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But isn't it generally true that money inflows are strong through April
15th due to last-minute IRA/401k deposits to save some tax $$? And of
course, we will also be getting the manipulated earnings reports at that
time which invariably will be positive by the usual 1-2 cents above
lowered analyst expectations. So logic might say that the markets will
continue higher into sometime in May, perhaps June. Of course, we all
know the value of logic in this market <g>...
JW
-----Original Message-----
From: listmanager@xxxxxxxxxxxxxxx [mailto:listmanager@xxxxxxxxxxxxxxx]On
Behalf Of Jpilleafe@xxxxxxx
Sent: Sunday, March 26, 2000 5:47 AM
To: realtraders@xxxxxxxxxxxxxxx
Subject: [RT] AN END OF HEDGING?
Collapse in P/C ratios is a concern for me.... Daily Index P/C ratio was
below 1.0 last 5 market days of Feb, ahead of S&P500 short term 1409
high 03-03. Again, ..03-23 Index P/C ratio .894, below the 1.0 level.
Importantly,....the CBOE Weekly P/C ratio (from Barron's P. MW68) at
0.36 (Previous weeks: .37, .35, .36, .36) all very close to my 0.34
threshold
for market topping level.
This collapse in P/C ratios indicates to me that hedging has ended,..and
should be "negative" for equity prices from a contrary perspective.
Weekly
AAII Survey 65.71% bulls, vs. 20% Bears (ratio 3.29:1) clearly
"overbelieved".
Note Consensus 53% Bulls on Bonds (TYX = 5.99%) is upper end vs only
21% Bulls on Bonds on 01-21 when TYX = 6.71%. Rally in bonds likely
extended. Bottomline,..Bond's reversal 03-24 (USM -1^04), with S&P500
little changed, and Oil price up ahead of Monday's OPEC production
decision, suggests downside pressure S&P500 likely near term.
Intermediate term,..downside risk appears greater than upside,...I am
open
minded to "sideways to lower" into April 03, then another leg down into
late
April or mid-May. Basically this upmove from early March is likely a B
Wave
of a larger A-B-C correction.
My expectation for a downmove near term is the result of concerns based
on
seeing big speculation evident everywhere: OTC/NYSE volume at record,
.collapse in P/C ratios, Margin Debt surge to record level (again a
chart
from Ned Davis research on Barron's p.5), narrow leadership, ALL
suggesting
the current rally off the early March low is "hollow", likely inspired
by
short
covering and based on daily measures of sentiment, close to complete.
Barron's (03-27) p.30 "The Morning After" article (worthwhile) correctly
notes
past 5 rate hikes: "..by the time the Federal Reserve raises interest
rates,
the news is already priced into the market. It's the subsequent weeks,
when strong economic new gets released that investors should fear".
Past
year pattern suggest risk is for a move lower after rally into most
recent
03-21
rate hike.
Would appreciate the thoughts or views of others.
Have a good week. Regards,
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