10-YEAR SENTIMENT INDICATOR RECAP:

I have been invited to speak at 3 venues in February on a 10-year analysis of the most effective Sentiment Indicators at market reversals, as well as the defensive, yet lucrative, investment strategy outlined in my book -Zero (IN)Tolerance: deep-in-the-money covered calls.

This Thursday, Feb.3, at the Orinda Library, the AAII (one of my contrary indicators) is hosting the talk; the TSAA is hosting a joint meeting at Golden Gate Univ. on Tues.,Feb.15 at 3 p.m. in San Francisco; and the GGU Library is featuring my talk in a Learning Program on Wed., Feb.23 at 5:30 also at GGU.

Once again the recent indicator extremes of: Bull/Bear surveys, negative McClellan Oscillator, low put/call and VIX numbers, etc. have at least called a temporary cessation of the upmove in the markets (Nasdaq), despite the sugar highs of QEII and zero interest rate alternatives.

Once again money is trickling out of MMFs and sticking a toe into domestic equity funds for the first time since April of 2010.

Here are the numbers:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11823	11871	14093	6626
Nasdaq:	2686	2689	2805	1114
S&P 500:	1276	1283	1561	683
CBOE Eq. put/call:	60	54	96-10/08	46-1/03
VIX:	20.0	18.5	90	8.8
McClellan Osc:	(24)	(29)	108	(123)
McClellan Sum:	540	551	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	55.1	56.0	63	22.21
InvestorsIntel.Bear:	19.1	20.9	54.4	16
AAII Bull:	42.0	50.7	n/a	n/a
AAII Bear:	34.3	29.1	n/a	n/a
US Equity-1 week lag	n/a	3.0B
Money Market Flows	(3.8B)	(35B)
Baltic Dry Index:	1137	1393	11700	663
Bullish %:	86	86	88	2
Insider Corporate Sellers:	10:1	198:1	198:1	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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10-YEAR SENTIMENT INDICATOR RECAP:

SALE OF THE CENTURY:

Insider Selling rose to a whopping 198:1 over buying last week, although a couple of the Sectors were n/a, even though they were probably negligible. Unfortunately, this is one of the Sentiment Indicators that is more "Observable" than "Actionable", since the last time it was huge was in April of 2009, just when the huge rally was getting underway.
Many Indicators regressed to the mean a bit last week, after hitting alarming extremes - so I am still wary of a possible minor downturn. Both the Decennial cycle and the 4-year Kinchen cycle indicate an upward first half of the year, sloping down the 2nd half. That is also when the Stimulus ends, in June, affecting state and federal economies.
Although the "headline" DJIA rose last week, the SPX and Nasdaq fell, so maybe sideways is in the cards. The McClellan Oscillator, ratio-adjusted, went to -29 as the weekly A/D (advance/decline) fell 1,000 issues. As my 10-year Sentiment wrapup of Indicator extremes at major reversals shows, a negative MO is prevalent.
Finally, a major reversal in mutual fund flows - $3.8B into domestic equities, also does not bode well for stocks.
Here are the results:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11871	11787	14093	6626
Nasdaq:	2689	2755	2805	1114
S&P 500:	1283	1293	1561	683
CBOE Eq. put/call:	54	47	96-10/08	46-1/03
VIX:	18.5	15.5	90	8.8
McClellan Osc:	(29)	10	108	(123)
McClellan Sum:	551	625	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	56.0	57.3	63	22.21
InvestorsIntel.Bear:	20.9	19.1	54.4	16
AAII Bull:	50.7	52.3	n/a	n/a
AAII Bear:	29.1	23.4	n/a	n/a
US Equity-1 week lag	n/a	3.8B
Money Market Flows	(35B)	(2.2B)
Baltic Dry Index:	1393	1480	11700	663
Bullish %:	86	87	88	2
Insider Corporate Sellers:	198:1	13:1	198:1	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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SALE OF THE CENTURY:

WINTER STORM WARNING: PART DEUX-

Reader - please note that there are two blogs this week, due to the inclusion of two separate matrices:
As promised below, here is the weekly matrix of Sentiment Indicators:

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11787	11674	14093	6626
Nasdaq:	2755	2703	2805	1114
S&P 500:	1293	1271	1561	683
CBOE Eq. put/call:	47	46	96-10/08	46-1/03
VIX:	15.5	17.1	90	8.8
McClellan Osc:	10	(7)	108	(123)
McClellan Sum:	625	597	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	57.3	54.5	63	22.21
InvestorsIntel.Bear:	19.1	20.5	54.4	16
AAII Bull:	52.3	55.9	n/a	n/a
AAII Bear:	23.4	18.3	n/a	n/a
US Equity-1 week lag	n/a	(4.2B)
Money Market Flows	(2.2B)	(12.1B)
Baltic Dry Index:	1480	1544	11700	663
Bullish %:	87	87	88	2
Insider Corporate Sellers:	13:1	30:1	108:1	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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WINTER STORM WARNING: PART DEUX-

WINTER STORM WARNING:

(This has been reposted to correct some formatting problems which caused some of the figures in the table to get chopped off.)

Much has been said lately about the possible toppiness of the recent market runup, including some great wisdom this past weekend from Martin Pring and Associates at the TSAA monthly meeting - many longer term cycle charts and statistics. I strongly advise the reader to go to the Pring.com website for much of this information, under 2 2011 predictions - free and easily accessible.

