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Wednesday, May 27, 2015

QUITE CONTRARY

Contrary to what I posted earlier this month (Contrarian that I am!), after visiting with family and friends over the past two weeks in Redding and So. Lake Tahoe, I find that some extended family members ( possibly back east) would like to hear what I have to offer in the way of Investment Finance info I dig up each week and report on my blog - Mktsentiment.blogspot.com , after over ten years of doing so.

I don't pretend to know or forecast what the market will do short term - no one can do that, just as with the weather or Economy. Contrary to these last two predictions which are impossible to envision long term, short term markets are harder (less profitable) to trade, unless you are a highly trained trader or HFT (high frequency trader- computer).

For young people just starting out, as well as retirees who do not need their 401Ks/IRAs for emergencies ( passing them on to heirs) IMO the stock market is the place to be. Lately the go to investment is Index funds - either mutual funds, or ETFs (Exchange Traded Funds) which are usually mutual funds traded on an exchange, such as the New York SE. They have outperformed "managed" funds due to very low management fees.
I recently read that over 50 years, with a high fee (over 2% annually) the managed fund fees will suck up 66% of the money you invest - outrageous!

Having worked for Schwab, I can recommend their Index funds as well as Vanguard's.
Over time, stocks have outperformed all other asset classes such as Real Estate, Gold, Bonds, etc. , although as we've seen this century, all have Boom/Bust cycles.
I've mentioned in previous columns that DCA (Dollar Cost Averaging) is definitely the way to go - adding a set amount at fixed periods over time. For example, if ine had just started to invest for retirement in the Nasdaq (Over The Counter, mostly tech stocks) in 2000, they would be at the same level now - unless they had contributed (DCA) during the bottoms of 2002 and 2009. Of course, even though the Composite Index (COMPQ) has risen from 1555 to its old high of 5048, it does not have near the 100 P/E ratio back then (now @19). With $CA one can actually be Happy to see the market sell off - one can buy more shares with a fixed amount!

Enough for now - nest week I hope to explain the purpose of my blog (above) for persons who want to "time" the markets using Technical Analysis (rather than Fundamental) - using Charts that show Price Volume over Time (as well as my favorite Indicator: Sentiment, or Contrary Behavior.

Below are my favorite Sentiment Indicators which I have followed over two decades, having gotten my Market Technician designation on that topic:  

Date>

5/15/2015
5/22/2015
Indices:
DJIA
18272
18232

NAZ
5048
5089

SPX
2122
2126
WklyVolume (Bshs).
naz/ny….
8.4/3.7
8.3/3.4
Specul.Ratio hi=bullish
2.27
2.44
Sentiment:
put/call-CBOE
59
64
VIX>50-alltmlow=8.8
12.4
12.1
Advance/Dec-NYSE..
1883/1323
1496/1731
Weekly Net:

560
-235
     Cumulative:

168326
168091
Weekly
NYSE hi/low…
198/118
265/110
New Hi's/Low's
Nasdaq h/l
238/150
300/152
McClellan
Oscillator
n/a
-8
McClellanSum
.+750/-1000
n/a
274
Newsletter
Inv.Intel -Bull
47.5
50.6
Surveys-Tues
Bear:-5yrs
15.8
15.8
Wed.
AAII  -Bull
26.7
25.2

Bear
26.4
25.0
COT:SPX w/w
large/small (net)k

COT:gold  comm.hedg
long-short.000
n/a
(133k)
COT:OIL comm.hedg
long-short.
n/a
(350k)
US$-WSJ

n/a
86.3
CEOinsider
selling
n/a
36:1
off.&bd b/s.vs.
10% holder b/s

.160/50
3-box rev
Bullish%-
64
64
US equity -ICI
Fund Flows
(5.0B)
WeekDelay
MMF flows
Change in $B
(1B)
20.6B
MargDebt- top (300M)
monthly


ETF:mthlyEqty/
Int'l/Bond-$B


2-yr Tsy Yield: Inflation
n/a
0.62%
TIP (ETF)
Inflation
n/a
112.93



For those FB readers who get too much "spam" already (I had to stop FB on my cell as it ran me over on my data feed amount), they can block my weekly utterances by going to home page - click on the fourth icon to the right of Find Friends on the upper toolbar (the padlock).

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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Monday, May 11, 2015

SINKO DE MAYO

Just when I take my usual two week vacation - to the real Casinos in Lake Tahoe- the market starts to get frisky (aka Volatile). Last week saw three big down days, followed by the Invisible Hand huge rally on Friday. Longer term, the DJIA (30) has been on a tear for 3 1/2 years with nary a major correction. As a technical analyst I prefer to look at charts, rather than listen to talking heads disagreeing on what economic event caused the action. What we used to call looking at photos of the markets (before High Freqs started PhotoShopping them) now show a tightening or coil in the price ranges, although Bullishly breaking to new highs - even without the Fed (??).

As some of you readers know I have been writing a sentiment blog since 2004, based on the Indicators I studied for my Chartered Market Technician designation. After halting my journalistic efforts on the Examiner.com and Marina Times, I started popping the column up on Facebook. Kindly, none of my family and friends have complained or delisted me (defriended??), but I decided to stop Spamming everyone and encouraging interested persons to check out my Monday blog: http://mktsentiment.blogspot.com/, or even sign up for it. The column will resume after my return from vaca!

I've used it to try to boil down what I consider recent meaningful research (Barron's, Mauldin, et.al.), as well as the above Sentiment Indicators, such as put/call ratios, newsletter opinions, etc.
The extremes last week (not many from the prior week) were a Bullish reading from the AAII (Individual Investor) where - as you can see below- Bulls and Bears were tied. Margin interest hit new highs (low interest rates could be dangerous), while Futures Traders (COT) smart money is shorting Oil and gold, but long stocks (SPX).
Here are the numbers:

Date> 5/8/2015 5/1/2015
Indices: DJIA  18191 18024
  NAZ  5003 5005
SPX  2116 2108
WklyVolume (Bshs). naz/ny…. 9.8/3.9 10.0/4.3
Specul.Ratio hi=bullish 2.51 2.33
Sentiment: put/call-CBOE  65 66
VIX>50-alltmlow=8.8 12.9 12.7
Advance/Dec-NYSE.. 1379/1851 1046/2180
Weekly Net: -472 -1134
     Cumulative: 167766 168238
Weekly  NYSE hi/low… 162/153 220/91
New Hi's/Low's Nasdaq h/l 181/197 258/180
McClellan  Oscillator -10 -27
McClellanSum .+750/-1000 305 488
Newsletter Inv.Intel -Bull 52.5 57.4
Surveys-Tues Bear:-5yrs 13.9 13.9
Wed. AAII  -Bull  27.1 30.8
Bear  26.8 22
COT:SPX w/w large/small (net)k 10k/(26k) 11k/(17k)
COT:gold  comm.hedg long-short.000 (74k) (107k)
COT:OIL comm.hedg long-short. (328k) (320k)
US$-WSJ 85.3 85.8
CEOinsider selling 40:1 NA
off.&bd b/s.vs. 10% holder b/s .160/40 .160/40
3-box rev Bullish%-  65 68
US equity -ICI Fund Flows WeekDelay (7.3B)
MMF flows Change in $B 8.6B (5.9B)
MargDebt- top (300M) monthly  MARCH 476Bnh
ETF:mthlyEqty/ Int'l/Bond-$B MARCH 1268/472/318
2-yr Tsy Yield: Inflation 0.58% 0.60%
TIP (ETF) Inflation 113.25 113.89


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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Monday, May 4, 2015

M'aidez, May Day

Help me... understand these paradoxes: "Experts" in weather prediction become less accurate the farther out in time they opine; the same is true of Economists (remember the saying- "you can lay all the world's Economists end to end and they would never reach an agreement!". However, studies show that the farther out in time Investors choose, the better their returns.  Contrary to my Technical/short term experience of thirty years, passive investors excel. In other words, sloth and ignorance beats effort and intelligence!!

I recently saw a chart from Schwab showing over 40 years the Stalwart who remained in the market investing annually earned $1,600,000 as of 2013; the  Reactor, bailing after 1987 and 2000 earned $1,063,000 and the Waffler, getting out after each major correction, earned less than $1,000,000! And that does not include DCA, or Dollar Cost Averaging, (buying at the bottoms) which would compound even much more.

So even though the shorter time that "average" traders employ renders the worst profits, the CBOE decides that in a few weeks or so Weekly expiration options will be available on the VIX - just like many stocks and indices. Hoo Haa.

 In the Sentiment area two records were set last week - neither very good predictors of market direction: the monthly figures for March showed new highs in ETFs buying - for stocks, bonds and int'l; also a record was margin interest, after backing off recently. Also high, but slow to predict, was Insider Selling, both by CEOs and all Insiders.

Money continues to flow OUT of MMFs and managed MUFunds (mutual); and commercial shorts increased yet again on both Gold and Oil, although both have acted well recently. Technicians can find a high correlation between the Dollar topping mid-March and Oil bottoming.

Here are the numbers:
Date> 5/1/2015 4/24/2015
Indices: DJIA  18024 18080
  NAZ  5005 5092
SPX  2108 2117
WklyVolume (Bshs). naz/ny…. 10.0/4.3 8.7/3.7
Specul.Ratio hi=bullish 2.33 2.35
Sentiment: put/call-CBOE  66 61
VIX>50-alltmlow=8.8 12.7 12.3
Advance/Dec-NYSE.. 1046/2180 2215/1009
Weekly Net: -1134 1206
     Cumulative: 168238 168248
Weekly  NYSE hi/low… 220/91 266/42
New Hi's/Low's Nasdaq h/l 258/180 313/112
McClellan  Oscillator -27 13
McClellanSum .+750/-1000 488 568
Newsletter Inv.Intel -Bull 57.4 52.5
Surveys-Tues Bear:-5yrs 13.9 15.2
Wed. AAII  -Bull  30.8 31.5
Bear  22 23.2
COT:SPX w/w large/small (net)k 11k/(17k) 11k/(14k)
COT:gold  comm.hedg long-short.000 (107k) (105k)
COT:OIL comm.hedg long-short. (320k) -325
US$-WSJ 85.8 86.4
CEOinsider selling NA 49:1
off.&bd b/s.vs. 10% holder b/s .160/40  .160:25
3-box rev Bullish%-  68 74
US equity -ICI Fund Flows WeekDelay (3.4B)
MMF flows Change in $B (5.9B) (6.9B)
MargDebt- top (300M) monthly  476Bnh March
ETF:mthlyEqty/ Int'l/Bond-$B 1268/472/318 March
2-yr Tsy Yield: Inflation 0.60% 0.51%
TIP (ETF) Inflation 113.89 115.02


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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Monday, April 27, 2015

HEDGE TRIMMING

There are two major fears I have for the near future, one is physical, the other mental: it has been a long time since we've had even a minor earthquake in the Bay Area; it is also been years since the stock market has had a meaningful correction. It is likely that the longer it takes, the larger it will be, although the USGS assured us that it would most likely be several small ones - that was before they discovered another "linking" fault between the two in the East Bay!

With the FED manipulative "put" now mostly taken away (QE), anything can happen, as we saw in May of 2010 thanks largely to a rogue trader in London. In this week's Barron's, Steve Sears - the option guy- mentions large Volume in weekly options, especially the VIX and SPY (mostly by hedge funds); if they were to unwind, the butterfly wings might start another cascade  down.

Just as it is wise to take precautions for a quake - bottled water and canned food, battening down shelves- it is prudent to be ready to hedge equity positions if the market starts to fall. All market drops  eventually end in a V-Spike, so they can be a great Buying opportunity, by staging in/ selling put options. There are also Inverse ETFs to hedge with, even triple-strength ones.

This week - Wednesday- the TSAA society is hosting an expert in ETFs from Factset.com at Golden Gate U. - see tsaasf.org for details.

Some markets hit new highs last week, but today's one-day reversal is not healthy. Charts most often do tend to retest breakouts before resuming their uptrends- I hope that is the case here!

Sentiment data was quiescent last week, although commercial traders' shorts on Oil and Gold expanded greatly (see below). CEO Insider Selling jumped, but that is not a very good short term signal. Large traders in the SPX are mostly long, while small traders are still short - a good contrary sign. Here are the numbers:
Sentiment: put/call-CBOE  61 65
VIX>50-alltmlow=8.8 12.3 13.9
Advance/Dec-NYSE.. 2215/1009 1285/1942
Weekly Net: 1206 -657
     Cumulative: 168248 167042
Weekly  NYSE hi/low… 266/42 258/34
New Hi's/Low's Nasdaq h/l 313/112 294/102
McClellan  Oscillator 13 -20
McClellanSum .+750/-1000 568 536
Newsletter Inv.Intel -Bull 52.5 50.5
Surveys-Tues Bear:-5yrs 15.2 13.9
Wed. AAII  -Bull  31.5 32.1
Bear  23.2 22.8
COT:SPX w/w large/small (net)k 11k/(14k) 10k/(8k)
COT:gold  comm.hedg long-short.000 (105k) (104k)
COT:OIL comm.hedg long-short. -325 -280
US$-WSJ 86.4 86.8
CEOinsider selling 49:1 16:1
off.&bd b/s.vs. 10% holder b/s  .160:25 .150:20
3-box rev Bullish%-  74 74
US equity -ICI Fund Flows WeekDelay (5.7B)
MMF flows Change in $B (6.9B) (39B)
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.51% 0.51%
TIP (ETF) Inflation 115.02 115.49


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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Monday, April 20, 2015

FED UP

Perhaps the cause of this new found Volatility in the markets in 2015 is that the Fed finally stopped driving them UP, forcing prudent investors into riskier assets. Even at triple the 2009 index levels, 300 points down, then up, seems pretty material. Maybe the Fed finally decided that, although the first ZIRP (Zero Interest Rate Policy) was needed, the multi-year extension was not effective. To diet is good, but to starve one's self to death is counter-productive!

After two market crashes since 2000, people want to avoid stocks and increase savings due to lower rates; if people are $aving, they are not $pending, ergo corporations are not expanding! Thus a sluggish Economy!

Last weeks flip-flops in Sentiment included the NYSE Advance/Decline - +900 to -600; therefore the McClellan Oscillator went from +20 to -20 as well, although the NYSE New Highs to Lows were almost 10:1 (see below). Commercial shorts in Gold expanded again, so no rise in sight; this week I also added COT OIL traders, with a heavily short position, and the US $, in a Wall St journal Index (not the basket one usually sees, which topped out recently. Finally, MMF (money market) flows were hugely negative. $$ flowing into ETFs outnumber managed mutual funds 15 to 1!

Here are the numbers:


Date> 4/17/2015 4/10/2015
Indices: DJIA  17826 18057
  NAZ  4931 4995
SPX  2081 2102
WklyVolume (Bshs). naz/ny…. 8.5/3.9 8.1/3.7
Specul.Ratio hi=bullish 2.18 2.19
Sentiment: put/call-CBOE  65 56
VIX>50-alltmlow=8.8 13.9 12.9
Advance/Dec-NYSE.. 1285/1942 2072/1155
Weekly Net: -657 917
     Cumulative: 167042 167699
Weekly  NYSE hi/low… 258/34
New Hi's/Low's Nasdaq h/l 294/102
McClellan  Oscillator -20 23
McClellanSum .+750/-1000 536 495
Newsletter Inv.Intel -Bull 50.5 50.4
Surveys-Tues Bear:-5yrs 13.9 14.2
Wed. AAII  -Bull  32.1 28.7
Bear  22.8 24.2
COT:SPX w/w large/small (net)k 10k/(8k) 10k/(9k)
COT:gold  comm.hedg long-short.000 (104k) (108k)
COT:OIL comm.hedg long-short. -280
US$-WSJ 86.8
CEOinsider selling 16:1 22:1
off.&bd b/s.vs. 10% holder b/s .150:20 .160:30
3-box rev Bullish%-  74 71
US equity -ICI Fund Flows WeekDelay (1.3B)
MMF flows Change in $B (39B) 0
MargDebt- top (300M) monthly 
ETF:mthlyEqty/ Int'l/Bond-$B
2-yr Tsy Yield: Inflation 0.51% 0.56%
TIP (ETF) Inflation 115.49 113.95


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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Monday, April 13, 2015

APRIL: Shower me the Money

No guarantees of future results of course, but it was reported that the 10 days following Income Tax Day has been positive for the stock market -so I checked. Going back to 2005 this is true, if only a few S&P points some years. Whether it is because of refunds, previously mentioned stock Buybacks as earnings season starts, one can only guess. Barron's also speaks of ETFs having to buy stocks- also a positive factor.

On the downside, every Rainbow must have Rain to produce it! Viewing the PBS program of the 1929 Crash, there are some similarities: It ran up 8 years after WWI (we are up 6 so far, tripling the March '09 low); Blind pools manipulated markets (HFTs?); the Economy slowed, but stocks rose.
Margin buying was at record levels.

Luckily there were warning signs - Corrections- which should be paid to attention to; either hedging or exiting.

The big difference between then and now, however, is the Sentiment. Everyone was in the markets then - shoeshine boys, cab drivers, etc. Last week, again, my Indicators only showed tepid levels:
With all markets barely below record levels, Volume last  week was average, as was the ratio of Nasdaq Volume to NYSE (speculative); option put to call ratio and the VIX were quiet; but Gold shorting by the Commercial traders (hedgers) went back up - not a good sign.

