BLACK FRIDAY, BLACK MONDAY:

Whatever shoppers are buying it ain't stocks today! The market's uncharacteristic parabolic Fall rally has finally taken a rest - down slightly on a shortened Friday market and more on Monday, as the Dollar descends to a 20-month low.
Whether it's hedgehogs taking profits, mutual funds tax-balancing, Japan carry-trade unwinding, or even Iceland krona dumping - technicians look to the charts for price, volume, momentum shifts; and of course, sentiment excesses.
Standouts last week included the AAII survey, which went to EVEN (41.9% of both Bulls and Bears) a rara avis. At rarefied levels are both the McClellan Summation and my cum.Advance/Decline number; also extreme is the NYSE New Hi/New Lo statistic at 663 to 28. The other meaningful survey - the Investors' Intelligence - spread to another high number ranging from 58.5 Bulls to 22.3 Bears. Finally, the Bullish per cent figure of stocks on Buy signals reached just under 78, a recent high.
Despite the tremendous liquidity out there, how high is high?

Mktsentiment. 11/24/2006......5Yr.HI........ LOW

DJIA 12280...........11577...........7286
Nasdaq 2460............2243............1114
S&P500 1400............1325............776
CBOE Equity put/call 54.............87-5/04........46-1/03

VIX 10.8.........44 9/02........10.3-7/05

ISEE-call/put 106...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 12...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 1051...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 58.5...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 22.3.........38.2-3/03.......16-6/03

AAII-Bull/Bear 41.9/41.9.....n/a n/a
MarketVane Bulls 73......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.57........-0.24 4/06.....-0.75 11/05

Bullish%- 77...............88 -2/04...... 46-8/04

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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BLACK FRIDAY, BLACK MONDAY:

'TIS THE SEASON:

Normally, the November through January Holiday period is the best one for stocks, adjusting for a slight hiccup for year-end mutual fund/institutional selling. But it usually follows a cathartic selloff during the September-October months.
This year would be a hard act to follow, after the 15% rise in the Dow this Fall. With no sign of weakness, and cash coming from carry-trade, lower oil (now $55/bbl.), huge international M&As reducing shares and raising prices, money coming out of housing, as well as commodity and oil stocks, cash is pouring in like a drunken sailor would spend his voyage pay.
And with ETFs growing from 30 to 290 since 1999, the $34B pouring into new ones this year, that has to buy sector and index stocks, the end is not in sight yet; especially with growth funds underperforming the SPX by 4%, they're throwing money in the game with desperation.
Yet, it is hard to buy into this euphoria without some correction (we all know that once we do, the correction will start - Murphy's Law). Tempering our judgment are some lofty Sentiment Indicators this week:The McClellan ratio-adjusted Summation Index has again crossed up over 1,000; the Investors' Intelligence survey widened its Bull/Bear spread to 56.4 vs. 22.3, with most other statistics subsiding into the Holiday.
Finally, the Bullish per cent PNF chart is at a very high 77 level (number of stocks on Buy signals).
Here are the numbers this week:

Mktsentiment. 11/17/2006......5Yr.HI........ LOW

DJIA 12342...........11577...........7286
Nasdaq 2445............2243............1114
S&P500 1401............1325............776
CBOE Equity put/call 54.............87-5/04........46-1/03

VIX 10.0.........44 9/02........10.3-7/05

ISEE-call/put 118...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 105...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 1008...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 56.4...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 22.3.........38.2-3/03.......16-6/03

AAII-Bull/Bear 46.6/30.5.....n/a n/a
MarketVane Bulls 73......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.56........-0.24 4/06.....-0.75 11/05

Bullish%- 77...............88 -2/04...... 46-8/04

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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'TIS THE SEASON:

HOUSECLEANING:

Now that the public has decided that a Woman's place is in the House, it's time to make some minor changes in the Sentiment Indicators: since the Commitment of Traders' gave no signal other than coincident, it has been replaced by Mutual Fund flows from AMG Data. Although Intermediate to Long term, it does reflect a contrary result, causing the public to be historically 180 degrees wrong at both tops and bottoms. Also being tracked are ETF flows.
Despite the shocking results,( both Barron's and the Iowa ElectronicMarkets.com had the Republicans winning the Senate), not much changed in either the Indicators or the market direction. Despite Demos profligate spending prognosis, the housing reversal, a slower Economy, etc., money seems to slosh in from Japanes yen-carry trade, etc. raising all boats.
Although the Transports cannot make a new yearly, not even monthly, high to confirm the Dow Theory, the Industrials do set records, paced by multi-national firms enjoying global increased profits.
Mktsentiment. 11/10/2006......5Yr.HI........ LOW
DJIA 12108...........11577...........7286Nasdaq 2389............2243............1114S&P500 1380............1325............776CBOE Equity put/call 62.............87-5/04........46-1/03 VIX 10.8.........44 9/02........10.3-7/05
ISEE-call/put 135...........299-12/04.......82-4/02(>200/Bearish)
McClel Osc.(+75/-100) 5.............91-5/04.........(81)-5/04McClelSum.(+750/-1000) 921...........1568-6/03.......(726)-5/04
Newsletter Surveys:Inv.Intel -Bull:62/28 52.1...........62.9-12/04......35-6/06Bear:43.2/16.1--5yrs 26.0.........38.2-3/03.......16-6/03
AAII-Bull/Bear 50.6/26.5.....n/a n/a MarketVane Bulls 73.............73..............24
Barron's Panic/Euphoric Master Idx -0.59........-0.24 4/06.....-0.75 11/05
Bullish%- 75...............88 -2/04...... 46-8/04

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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HOUSECLEANING:

SNAPBACK:

After 6 straight down closes on the SPX (S&P500) one would expect a snapback, shortcovering rally, especially with Election Day looming tomorrow. After several months of observing the Commitment of Future Traders, no correlation to the market is apparent based on the net changes of the Small Trader, the Large Speculator, or even the Commercial Hedges; therefore it is being dropped from the matrix.
Another observation - although New Highs/New Lows data is not really Sentiment, it is an important Technical measure; lately it has been huge to the upside ( 733 to 29 the prior week, 516 to 55 last week on the NYSE). Upon examination, many of the issues are either ADSs (foreign stocks) or Closed End Funds and Preferred stocks.
The only Sentiment Indiicators worthy of note last week were the McClellan Oscillator zooming down to -32 from +7 , bringing the Summation below 1,000 but still overbought; the Investor's Intelligence survey widened its spread further to 53.7 Bulls vs. 28.4 Bears a complacent difference; the AAII backed off from its Bullish stance.
Meanwhile record short interest and impending favorable months indicate the Bull is just resting, not over - although the Election results could cause a stir, and the Kinchin 4-year cycle could still kick in if funds/hedgehogs want to dump stocks.

Mktsentiment. 11/3/2006......5Yr.HI........ LOW

DJIA 11986...........11577...........7286
Nasdaq 2330............2243............1114
S&P500 1364............1325............776
CBOE Equity put/call 63.............87-5/04........46-1/03

VIX 11.1.........44 9/02........10.3-7/05

ISEE-call/put 117...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) -32...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 929...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 53.7...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 28.4.........38.2-3/03.......16-6/03

AAII-Bull/Bear 43.8/36.9.....n/a n/a
MarketVane Bulls 73......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.61........-0.24 4/06.....-0.75 11/05

Bullish%- 74...............88 -2/04...... 46-8/04

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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SNAPBACK:

THE PAUSE THAT REFRESHES:

After a 4-month straightup Dow, it seems like we may at least go sideways, at least until after the elections next week. Whether the excess liquiduty that has confounded seasonal history came from lower oil/gas, a renewal of Japan's carry-trade, or corporate share buybacks, it seems the housing crash has not hurt stocks, as of yet.
With the levelling off, some of the excessive sentiment readings have backed off, such as the CBOE put/call ratio, VIX, Panic/ Euphoria,Specialist shorts,and AAII survey.Still indicating a potential downturn are the McClellan Summation, now crossing over 1000, Bullish per cent at a high of 74, and finally, the Nova/Ursa waking up from its single-digit bullishness up to the 15 mark it saw at May's top. Here are the numbers:

Mktsentiment. 10/27/2006......5Yr.HI........ LOW

DJIA 12090...........11577...........7286
Nasdaq 2350............2243............1114
S&P500 1377............1325............776
CBOE Equity put/call 61.............87-5/04........46-1/03

VIX 10.8.........44 9/02........10.3-7/05

ISEE-call/put 161...........299-12/04.......82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 7...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 1005...........1568-6/03.......(726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 52.7...........62.9-12/04......35-6/06
Bear:43.2/16.1--5yrs 30.1.........38.2-3/03.......16-6/03

AAII-Bull/Bear 52.2/30.4.....n/a n/a
MarketVane Bulls 73......... 73..............24

Barron's Panic/
Euphoric Master Idx -0.57........-0.24 4/06.....-0.75 11/05

Bullish%- 74...............88 -2/04...... 46-8/04

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 PAUSE THAT REFRESHES:

MEA CULPA:

As evident, I was unable to update this blog this week due to my vacation, sans my heavy laptop. I was able to retrieve the data, as viewed below.
The October Surprise continues to defy traditional October selloffs (word is many funds did it early this year); and so the rubber band stretches further. NYSE new his/lows were outrageous at 650 to 24, with the NAZ a weaker copy; the McClellan Summation also pushes the envelope at 935.
Also nearing optimal levels are the AAII and Invest.Intell. surveys (see below), and the Bullish per cent.Here is the Matrix:
Mktsentiment.blogspot 10/20/2006......5Yr.HI........ LOW

DJIA.................................. 12002...........11577...........7286
Nasdaq.................................. 2342............2243............1114
S&P500............................. 1368............1325............776
CBOE Equity
ratio ...................................60.............87-5/04........46-1/03
VIX ................................10.63.........44 9/02........10.3-7/05
ISEE-call/put ................. 146...........299-12/04.......82-4/02(>200/Bearish)
McClel Osc.(+75/-100) ...9...............91-5/04.........(81)-5/04
McClelSum.(+750/-1000) 935............1568-6/03.......(726)-5/04
Newsletter Surveys:
Inv.Intel -Bull:................... 52.2...........62.9-12/04......35-6/06
Bear:................................ 30.........38.2-3/03.......16-6/03
AAII-Bull/Bear 54.2/29.8.....n/a n/a
MarketVane Bulls 72......... 73..............24
Barron's Panic/Euphoric -0.65........-0.24 4/06.....-0.75 11/05
Bullish%- ........................ 72...............88 -2/04...... 46-8/04

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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MEA CULPA:

TO THE MOON, ALICE:

So when does this parabolic upthrust end? We all know the bricks in the Wall of Worry -interest rates, Iraq, economy, housing. In stark contrast to the seasonal normal, the markets have ignored history (so far), and as if there were a deus ex machina lifting all boats ( Hedge funds, ETFs -whose inflows were $6B last week, although without them equity flows were negative-, or the Republicans?).
NYSE new highs to lows were 558 to 25, and my own cumulative A/D reached all-time highs of 83,805. Still, NYSE Volume remains between 1.2B and 1.5B shares, not at all heavy. Although the DJIA is making new highs (although well off its 2000 inflation-adjusted highs) other Indices, such as the NYSE and Nasdaq comps are bumping up on last April/May's highs, a Resistance area.
As for the Sentiment readings, they're as wacky as I've ever seen them. Most show evidence of the past strong runup, but have entered the "toppy" zone - such as the McClellan Summation Index at 835; also, the Bullish per cent at 71 nears previous recent tops.
The Bull/Bear spread for the Investors Intelligence has gone from 4 in August to 22, at 52/30; likewise the AAII flip-flopped from an inverse 37/46 to 49/37, as the Market Vane climbs to a toppy 72. Conversely, the Citi Panic/Euphoria master indicator is Bullish at -0.67, as are the Specialist to Public shorts and short interest.
Here are the indicators:

Mktsentiment.blogspot 10/13/2006 4Yr.HI LOW
DJIA 11960 11577 7286
Nasdaq 2357 2243 1114
S&P500 1365 1325 776

CBOE Equity
put/call ratio 60 87-5/04 46-1/03

VIX 10.75 44 9/02 10.3-7/05

ISEE-call/put 147 9-12/04 82-4/02
(>200/Bearish)

McClel Osc.(+75/-100) 24 91-5/04 (81)-5/04
McClelSum.(+750/-1000) 835 1568-6/03 (726)-5/04

Newsletter Surveys:
Inv.Intel -Bull:62/28 52.2 62.9-12/04 35-6/06
Bear:43.2/16.1--5yrs 30.4 38.2-3/03 16-6/03

AAII-Bull/Bear 49/37.8 n/a n/a
MarketVane Bulls 72 73 24

Barron's Panic/
Euphoric Master Idx -0.67 -0.24 4/06 -0.75 11/05

Bullish%- 71 88 -2/04 46-8/04

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

TO THE MOON, ALICE: