THE "HAULS" OF IV

Gunslinger Advisory - If Gold has finally turned around, brave souls might want to venture into the triple strength miners ETF - NUGT; 3 times the GDX ETF. A month ago I bought shares at $24 - today's quote is $58! The bad news is, to hedge the huge Volatility factor (IV) of the 3X moves - up and down, I sold a covered call on them 5 months out at 26!!

So missing out on the unexpected large move, I still realize a potential gain of 36% (86% annualized) if NUGT us above 26 in mid-June. High IV (Implied Volatility) is nice if one sells it, but there is a reason for its high level !!!  Caveat Emptor.

Over the weekend, when I do most of my market research (Barron's, Mauldin, et.al. to get a "leg" up on the week -BTW,  I just had a knee replacement), I read a study on how Google Search could affect the  upcoming election. It seems the powers that select which lines are ordered from one on down - most people read the top two lines - can sway readers one way or t'other. Google's head and most executives are Democrats, as shown by the 10:1 donations. It could affect up  to 10M voters in November.

Another startling factoid that dawned on me: I've been morally opposed to the huge rise in Fantasy Betting on sports, mainly football, as the commercial aspect of it seems to be spiraling out of control (my Organic theory). Is it Gambling or Wagering, ask the courts? Then I thought - what is the difference between it and day trading the stock market? Requiring intelligence, heavy research, some luck and patience, they are about the same.

Speaking of the stock market, it has been on a cyclical upturn, but on weak Volume (last week was about the same as the previous, which had a Holiday). If the SPX breaks up above the 1950 Resistance, it looks to 2000.

According to the historical model from 1928 to 2012, if January is down to start the year (as it is in 2016), Feb. is  also down (right); Mach shows a nice rally midmonth, then the SPX slides down into June - then rallying into and beyond the anticipated election.

As for Sentiment, after the second week, most Indicators have normalized into the median areas, with newsletters (AAII and Inv. Intell.) dead even for Bulls/Bears. One standout for breadth was the McClellan Oscillator at 76, and true to form, the market did open higher, but failed  hour to hour. MMF inflows increased as negative rates loom ahead.

Here are the numbers:

Date>	2016	2/26/16	2/19/2016
Indices:	DJIA	16639	16391
	NAZ	4590	4504
	SPX	1948	1917
WklyVolume (Bshs).	naz/ny….	8.9/4.9	8.2/4.7*
Specul.Ratio hi=bullish		1.82	1.74
Sentiment:	put/call-CBOE	65	78
VIX>50-alltmlow=8.8		19.8	20.5
Advance/Dec-NYSE..		2358/833	2683/516
Weekly Net:		1525	2167
Cumulative:		159035	157510
Weekly	NYSE hi/low…	155/120	76/116
New Hi's/Low's	Nasdaq h/l	90/209	48/178
McClellan	Oscillator	76	51
McClellanSum	.+750/-1000	-139	-467
Newsletter	Inv.Intel -Bull	34.7	26.5
Surveys-Tues	Bear:-5yrs	35.7	39.8
Wed.	AAII  -Bull	31.2	27.4
	Bear	31.4	37.8
US$-WSJ		98.1	96.6
3-box rev	Bullish%-	57	47
US equity -ICI	Fund Flows	WeekLate	(2.3B)
MMF flows	Change in $B	15.1B	7.5B
MargDebt- top (300M)	monthly	445B	JAN.
2-yr Tsy Yield: Inflation		0.80%	0.75%
TIP (ETF)	Inflation	112.4	111.3

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 "HAULS" OF IV

The MOOD is DOOM

More and more credible (IMO) market analysts are calling for up to 50% Bear market ahead. From Barron's last week - John Hussman, and John Mauldin's goto - GaveKal. Just like gloomanddoomer James Davidson, They cite the CAPE ratio from R. Shiller on 10-year EPS overvaluation and Global Debt. Also an extended Market Capitalization to GDP ratio. It would be wise to heed this eventuality - my choice to hedge is TVIX and DXD inverse ETFs.

A Recession, however, seems to be off the table for now - they are usually preceded by an uptick in both Oil and Unemployment (not on the radar so far). Most seem to occur on 0 years of the Decennial cycle.

In a shortened week the sharp rise came early - enough for the two newsletter surveys to see - although they still both remain Bearish; the put/call ratio is high, as is the McClellan Oscillator (51), as we see the market take off today. Money flows see $$ going into MMFs and global Gold ETFs.

Here are the numbers:

Date>	2016	2/19/2016	2/12/2016
Indices:	DJIA	16391	15973
	NAZ	4504	4337
	SPX	1917	1864
WklyVolume (Bshs).	naz/ny….	8.2/4.7*	12.3/6.1
Specul.Ratio hi=bullish		1.74	2.01
Sentiment:	put/call-CBOE	78	83
VIX>50-alltmlow=8.8		20.5	25.4
Advance/Dec-NYSE..		2683/516	728/2476
Weekly Net:		2167	-1748
Cumulative:		157510	155343
Weekly	NYSE hi/low…	76/116	144/978
New Hi's/Low's	Nasdaq h/l	48/178	31/920
McClellan	Oscillator	51	-4
McClellanSum	.+750/-1000	-467	-668
Newsletter	Inv.Intel -Bull	26.5	24.7
Surveys-Tues	Bear:-5yrs	39.8	39.2
Wed.	AAII  -Bull	27.4	19.2
	Bear	37.8	48.7
US$-WSJ		96.6	96
3-box rev	Bullish%-	47	30
US equity -ICI	Fund Flows	WeekLate	(3.6B)
MMF flows	Change in $B	7.5B	3.2B
MargDebt- top (300M)	monthly		461B
2-yr Tsy Yield: Inflation		0.75%	0.71%
TIP (ETF)	Inflation	111.3	111.6

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 MOOD is DOOM

MUCH ADO ABOUT NOTHING

Lots of Volatility last week, but going nowhere fast. Or as Yogi Berra once said: "We're lost but making good time". Pick whatever Fundamental reason you like - Yellen, short covering, Oil, - the end of the week turned right around again, and looks to resume the upward move in this shortened week.
As GGU's Dr. Hank Pruden pointed out in last Saturday's excellent fact-filled 2-hour promo for his upcoming class - Double Helix Power of Combining Wyckoff and Elliott Wave Method, except for the DJIA, markets have been making lower lows - not a good sign.

As shown below, both newsletter surveys (which report Tues. and Wed.) report large numbers of BEARS (Bullish FOR the market). And with the rest of the globe going to Negative interest rates, holding Gold with no dividends isn't such a bad idea, especially if it is oversold these past months.
Even the 2-year Treas. yield is dropping fast - from above 1% recently to 0.71%.

Finally, since writing my book on DITM ( Deep-In-The-Money) covered call options in 2010, the current environment looks like the best it's been since then: quality stock prices have dropped bigtime; which makes the dividend yield that much higher; and dropping prices makes huge increases in the IV (Volatility) of call options, which one is selling. Being ITM also gives a nice cushion for the stock to drop even further.

Here are the numbers from last week:

Date>	2016	2/12/2016	2/5/2016
Indices:	DJIA	15973	16204
	NAZ	4337	4363
	SPX	1864	1880
WklyVolume (Bshs).	naz/ny….	12.3/6.1	11.2/5.6
Specul.Ratio hi=bullish		2.01	2
Sentiment:	put/call-CBOE	83	78
VIX>50-alltmlow=8.8		25.4	23.4
Advance/Dec-NYSE..		728/2476	1072/2133
Weekly Net:		-1748	-1061
Cumulative:		155343	157091
Weekly	NYSE hi/low…	144/978	197/378
New Hi's/Low's	Nasdaq h/l	31/920	54/464
McClellan	Oscillator	-4	15
McClellanSum	.+750/-1000	-668	-560
Newsletter	Inv.Intel -Bull	24.7	34
Surveys-Tues	Bear:-5yrs	39.2	38.1
Wed.	AAII  -Bull	19.2	27.6
	Bear	48.7	34.7
US$-WSJ		96	97
3-box rev	Bullish%-	30	38
US equity -ICI	Fund Flows	WeekLate	2.3B
MMF flows	Change in $B	3.2B	(4.2B)
MargDebt- top (300M)	monthly	461B	DEC.
2-yr Tsy Yield: Inflation		0.71%	0.73%
TIP (ETF)	Inflation	111.6	111.4

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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MUCH ADO ABOUT NOTHING

STUPORBOWLED OVER

After all the weeks of high-testosterone hype in the Greater Bay Area, the game itself was pretty boring - although the better team won!!. Record number of 3 and Outs - MVP should go to the kicker!
Thanks to strong defenses, Peyton Manning looked more like Bradley Manning, and Cam the Avatar looked like a deer in the headlights. Half time was much better to watch.

Back to the Dow(n) Jones. DIA and SPX down 14% from their 2015 highs (where's the FED?).
For weeks now I've been touting the TVIX as a hedge (a 3X VIX ETF that goes up when stocks drop) . It has doubled from 6 to 12 just this year ($6 to 12); in last Sept.'s market drop it went to $20!! (No guarantees). Then the VIX went above 50 (now at 28).
Another triple-strength ETF I've held thru thick and thicker, is the NUGT - 3X the GDX gold miners. That has gone from @$20 this year to $48, and was $150 last May on a Gold Spike. Volatility in the options (IV) is huge, so you should sell them not buy them (sell puts, or covered calls, both of which I've done).

Another extreme recently - the 2-year Treas. note went from  a recent high yield of 1.06% to today's 0.66% in a rush to safety. Last week the CBOE put/call was high at 78 and the Bull/Bear surveys inverted to Bearish (ON the market), but that did not help stocks today. Nasdaq New Lows were 10:1 last week.
Here are the numbers:

Date>	2016	2/5/2016	1/29/2016
Indices:	DJIA	16204	16466
	NAZ	4363	4613
	SPX	1880	1940
WklyVolume (Bshs).	naz/ny….	11.2/5.6	10.8/5.9
Specul.Ratio hi=bullish		2	1.83
Sentiment:	put/call-CBOE	78	64
VIX>50-alltmlow=8.8		23.4	20.2
Advance/Dec-NYSE..		1072/2133	2370/845
Weekly Net:		-1061	1525
Cumulative:		157091	158152
Weekly	NYSE hi/low…	197/378	96/253
New Hi's/Low's	Nasdaq h/l	54/464	45/389
McClellan	Oscillator	15	58
McClellanSum	.+750/-1000	-560	-725
Newsletter	Inv.Intel -Bull	34	29.2
Surveys-Tues	Bear:-5yrs	38.1	35.4
Wed.	AAII  -Bull	27.6	29.8
	Bear	34.7	40
US$-WSJ		97	99.6
3-box rev	Bullish%-	38	33
US equity -ICI	Fund Flows	WeekLate	(6.2B)
MMF flows	Change in $B	(4.2B)	13.8B
MargDebt- top (300M)	monthly	DEC.	461B
2-yr Tsy Yield: Inflation		0.73%	0.78%
TIP (ETF)	Inflation	111.4	111.4

  

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

Subscribe in a reader

STUPORBOWLED OVER

VIEW OF THE PAST

Back to what passes for Normal for the Sentiment Indicators. A couple things stand out: the Reliable McClellan Oscillator shot to a high 58, which is Overbot, so we had a mostly down day today; the Summation is very low - but not near a record. Also unusual - AAII Bull/Bear postcards were inverted to be Bullish FOR the market, not ON the market!).
This week I decided to juxtapose Multi-year highs next to last weeks Indicators (instead of the previous week's), to give a frame of reference. Nothing perilous.

Date>	2016	2/1/16	Multi-Year HI
Indices:	DJIA	16466	18272
	NAZ	4613	5147
	SPX	1940	2126
WklyVolume (Bshs).	naz/ny….	10.8/5.9	12.2/6.1
Specul.Ratio hi=bullish		1.83	3.39
Sentiment:	put/call-CBOE	64	104.11/08
VIX>50-alltmlow=8.8		20.2	90
Advance/Dec-NYSE..		2370/845
Weekly Net:		1525
Cumulative:		158152	168326
Weekly	NYSE hi/low…	96/253	950
New Hi's/Low's	Nasdaq h/l	45/389
McClellan	Oscillator	58	Jan.09:108
McClellanSum	.+750/-1000	-725	(1514).LOW
Newsletter	Inv.Intel -Bull	29.2	62.9-12/04
Surveys-Tues	Bear:-5yrs	35.4	54.4-10/08
Wed.	AAII  -Bull	29.8
	Bear	40	70.3(3/09)
US$-WSJ		99.6	90.8
CEOinsider	selling	33	235:1
3-box rev	Bullish%-	WeekLate	(3.8B)
US equity -ICI	Fund Flows	13.8B
MMF flows	Change in $B	461B
MargDebt- top (300M)	monthly	0.78%	507B
2-yr Tsy Yield: Inflation		111.4	0.96%
TIP (ETF)	Inflation	110	Nov.'12:123

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

VIEW OF THE PAST