Many Sentiment and Breadth extremes have been presenting themselves recently - so much so that I've put together a matrix of the most egregious, which will be shown and explained below.

I'm also giving several presentations in February on the decade-long, year-ending wrapup I exhibited last week, but also more fully explaining these extremes, in February at the GGU Library Learning program Feb.23, the AAII in the Orinda Library, the TSAA monthly meeting, and possibly other venues.

As striking as some of these numbers are, they often need explaining and put into context. Like most wise analysts, I hesitate to call market turns, rather displaying caution lights to hold off buying and look to hedging in apprehension of technical bearish signals.  Of course, these talks will also include my recent variation of the DITM covered call strategy that is so timely and optimally defensive for this Lost Decade ahead.

Here are the two grids:

SENTIMENT INDICATOR COMPARISON

Indicator	Date:	Close:	Date:	Close:
S&P500	April 23,2010	1217	Jan.14,2011	1293	new recent high
	July 2,2010	1022	????	????	since Sept.15,2008
				????
CBOE Eq. put/call	April 16,2010	42	Jan.14,2011	47	7-yr.Low: 42
VIX Index	April 23,2010	16.6	Jan.14,2011	15.5	7-yr.Low: 8.8
NYSE Hi/Lo	"	950/18	Jan.7,2011	554/20
McClellan Summ.	"	1241	Jan.14,2011	625
Inv.Intell.bull/bear	"	53	Jan.14,2011	57
"	May 7,2010	57
CEO Insider Sales	April 23,2010	.91:1	Jan.7,2011	.30:1
Bullish percent	"	87	Jan.14,2011	87	new recent high:88
Mutual Fund
Equity Inflows	April 23,2010	Ended	Dec.23,2010	Resumed
NYSE Margin Debt	"	$262B	Dec.23,2010	$274B	new recent high:$381B(July/07)

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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WINTER STORM WARNING:

PRING THING:

Fresh off their market call a year ago that the summer would see a 16% correction (during an ebullient market time), and we saw the May Flash Crash fall to a 16% correction - Martin Pring and Joe Turner return this Saturday to GGU for a monthly TSAA meeting (only $10 for members), at 8:30 in the a.m.

Fortunately, option expiration and the SFOG meetup is the following Saturday (day after the 3rd Friday of the month), so no conflict there.
This new year started with some cautious action, both in Price and Sentiment: Bullish % is 1 point off a record high at 87; AAII Bulls and Bears are complacent at 55% and 18%. Mutual Fund flows turned to inflows for  the second week in a row, after a multi-month hiatus of selling.

Although Advance/Declines were about even, New Highs to Lows were huge in both the NYSE and Nasdaq. Looking ahead to the January Barometer, it might be wise to hedge after the large rally of 2010, although pre-election years are usually very good overall - better than the other 3 combined in the 4 year cycle.

Here are the numbers: 

MktSentiment	Last Week	Prev. Week	5 Yr HI	5 Yr LOW
DJIA:	11674	11577	14093	6626
Nasdaq:	2703	2652	2805	1114
S&P 500:	1271	1257	1561	683
CBOE Eq. put/call:	46	58	96-10/08	46-1/03
VIX:	17.1	17.8	90	8.8
McClellan Osc:	(7)	14	108	(123)
McClellan Sum:	597	538	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	54.5	55.6	63	22.21
InvestorsIntel.Bear:	20.5	20.0	54.4	16
AAII Bull:	55.9	51.6	n/a	n/a
AAII Bear:	18.3	20.1	n/a	n/a
US Equity-1 week lag	n/a	.5B
Money Market Flows	(12.1B)	22.4B
Baltic Dry Index:	1544	1999	11700	663
Bullish %:	87	85	88	2
Insider Corporate Sellers:	30:1	14:1	108:1	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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PRING THING:

CYCLE "FOUR"CAST:

According to both JP Morgan data and Ned Davis Research, the Pre-election year of the 4-year election cycle is the best for stocks - in fact, it is better than the the other 3 years combined from 1940-2008! Going according to  plan, the 4th Q of the previous year (just past) was the best of all quarters, and the new quarter ahead should be the best of the 4 this year, followed by the 2nd Q. 
That said, short term conditions -despite Monday's great start - still look to caution based on previously mentioned Sentiment extremes: the AAII Bulls coming off a 63% reading (Bears off 16%); the SPX stretched above its 200-day moving avg.; a low 2% dividend yield and a 16 VIX recent reading. Longer term, margin debt continues to increase to $270B.
For the first time since last Spring, equity mutual funds showed INFLOWS.
  Here are the numbers:

DJIA:	11577	11573	14093	6626
Nasdaq:	2652	2665	2805	1114
S&P 500:	1257	1256	1561	683
CBOE Eq. put/call:	58	53	96-10/08	46-1/03
VIX:	17.8	16.5	90	8.8
McClellan Osc:	14	15	108	(123)
McClellan Sum:	538	463	1568	(1514)
Newsletter Surveys
InvestorsIntel.Bull:	55.6	58.8	63	22.21
InvestorsIntel.Bear:	20.0	20.6	54.4	16
AAII Bull:	51.6	63.3	n/a	n/a
AAII Bear:	20.1	16.4	n/a	n/a
US Equity-1 week lag	n/a	.3B
Money Market Flows	22.4B	(9.3B)
Baltic Dry Index:	1999	1999	11700	663
Bullish %:	854	84	88	2
Insider Corporate Sellers:	14:1	28:1	108:1	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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CYCLE "FOUR"CAST: