My word, what a crappy mkt.

Last Thu the traders were saying the rally is here, mkt's seen its lows for 2006.

Guess what. 2Q is nearly over. Much of the mutual fund industry is compensated based on fiscal yr ending 3Q. So you're going to have lots of nervous institutional portfolio managers seeing their entire year's earnings come down to 1 qtr, traditionally a weak one. Increases potential for overreaction.

That wasn't negative breadth. :rolleyes:

Get ready for a rough ride. CPI is just in.
CPI 0.4
core CPI 0.3 (same as last month)

Woah. Thats almost 4% annualized. The inflation genie is busting out of the bottle.

Consumer spending gro in May was negative excluding energy. Esp weak in big-ticket and home-related - auto, furniture, home improv stores.

Imagine how good it will feel when interest rates and mortgage rate rise another 50bps - say, by year-end.

Note rent +0.6% (= 7.2%/yr), largest rise since . . . 1990.

Here's a fun site I found.

http://tal.marketgauge.com/dvMGPro/gauges/HistoricalGauges.asp

Shows a collection of momentum, sentiment, valuation, etc measures for each day. And you can click on a chart and see how those measures looked for a past day, up to 6 months ago.

Probably most useful for ST traders.

Here's another page.

http://www.cboe.com/data/IntraDayVol.aspx

I used this recently when doing some work on the predictive effect of put/call ratio.

The high/low chart is superb. Today wasn't so hot for this statistic. A ton of new lows and nil for new highs.

From the first link:
"Conversely, it is extremely dangerous to buy stocks when the ratio is below 20%. When the indicator climbs from below 30% to above 30% it is a signal of internal strength. This has historically led to a bull market."

On 6/14, the NYSE high/low ratio was 5% and NASDAQ was 11%.

I haven't poked around Market Gauges site enough to figure out if they serve up the technical charts and gauges straight, or if they sneak in their own "view". For now, I'm assuming its served straight up.

According to the 6/14 page, market is currently set up w/ multiple ST bullish indicators.

Makes sense, market is way oversold. Tacticians been saying that for a week. My market technician buddy was telling me getting close to buy point, last Wed.

Question is, is how much do you get rewarded for jumping in and buying, say, a couple thousand QQQQs?

I used the Market Gauge handy historical chart to click back to the late May 06 period, and the same ST bullish indicators were flashing (look around 5/24).

What a rally we had then, eh? Yeah, I didn't notice either.

My view is, market can be technically oversold, RSI<30, VIX/VXN high, etc, and so stocks can bounce. Maybe bounce hard, S&P500 up 2-3%, etc.

But a counter-trend bounce is not what bulls need/want/wish. They're looking for market to resume durable up trend.

So you don't get that from positive ST technicals, that requires positive MT/LT fundamentals. I don't see those positive fundamentals? Won't do another cut & paste job, but the picture looked bearish a few months ago and it still looks bearish now. True, stocks are 10-20% cheaper. But they're merely back to Nov 2005 levels. That's all we've done. That doesn't seem like a lot of work.

Or the CBOE page, the person who pointed me to it says that the index options represent the smart money (hedge funds and others who are hedging portfolios) and the equity options represent the dumb money (individual options traders).

Indeed, the index options have consistently had put/call > 1 and the equity options have put/call < 1 during this sell-off.

So, something to watch. I am not convinced the index put/call is really predictive. But if I see the equity put/call go >>1, I will sit up and pay attention.

The link has intra-day volume. Are you watching that closely or do you view daily ratios? I pulled up the last 3 years of data from CBOE and in the past 30 days the index put/call ratio flew all over the map. The high was 3.04 on 5/24/06 and low was 2 days later at 1.28. I can't tell if the ratio is predictive or reactive.

The volume traded is wild. I can't comprehend the $ traded in each day. Within 2 days, 900k contracts are liquidated!

FWIW, index calls are up the past 4 days straight. Hmmm.


calls puts total put/call
6/9/2006 513519 833739 1347258 1.62
6/12/2006 640684 1006497 1647181 1.57
6/13/2006 966989 1927373 2894362 1.99
6/14/2006 1175595 1627560 2803155 1.38

Market volatility is fun. Only problem is I can't figure out which side to trade. :)

Not watching intra-day. With daily, I ran into same problem you saw. I downloaded 10 years of put/call ratios from the CBOE site, then 10 years of daily S&P500 closing prices, and eyeballed it for some predictive relationship. I didn't see one. Put/call fluctuates wildly, when you try to chart it, it looks like a fuzzy band. One of these days I'll try harder. Maybe use moving averages, or standard deviations, or something - possibly a predictive relationship will show up. For now, I'm treating put/call more like anecdotal data (watching if it goes high along with other fear measures like VIX and Investor Sentiment, volume on down days, advance/decline, media headlines about market fall). And I'm watching for really extreme values (in equity put/call).

