollar cost averaging and mutual fund reinvesting, the lower the better. Also, bubbles such as tech stocks, Real Estate, Gold (?) usually end up badly without a respite. BTW - the CME is raising margin requirements on Gold, just as they did with silver.
Sentiment conditions still remain oversold and indicating  a strong rally: the NASD to NYSE Volume is near record lows; NYSE new highs were an incredible 20 to 1510 new lows for the week; the McClellan Summation is now negative 621.
Legal insider selling is way low at 4:1, after weeks in the 50's and 60's to 1 buyers. Money market flows did a huge flip flop the past two weeks: 66B out, then 53B back in last week (but not into stock funds). Finally, the Bullish % is at a lowly 23% of stocks on buy signals.
Here are the weekly numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11269	11444	14093	6626
Nasdaq:	2507	2532	2861	1114
S&P 500:	1178	1199	1561	683
CBOE Eq. put/call:	85	85	96-10/08	46-1/03
VIX:	36.4	33.0	90	8.8
McClellan Osc:	(8)	(111)	108	(123)
McClellan Sum:	(621)	(275)	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	47.3	46.3	63	22.21
InvestorsIntel.Bear:	23.7	24.7	54.4	16
AAII Bull:	33.4	27.2	n/a	n/a
AAII Bear:	44.8	49.9	n/a	n/a
US Equity-1 week lag	n/a	(10.4B)
Money Market Flows	52.8B	(65.8B)
Baltic Dry Index:	1287	1268	11700	663
Bullish %:	23	30	89	2
Insider Corporate Sellers:	4:1	14:1	235:1	2.4:1

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

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LOCK THE DOORS !:

REVERSING THE QE II:

It may take a long time to turn ships like the Queen
Elizabeth in the opposite direction, but it didn't take
long for Bernanke's QE II to reverse, just like the QE I
in 2010 ! From 3/9/09 to 4/23/10 the S&P500 rose 80%, then
corrected 14% by 8/26/10. So far the QE II reversal is 14%
after repricing the sugar high run up of 33%.
Although there may not be a QE III, since it is debatable
how effective the first two were, word is that Ben's
secret weapon, not used since WW II, is to lower longer
term Treasuries' yields, flattening the yield curve - not
next Tuesday, but maybe at Jackson Hole later this month.
At a gala dinner event, sponsored by Schwab, at the swank
Omni Hotel inSan Francisco, the main speaker - Frank
Holmes of US Global Funds - ended his slick talk with
probably the most important statement: a MIT study showing
that people who maintained a positive mental attitude
(PMA) were not only happier and healthier in life, but had
better intuition in investing.
That said, for the first time in many months, almost all
the Sentiment Indicators I follow have lined up on the
positive, oversold side, boding for a possible short term
rally soon:
The VIX upspike over 35 has shown recently that a rally is
due;
NASD to NYSE Volume for the weak was low, meaning less
speculation.
The CBOE Equity put/call ratio jumped to a high 85%;
The McClellan Oscillator is now at minus 111, with the
Summation going negative.
The AAII Bull/Bear survey is way fearful at 27 to 50.
And although huge outflows of Money Markets occurred due
to European holdings and zero rates, money also came out
of equity Mutual Funds.
For those readers who have followed my DITM, or covered
call strategy at the blog below, it has survived the 14%
correction quite well, so far. With the hoped for future
rally, the slightly "under water" positions will improve
and, over time, allow selling a lower 5 to 10% call on
higher dividend % and richer call premium due to the
higher volatility (VIX).

Last week, the book I wrote on it - Zero (IN)Tolerance -
was converted to an eBook on most eReaders except for
Amazon's Kindle (hopefully by December); it is on iPad,
Nook, Sony, Kobo, etc. by title or author.

Here are the Sentiment numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11444	12143	14093	6626
Nasdaq:	2732	2756	2861	1114
S&P 500:	1199	1292	1561	683
CBOE Eq. put/call:	85	67	96-10/08	46-1/03
VIX:	32.0	25.3	90	8.8
McClellan Osc:	(111	(84)	108	(123)
McClellan Sum:	(275)	165	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	46.3	49.5	63	22.21
InvestorsIntel.Bear:	24.7	21.5	54.4	16
AAII Bull:	27.2	37.8	n/a	n/a
AAII Bear:	49.9	31.4	n/a	n/a
US Equity-1 week lag	n/a	(8.8B)
Money Market Flows	(65.8B)	(37.5B)
Baltic Dry Index:	1268	1278	11700	663
Bullish %:	30	59	89	2
Insider Corporate Sellers:	14:1	37:1	235:1	2.4:1

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

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REVERSING THE QE II:

GOOGLED :

For the first time in 6 years of posting Sentiment numbers, my template sabotaged me by repeating the numbers from the week before; some little worm in there did not update the template. Rest assured, the numbers this week (and for the previous week in the template) are correct ! I think!