Here are the numbers:

Date> 4/10/2015 **4/2/2015
Indices: DJIA  18057 17763
  NAZ  4995 4886
SPX  2102 2066
WklyVolume (Bshs). naz/ny…. 8.1/3.7 **6.9/3.2
Specul.Ratio hi=bullish 2.19 2.16
Sentiment: put/call-CBOE  56 69
VIX>50-alltmlow=8.8 12.9 14.7
Advance/Dec-NYSE.. 2072/1155 2145/1070
Weekly Net: 917 1075
     Cumulative: 167699 166782
Weekly  NYSE hi/low… 261/57
New Hi's/Low's Nasdaq h/l 237/125
McClellan  Oscillator 23 12
McClellanSum .+750/-1000 495 380
Newsletter Inv.Intel -Bull 50.4 54.5
Surveys-Tues Bear:-5yrs 14.2 14.2
Wed. AAII  -Bull  28.7 35.4
Bear  24.2 32
COT:SPX w/w large/small (net)k 10k/(9k) 6k/(3k)
COT:gold  comm.hedg long-short.000 (108k) (81k)
CEOinsider selling 22:1 25:1
off.&bd b/s.vs. 10% holder b/s .160:30 .160:30
3-box rev Bullish%-  71 70
US equity -ICI Fund Flows WeekDelay (3.3B)
MMF flows Change in $B 0 (47B)
MargDebt- top (300M) monthly  465B
ETF:mthlyEqty/ Int'l/Bond-$B 1280/457/320
2-yr Tsy Yield: Inflation 0.56% 0.48%
TIP (ETF) Inflation 113.95 114.05
**Holiday

 

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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Monday, April 6, 2015

GREEN VS. BROWN

Governor Jerry "Brown's" final legacy might be his necessary mandate to turn every household's lawn from green to brown, considering our prolonged drought. To his credit, however, he managed to help save my "watering" hole - Capp's Corner in North Beach- from being leased-out, since he lunches there monthly with his St. Ignatius H.S. buddies and supposedly pressured the landlord to be reasonable.

Also seemingly healthy (judging by today's action) is the stock market, now up nearly 200 points after a lousy employment number on Good Friday. Last week's numbers, ending on Thursday, showed reversals in breadth indicators - advance/declines, and the McClellan Oscillator, with increased New Highs. Other reversals include the  CEO Insider selling to much lower selling; and a large swing in MMF (money market) flows -from plus $17B to negative $47B!!

Lastly, the monthly figures for ETF assets came out - all at record inflows - stocks, bonds, and overseas investing. Here are the numbers:

Date> **4/2/2015 3/27/2015
Indices: DJIA  17763 17712
  NAZ  4886 4891
SPX  2066 2061
WklyVolume (Bshs). naz/ny…. **6.9/3.2 9.0/3.8
Specul.Ratio hi=bullish 2.16 2.37
Sentiment: put/call-CBOE  69 66
VIX>50-alltmlow=8.8 14.7 15.1
Advance/Dec-NYSE.. 2145/1070 1212/2014
Weekly Net: 1075 -802
     Cumulative: 166782 165707
Weekly  NYSE hi/low… 261/57 367/77
New Hi's/Low's Nasdaq h/l 237/125 274/130
McClellan  Oscillator 12 -12
McClellanSum .+750/-1000 380 357
Newsletter Inv.Intel -Bull 54.5 56.6
Surveys-Tues Bear:-5yrs 14.2 14.1
Wed. AAII  -Bull  35.4 38.4
Bear  32 24.4
COT:SPX w/w large/small (net)k 6k/(3k) 10k/3k
COT:gold  comm.hedg long-short.000 (81k) (53k)
CEOinsider selling 25:1 74:1
off.&bd b/s.vs. 10% holder b/s .160:30 160:40
3-box rev Bullish%-  70 70
US equity -ICI Fund Flows WeekDelay (4.5B)
MMF flows Change in $B (47B) 17B
MargDebt- top (300M) monthly  465B 445B
ETF:mthlyEqty/ Int'l/Bond-$B 1280/457/320 1219/424/308
2-yr Tsy Yield: Inflation 0.48% 0.60%
TIP (ETF) Inflation 114.05 113.42
**Holiday

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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