So was last Thursday a dead cat bounce? Homebuilders were up nicely (4%). I thought this would eventually give me an opportunity to load up the put option dumptruck. Friday was flat and today continues the decline. As of midday, homebuilders (XHB) are down 2.4%, nearly wiping out last week's gain.

Expanding on vegastabs oil thread, OIH is an ETF covering the oil service industry. It might be a worthy short candidate, but if the oil sector takes a dive, I'd expect all commodities to take it on the chin. China recently raised commercial lending reserves 0.5% to 8.0%, which will certainly reduce the high growth rate. If China and India are constrained, then commodity demand may flatline.

I thought market would bounce better/longer than this.

Read some stuff over the weekend that looked hopeful Based on an ongoing monthly survey, institutional portfolios made big adjustments in past month, took cash to overweight, took aggressive sectors like tech from overweight to neutral, took defensive sectors like staples from underweight to neutral, some of the most rapid portfolio changes I've seen in 3+ years of watching this monthly survey. Based on that plus some other stuff, I thought we'd see a better rally.

Market technician types were saying that after Thursday's big up day, need to see market follow through w/ more up days early this week. So far not seeing it.

I'm still short NDX. Have sold some stuff and increased cash greatly elsewhere. Still own some equities, though, not feeling too smart.

Do We Get To Do It Again?
 

See NDX chart.

NDX breaks support, spends couple weeks struggling in a range, fakes a rally, then breaks again, struggles for a while, then . . .

http://forums.pelicanparts.com/uploa...1151461396.jpg

I am not feeling optimistic, let's put it that way.

Yeah, Nasdaq 1000 looks terrible. The rest of the market looks somewhat stable. It hasn't totally fallen apart, at least.

These guys are saying there market is showing a base for a big rally. http://www.financialsense.com/editorials/barbera/2006/0622.html

This assumes we don't see further deterioration. I would view a rally as a short term signal to sell short. Oil is still above $70/barrel, worldwide liquidity is being drained, and interest rates (bonds and short term) are continuing to climb. How equities can rise in that environment is beyond my comprehension.

Old adage - SOX leads NDX, NDX leads mkt . . .

I predict that if the market doesn't go down, it will go up.

thank you.

:)

Am I losing my mind? I keep hearing the Sesame Street song "One of these things is not like the others."

Help me out:
1) Rising bond yields (despite a retreat today)
2) Rising short term interest rates (US and globally)
3) Spiking crude oil prices ($73+)
4) Growing concern of a general slowdown in earnings
5) 25 basis point rise today
6) DOW up 200+ points (2%) and NASDAQ up 3%

I sold some homebuilder put options last week. Today, I nibbled on Dec 06 options to replace the Sept 06 position sold previously. If the market wants to give the homebuilder index a 4% spike and a fresh entry point for traders, I'm not going to cry. :D

I haven't dug into what drove today's rally. I know people were keying on changes in Fed language. Hoping for return to Goldilocks, econ gro not too hot not too cold just right. Add short-covering. 2Q ends Fri, no-one wants to be left behind on the last 2 trading days.

Hey Jurgen, what Dec 06 strike price did you do? I agree with your analysis and think this is a good time to nibble . Let me know or PM me.

I sold my 38 Sept 06 puts (can't remember which day last week) and bought 30 Dec 06 puts @ $1.15. I only bought 10 contracts, because I plan to average into my final position. Ultimately, I would like to have around 50-75 Dec 05 contracts.

Yesterday, I saw excerpts of report by a Bank of America analyst. He is predicting homebuilder earnings will fall 48% in 2007 and a cumulative 72% by 2008. TOL closed at $26.18 today. If you assume the P/E ratio stays the same, a 72% decline in earnings would put Toll Bros. stock at $7.33. For the week of Jun 25, 2000, the weekly average price of TOL, adjusted for stock splits, was $5.33.

Homebuilders = tech stocks of 2000