Mistakes will happen. Look at the GDP predictions by the best and brightest Economisseds for the past several quarters; look at Barron's stock pickers, underperforming static INDICES! And according to Prof. Tetlock of UC Beserkely, out of 27,450  future predictions barely 50% were correct, with the most egregiously wrong being the most esteemed, such as Paul Ehrlich and Paul Krugman. Stuff happens.

Looking at a yearly chart, the previous times the VIX has spiked, as it did last week, a huge rally ensued. The A/D (advance/declines on the NYSE) were 1:10, which should be a selling climax. Ergo, the McClellan Oscillator sank to a minus 84, with -50 being my buy signal.Since I started keeping track of the COT, the commitment of large (smart money) traders went positive for the first time, barely. Small traders are still looking through rose-colored glasses.
Finally, money market Outflows were huge, as were equity fund flows yet again - ETF capital remains unchanged, although margin interest has lessened for the second month.

Here are the correct numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	12143	12681	14093	6626
Nasdaq:	2756	2858	2861	1114
S&P 500:	1292	1345	1561	683
CBOE Eq. put/call:	67	60	96-10/08	46-1/03
VIX:	25.3	17.5	90	8.8
McClellan Osc:	(84)	13	108	(123)
McClellan Sum:	165	460	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	49.5	46.2	63	22.21
InvestorsIntel.Bear:	21.5	21.5	54.4	16
AAII Bull:	37.8	39.9	n/a	n/a
AAII Bear:	31.4	30.6	n/a	n/a
US Equity-1 week lag	n/a	(6.5B)
Money Market Flows	(37.5B)	(24.7B)
Baltic Dry Index:	1278	1325	11700	663
Bullish %:	59	70	89	2
Insider Corporate Sellers:	37:1	63:1	235:1	2.4:1

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

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GOOGLED :

RAISE THE ROOF !:

How about we start the Cap and Cut of the Budget by halting paychecks for the President and Congress? It worked for California.How about snugging up interest rates? According to the AIER, the nearly $20T in interest rate sensitive securities have cost $587B in consumption and 4 1/2 million jobs.

So far, stocks and Treas are calling Congress' bluff - both up for last week. Speculative NASD to NYSE Volume is at a recent record high; most other indicators regressed to the mean. The McClellan Oscillator is hovering around the zero line, as Tom is calling for a short term cycle bottom this week, but lower stocks going into October. Money Market flows reversed from $10B IN to $25B OUT, I know not where. US Mutual equity fund flows have been negative since April 22, when the S&P500 was $1 lower than today - maybe the public isn't that dumb!

Last February I started keeping track of COT (Commitment of Traders) for the S&P500 -during that whole time, including last week :large traders were (slightly) short and small traders (dumb money) long bigtime. Finally, Insider Selling jumped largely, with almost no Buying, to 63:1.

FYI - My book on Zero Rates - Zero (IN)Tolerance - should be out this week in eReader form (except Kindle , so far), at 2/3 the print book price, and updated.

Here are the results of last week:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	12479	12657	14093	6626
Nasdaq:	2789	2859	2861	1114
S&P 500:	1316	1343	1561	683
CBOE Eq. put/call:	71	62	96-10/08	46-1/03
VIX:	19.5	16.0	90	8.8
McClellan Osc:	(11)	49.9	108	(123)
McClellan Sum:	497	524	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	44.1	40.9	63	22.21
InvestorsIntel.Bear:	22.6	24.7	54.4	16
AAII Bull:	39.3	41.8	n/a	n/a
AAII Bear:	29.2	24.7	n/a	n/a
US Equity-1 week lag	n/a	(4.5B)
Money Market Flows	9.7B	3.9B
Baltic Dry Index:	1367	1453	11700	663
Bullish %:	69	71	89	2
Insider Corporate Sellers:	42:1	58:1	235:1	2.4:1

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

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RAISE THE ROOF !:

PIXED MIXTURE:

Last week's sentiment indicators are giving  a mixed picture on the direction of the market - confusion of the debt ceiling is driving money out of equity mutual funds and back into MMFunds, even though they are reported to have European securities in them, for slightly enhanced yields! Risk/Reward?

The usually reliable CBOE put/call ratio at 71 assumes a higher market, possibly after the resolution of the above; but newsletter surveys are complacent and getting moreso; key officers' Insider Selling is still high, with almost no Buying.

Also negative FOR the market, Bullish % is high and COT (commitment of Traders) has smart money still shorting, with small speculators long. A sustained break below 1260 S&P 500 would make me change my Bullish stance for year-end.

Nasdaq:	2789	2859	2861	1114
S&P 500:	1316	1343	1561	683
CBOE Eq. put/call:	71	62	96-10/08	46-1/03
VIX:	19.5	16.0	90	8.8
McClellan Osc:	(11)	49.9	108	(123)
McClellan Sum:	497	524	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	44.1	40.9	63	22.21
InvestorsIntel.Bear:	22.6	24.7	54.4	16
AAII Bull:	39.3	41.8	n/a	n/a
AAII Bear:	29.2	24.7	n/a	n/a
US Equity-1 week lag	n/a	(4.5B)
Money Market Flows	9.7B	3.9B
Baltic Dry Index:	1367	1453	11700	663
Bullish %:	69	71	89	2
Insider Corporate Sellers:	42:1	58:1	235:1	2.4:1

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

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PIXED MIXTURE:

"HERD" SHOT AROUND THE WORLD:

If Pro is the opposite of Con, is Congress the opposite of Progress? BTW, why do they call them "parties"? As they debate the debt ceiling, the market goes through the floor until Aug.2 (or later). Meanwhile corporations are paralyzed with confusion. Two months ago Key Officer Insider Selling to Buying set a new record of 235:1; last week it popped to 58:1 from 13, with almost no buying in all sectors.
After 2 months of downturn, last week's End-of-Quarter Rally saw improving breadth - my cumulative A/D set a new record high, and NYSE new highs/lows were 366 to 30. The McClellan Oscillator is still overbought at 50%; and newsletters are getting complacent.
Which is why I'm very defensive these days, in the weakest part of the year, with my DITM covered call strategy, which I am updating this Saturday for the SF Bay Area Option Group at Fort Mason. Today's drop has only 3 of my 30 position "temporarily under water". I recommend everyone take a look at this plan for at least a portion of their assets receiving 0% in CDs, MMFs; negative after taxes, Inflation, and a weakening dollar. See brentleonard.com for info on DITM - the eBook is currently being formatted.

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	12657	12582	14093	6626
Nasdaq:	2859	2816	2861	1114
S&P 500:	1343	1339	1561	683
CBOE Eq. put/call:	62	57	96-10/08	46-1/03
VIX:	16.0	15.9	90	8.8
McClellan Osc:	49.9	90	108	(123)
McClellan Sum:	524	248	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	40.9	39.8	63	22.21
InvestorsIntel.Bear:	24.7	26.9	54.4	16
AAII Bull:	41.8	38.3	n/a	n/a
AAII Bear:	24.7	30.2	n/a	n/a
US Equity-1 week lag	n/a	(3B)
Money Market Flows	3.9B	(16.9B)
Baltic Dry Index:	1453	1420	11700	663
Bullish %:	71	68	89	2
Insider Corporate Sellers:	58:1	13:1	235:1	2.4:1

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

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"HERD" SHOT AROUND THE WORLD:

WINDOW DRESSING:

Talk about ending a quarter with a bang! After wild swings in Q2, the S&P 500 ended right where it started in April. Responding to the reliable Sentiment Indicators such as the CBOE put /call ratio at 90 a couple of weeks ago, and an inverted AAII Bull/Bear ratio, the market roared back almost to the high seen early May. Also alerting investors: the McClellan Oscillator at -68 and its concomitant Summation in a rare negative area. Money has been flowing out of Zero MMFs, but not into equity funds.
Currently we see signs of overbought short term, with the McClellan Oscillator at plus 90! The  VIX is below 16 again , and the Bulls are starting to get complacent.

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	12582	11934	14093	6626
Nasdaq:	2816	2652	2861	1114
S&P 500:	1339	1268	1561	683
CBOE Eq. put/call:	57	61	96-10/08	46-1/03
VIX:	15.9	21.19	90	8.8
McClellan Osc:	90	(9)	108	(123)
McClellan Sum:	248	(11)	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	39.8	37.6	63	22.21
InvestorsIntel.Bear:	26.9	28	54.4	16
AAII Bull:	38.3	37.5	n/a	n/a
AAII Bear:	30.2	35.7	n/a	n/a
US Equity-1 week lag	n/a	(4.3B)
Money Market Flows	(16.9B)	(8.1B)
Baltic Dry Index:	1420	1409	11700	663
Bullish %:	68	60	89	2
Insider Corporate Sellers:	13:1	18:1	235:1	2.4:1

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

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WINDOW DRESSING: