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Deja View

If the stock market doesn't exactly repeat itself, it at least rhymes! This column has been advising caution (i.e. hedging) against rising stocks that are almost too good to be true. June would be the likely month for a correction, which has happened every mid-term election year since 1962 ( of at least 9%) per Liz Ann Sonders of Schwab. June also has a summer solstice, an option/future expiry on the same day, and a quarterly rebalancing of institutions.

Harkening back to 2007, the VIX Volatility Index just hit an '07 low of under 10 last week, and in a divergence, is climbing when the markets go up. Per Jon Hilsenrath, it has logged 74 weeks under its average for the first time since '07. The SPX (500) is up 166% in the past 5 years, and junk bond volume as well as the spread between corporate and Treas. are the greatest since '07.

Investors Intelligence, which does a survey of wire house newsletters, has Bulls at 62.2% last week, the second highest ever (to 2004's high), with only 17% Bears. Breadth, as measured by Advance/Decline is huge. With a declining government deficit, the Fed is now buying 75% of the Treasuries, causing an unexpected rise so far in 2014, along with short covering. Jim Bianco asserts that 100% of economists are planning on a rate rise before the end of the year, although that actually does not hurt stock prices until it swings above the rate norm.

IMO, if we do not have a substantial correction by June end, I would look for it in the usual Sept./Oct. period, just before elections. Some pundits are even opining that the Bull market is caused by the probability of a Conservative change in Congress at that time.


This Tuesday (June 10th) we will have the opportunity to learn about Market Profilefrom one of the leading experts on the subject, Robin Mesch, who worked directly with Peter Steidlmayer at the CBOT. Don't miss this session, as Robin returns virtually to the Bay Area to share with us how to build and manage a portfolio using Market Profile!

Don't forget, you must REGISTER in advance to gain entrance to this FREE event through Bloomberg security. See the website for more info.


Tuesday, June 10, 2014

3:00 pm - 4:30 pm


Bloomberg West Coast Offices

Pier 3

San Francisco, CA

SF Bay Area Options Group Monthly (FREE) Meeting:

Adjunct Professor at GGU and editor of Edwards-Magee-Charles Bassetti- will be talking this month at the option group meetup, discussing Technical Analysis, etc.

Saturday , June 21, 2014, from 9:00 AM to Noon
Room C-235, Fort Mason Center, San Francisco

This Group is not associated with any commercial, political or religious entity. Content of discussion shared among members and guests is strictly for education and information only. Members and guests are fully responsible for their trading decisions.