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Market Sentiment, Tuesday, 05/13/2003

One Step Closer
by James Brown

What can you say? Equity bears are going bug-eyed as bulls refuse to slow down. Q1 corporate earnings are essentially over and over half the S&P 500 has pre-warned that the next quarter looks flat to down. Today's Richmond Fed Manufacturing survey showed Wall Street that the economy has seen no post-war bounce. Both oil and gold continue to climb off their lows and someone's buying bonds like there is no economic recovery in site.

As Jim & Linda and the rest of the crew said on the MarketMonitor today, something has to give soon. We noticed that the put-to- call ratios have once again given us a bearish divergence with the equity only pcr at a bullish 0.56 and the index pcr's at a somewhat bearish (not too terribly so) at 1.22 (OEX) and 1.23 (QQQ). This is a "soft" indicator and a contrarian one at that.

The bullish percent charts continue to show the market creeping ever higher into extreme overbought conditions. Remember that traditionally 70 and above is overbought and risk favors the bears not the bulls. As of today the Industrials bullish percent is at 66.00, the NASDAQ-100 is at 79.00 and the S&P 500 is at 65.8. Looking at a bullish percent chart and you'll see that the NDX topped out at 82 last time and the S&P 500 is at descending bearish resistance of 65-66. These indicators are not screaming "go long" here.

We continue to urge caution and monitor your stops closely.


Market Averages

DJIA ($INDU)

52-week High: 10353
52-week Low :  7197
Current     :  8679


Moving Averages:
(Simple)

 10-dma: 8570
 50-dma: 8238
200-dma: 8326



	
S&P 500 ($SPX)

52-week High: 1107
52-week Low :  768
Current     :  942


	
Moving Averages:
(Simple)

 10-dma:  929
 50-dma:  880
200-dma:  882



		
Nasdaq-100 ($NDX)

52-week High: 1351
52-week Low :  795
Current     : 1156



Moving Averages:
(Simple)

 10-dma: 1136
 50-dma: 1064
200-dma: 1002


		


The VIX and the VXN seem as confused as most bears in this market.
The major averages are significantly overbought and in need of
some consolidation but sellers have yet to appear in force.
How much longer can the market hold up?

CBOE Market Volatility Index (VIX) = 22.03 +0.61
Nasdaq-100 Volatility Index  (VXN) = 32.84 +0.26




Put/Call Ratio Call Volume Put Volume Total 0.67 703,421 468,959 Equity Only 0.56 508,874 283,551 OEX 1.22 30,301 36,851 QQQ 1.23 29,777 36,625
Bullish Percent Data Current Change Status NYSE 58.1 + 2 Bull Confirmed NASDAQ-100 79.0 + 1 Bull Confirmed Dow Indust. 66.7 + 0 Bull Confirmed S&P 500 65.8 + 2 Bull Confirmed S&P 100 65.0 + 0 Bull Confirmed Bullish percent measures the number of stocks in an index currently trading on a buy signal on their point and figure chart. Readings above 70 are considered overbought, and readings below 30 are considered oversold. Bull Confirmed - Aggressively long Bull Alert - Cautiously long Bull Correction - Pause or pullback in upward trend Bear Alert - Take defensive action if long Bear Confirmed - High risk if long, good conditions for shorting Bear Correction - Pause or rebound in downtrend
5-Day Arms Index 1.17 10-Day Arms Index 1.08 21-Day Arms Index 1.04 55-Day Arms Index 1.27 Extreme readings above 1.5 are bullish, and readings below .85 are bearish. These signals don't occur often and tend be early, but when they do, they can signal significant market turning points.
Market Internals -NYSE- -NASDAQ- Advancers 1379 1580 Decliners 1453 1450 New Highs 263 166 New Lows 14 5 Up Volume 827M 1103M Down Vol. 846M 705M Total Vol. 1697M 1824M M = millions
Commitments Of Traders Report: 05/06/03 Weekly COT report discloses positions held by small specs and commercial traders of index futures contracts at the Chicago Mercantile Exchange and Chicago Board of Trade. COT data can be found at www.cftc.gov. Small specs are the general trading public with commercials being financial institutions. Commercials are historically on the correct side of future trend changes while small specs tend to be wrong. S&P 500 We knew it would be a quiet week on Wall Street last week, aside from the FOMC meeting, and we see little change in the Commercial's net-long stance. There has also been little change in the Small Trader's net long stance either. Commercials Long Short Net % Of OI 04/15/03 424,219 409,853 14,366 1.7% 04/22/03 430,758 423,295 7,463 0.9% 04/29/03 432,710 419,245 13,465 1.6% 05/06/03 429,519 419,545 9,974 1.2% Most bearish reading of the year: (111,956) - 3/6/02 Most bullish reading of the year: 14,366 - 4/15/03 Small Traders Long Short Net % of OI 04/15/03 148,434 137,680 10,754 3.8% 04/22/03 147,068 140,153 6,915 2.4% 04/29/03 149,616 154,782 5,166 1.7% 05/06/03 150,345 148,681 1,664 0.6% Most bearish reading of the year: 10,754 - 4/15/03 Most bullish reading of the year: 114,510 - 3/26/02 E-MINI S&P 500 It is the e-mini positions that we are seeing some shifts. The Commercials have bumped up their longs by more than 30K while reducing their shorts by about 25K. Looks like money is shifting sides here. Small Traders have also shown a small reversal with longs decreasing by almost 40K and shorts jumping by more than 10%, but they remain significantly net long while Commercials are exceedingly net short. Commercials Long Short Net % Of OI 04/15/03 119,316 390,555 (271,239) (53.2%) 04/22/03 124,200 437,597 (313,397) (55.7%) 04/29/03 134,751 472,247 (337,496) (55.6%) 05/06/03 169,388 447,330 (277,942) (45.1%) Most bearish reading of the year: (337,496) - 04/29/03 Most bullish reading of the year: (222,875) - 04/01/03 Small Traders Long Short Net % of OI 04/15/03 365,876 44,137 321,739 78.5% 04/22/03 395,596 40,480 355,116 81.4% 04/29/03 459,687 50,030 409,657 80.4% 05/06/03 423,918 55,932 367,986 76.7% Most bearish reading of the year: 283,831 - 04/08/03 Most bullish reading of the year: 409,657 - 04/29/03 NASDAQ-100 It's pretty much dead-even on the Commercials positions on the NDX. Meanwhile the Small Trader has increased their position sizes in both longs and shorts. Commercials Long Short Net % of OI 04/15/03 44,976 37,929 7,047 8.5% 04/22/03 45,647 38,531 7,116 8.5% 04/29/03 45,497 37,557 7,940 9.6% 05/06/03 46,327 38,216 8,111 9.6% Most bearish reading of the year: (15,521) - 3/13/02 Most bullish reading of the year: 9,068 - 06/11/02 Small Traders Long Short Net % of OI 04/15/03 11,182 17,438 ( 6,256) (21.9%) 04/22/03 10,929 20,376 ( 9,447) (30.2%) 04/29/03 11,219 19,760 ( 8,551) (27.6%) 05/06/03 13,482 21,010 ( 7,528) (21.8%) Most bearish reading of the year: (10,769) - 06/11/02 Most bullish reading of the year: 19,088 - 01/21/02 DOW JONES INDUSTRIAL Again we're not seeing any big shifts of money or attitude in the Commercials or the Small Traders. The "smart" money is still net long the Industrials and the small guy is just barely net short. Commercials Long Short Net % of OI 04/15/03 17,881 13,124 4,757 15.3% 04/22/03 16,942 14,750 2,192 6.9% 04/29/03 17,927 14,083 3,844 12.0% 05/06/03 16,772 13,568 3,204 10.6% Most bearish reading of the year: (8,322) - 1/16/01 Most bullish reading of the year: 15,135 - 10/16/01 Small Traders Long Short Net % of OI 04/15/03 7,748 8,704 ( 956) ( 5.8%) 04/22/03 8,081 8,275 ( 194) ( 1.2%) 04/29/03 7,081 8,604 (1,523) ( 9.7%) 05/06/03 7,829 8,642 ( 813) ( 4.9%) Most bearish reading of the year: (8,777) - 10/12/01 Most bullish reading of the year: 1,909 - 1/16/01


 

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