Thanks to the opening day surge, the Dow and other markets are off to a great 2013, but a replay of the Fiscal Cliff is on the horizon come February - with the debt ceiling and sequester, etc.
Just as dramatic as the first-day rally is last week's Sentiment Indicator group: The SPX (S&P 500) ran to its September high of 1472, a possible Resistance point; also the target from Tom DeMark and other analysts. Insider Selling versus Buying more than doubled from last week's high mark, to 130 to 1 - even though were into the new year of increased taxes. The only major Buyers were Financials.
Bullish signs were the speculative Nasdaq Volume over NYSE and the increased CBOE put/call ratio to 67. Although McClellan's Oscillator came off its 50+ reading, the ratio of new highs to new lows, both on the NYSE and Nasdaq, were HUGE. 10:1 on the NASD; 578 to only 16 on the NY! With the fear of QE ending, money flows are starting to come out of fixed income into stocks - the largest inflows into funds in a decade, says Barron's.
Hedge funds have the highest exposure to stocks as well, which bodes for at least a near term correction. Newsletter surveys are way complacent, the Inv. Intell. Bulls over 50%; the AAII just under - with Bears in the mid-20s. The Bullish %, stocks on a buy signal, as well as stocks above the 50-day moving average, also warn of caution.
These indicators and more can be found at my Sentiment blog: www.mktsentiment.blogspot.com
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The regular meeting of the San Francisco Bay Area Options Group will be held as usual at Fort Mason this Saturday morning at 9 a.m, Bldg.C., in room C-235. This is an excellent source of information about options for people of all levels. For more information and history, please see the previous Examiner.com column below (click on the Blue heading for the interview with founder George Chen).
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