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[Tor]

US Market Timing
Buy/Sell Climaxes
13 November 2006 By Mike Burke & John Gray


After three weeks in a row with high levels, there was a more subdued 89 buying climaxes last week. Considering the fact that the election has come and gone and prices are still moving up, that is a modestly good sign. The prior three weeks totaled over 600 buying climaxes. The current selling climaxes advanced a bit to 45, from 19 the week before.

We are entering the end of year portfolio adjusting period when many investors dump their losing positions for tax purposes. That often drives these depressed shares even lower and many of these stocks wind up with selling climaxes, and ultimately turn out to be excellent buys. We always try to pick up some stocks at the end of year for a “bounce” into the following year, and prior results have proved successful.
Short-term indicators remain mostly bullish, but all are below their overbought peak levels and some indicate caution. The medium term timing tools remain positive, but amongst these a downturn for the industry sector sum would increase the negative potential.

There were six S&P 500 stocks with buying climaxes last week and none with selling climaxes. That is down sharply from the prior week’s action. The fewer climaxes also meant almost no sector concentration occurred.

Buying climaxes take place when a stock makes a 12-month high, but closes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones. Selling climaxes occur when a stock makes a new 12-month low, but then closes the week with a gain. They are a sign of accumulation and indicate that stocks are passing from weak hands to strong ones. Our work shows that sellers into buying climaxes and buyers into selling climaxes are right about 80% of the time after four months.

Have you got a we site for this Cheif? Thanks.

[da_cheif]

US Market Timing Advisors Sentiment 15 November 2006 By Mike Burke & John Gray Overview The advisors found the combination of a quick rebound to new highs for the Dow Jones Industrials and a Democrats election win too much to ignore and they ended their recent cautiousness. The bulls jumped up to 56.4%, from 52.1% last week. That is only slightly below the reading that began 2006 trading, and the third highest level of year. The bears moved down to 22.3%, from 26.0% and 28.4% the past two weeks. The only lower reading this year was 22.1% shown on January 6th. The remaining 21.3% are classified as correction, and that group declined from 21.9% a week ago. Those advisors are looking for shorter term weakness, but are longer term bullish. The sentiment readings are now bearish. Although they don’t signal an imminent decline, the increased optimism say’s it’s a good idea to start planning an exit strategy. We are in the seasonally strong six month and three month periods of the year and there is no reason why stocks can’t go higher for a while, but the handwriting is on the wall. Historically, bulls are 55%-60% when indexes achieve record highs. Those extreme levels of optimism often prove negative as they reflect fully invested positions leaving little cash for additional purchases. At market tops we typically see the bears in the low 20%s. The advisors have made a large move from mid-June, when the bulls and bears were even at 35.6%. That was a very positive signal that stocks were trading at a low risk area, and buying was in order. With the shift of recent weeks the readings are nearing the extremes shown at the end of 2005, when there were 60.4% bulls, 20.8% bears and 18.8% correction. Other market indicators remain bullish, but at overbought levels where they have held for over six weeks. There were some caution flags shown early November but confirming bearish signals were avoided. The difference between the bulls and bears was surged to 34.1%, a big jump from 26.1% last week, and must also be considered as negative. Short term opportunities have been indicated after the spread between the bulls and bears contracted to 15% or lower, and then expanded. It was ‘0” mid-June and has been expanding ever since. Sentiment Charts Bullish Themes “We consider the following the strongest argument for this being a continuation of a bull market: the markets around the world are very, strong, and in many cases stronger than the US. Liquidity is driving them. We are once again seeing a synchronized, worldwide bull markets. Conversely, when divergences between important markets develop you have to start being very, very cautious. But currently, these divergences do not exist.” (6-Nov-06) Bert Dohmen’s Wellington Letter, PO Box 49-2433, Los Angeles, CA 90049 “The technical indicators remain positive. Momentum is strong as reflected by the overbought levels of the issues reaching new high, new lows, advancing and declining. They will tell us when to start selling when they decline from current levels. Our proprietary trading volume model is still positive as the indicator keeps rising. The number of stocks above their 10 and 30 week moving averages reached the danger zone. The change in these measures is still solidly bullish. When they decline from current levels we will recommend you start selling and increase your cash levels.” (6-Nov-06) The Peter Dag Portfolio, 65 Lakefront Drive, Akron OH 44319 Bearish Themes “The relentless assault on Dow 12,000 has carried investor optimism to a record extreme and upside momentum to a multi-year high. History has shown this to be consistent with a stock market top. After declining to our cited targets, US Treasury Notes and Bonds are back at the late September high. Investor optimism is extreme here too, suggesting limited upside price potential. Gold and silver remain in the throes of their respective upside corrections. Once these rallies complete, each precious metal should resume its larger decline.” (Nov-06) Elliot Wave Financial Forecast, PO Box 1618, Gainesville, GA 30503 “As indicated in our recent letters, we are increasingly reticent to make any stock purchases. For the moment, we would only add the following names on pullbacks: Angotech Pharmaceuticals below C$15, Bristol Myers below $23, Conagra Foods below $22, El Paso below $8, Incyte below $7, Millennium Pharmaceuticals below $12, Novell below $7, Smith & Nephew ADR below $42.” (3-Nov-06) Interinvest, PO Box 51462, Boston, MA 02205 Newsletter Extracts Cabot Market Letter | Timothy W. Lutts, Editor | 176 North St, POB 2049, Salem MA 01970 | www.cabot.net “The earnings season we've just come through was one of the toughest ever. And why? Because the limiting leakage of any material information kept even professional analysts in the dark ... which means there were more surprises, both good and bad. The upside surprises, we love, but those potholes we can do without. But that's history, as is the recent election, and now all we see is smooth pavement ahead, like an Arizona highway that stretches to the horizon. Dow 13,000? We're confident of it. Uptrending through the end of the year? Why not? All our market-timing indicators are giving green lights. Chief among them are the venerable Cabot Trend Lines, which have been bullish since the end of August. They may be slow, but they can keep you on the right side of major uptrends better than any other indicator. Then there are the intermediate-term Cabot Tides, which have been bullish since mid-August. They can get you into bull markets quicker, and they get you out faster too, when the bear takes charge.... but sometimes they'll whipsaw you. If you combine them with the Cabot Trend Lines, you will never go far wrong. On a daily basis, we don't watch news; we watch the Two-Second Indicator, which turned bullish one day after the Cabot Tides. And last week it proved quite instructive. At the depth of the correction, on Thursday, the number of stocks hitting new lows expanded to only 32, telling us the market was still healthy. At the same time, the number of stocks hitting new highs shrank to 114 (two days in a row), telling us the correction was likely near an end. Monday's big blast-off confirmed it. Thus, the market is very healthy now. But what makes us so bullish about the months ahead? Two big indicators. First, there were the three days back in June and July, at the market bottom, when upside volume swamped downside volume by a ratio of 9-to-l. Such an occurrence is an excellent long-term buy signal, almost always delivering 10% to 20% gains over the following next year. And finally, there's the Presidential Election Cycle Indicator detailed in our last issue, which says that since 1950, the market has gained an average of 50% from its low in the Congressional election year to its high the year later. An average advance, therefore, would take the Dow to 15,910 sometime next year! Our stocks, happily, do even better in these periods. Lacking daily records, we can't tell you our average performance over the same time period. But we can tell you that our Model Portfolio's average gain in the past four pre-election years (as 2007 will be) is a whopping 74%. We get that return by investing in great growth stocks, of course. The top characteristics we look for: Excellent innovative management, high profit margins, strong momentum over at least six months, accelerating earnings growth, high barriers to entry or market dominance, huge mass markets, and revolutionary products and services that provide a major benefit.” (9-Nov-06) The Sudbury Bull and Bear Report | Jim Miekka, Editor | 6735 14th St South, St Petersburg FL 33705 | 727-866-8682 “Starting one week from this Monday we will be entering ­a long period of very favorable seasonality, during which the market will have a high probability of rising for the rest of this year and all of next year. The third year of the presidential cycle (2007) is historically the strongest year, during which the market tends to rise about twenty percent, with very few down years. We hope that there will be enough losing days to allow us to become fully invested via our ten percent per down day procedure. If the market fails to give us those entry points by Thanksgiving, we may have to throw in the towel and complete our investment program in a lump sum. The question remains: have we experienced the 40-week market lows, or does it lie ahead of us? Some argue that the 1.8% market dip that occurred between October 27 and November 3 pinpointed the 40-week cycle lows, so we should have clear sailing from now on. Based upon the very high McClellan Summation Index, we tend to agree with this assessment. Only time will tell for sure. In the bull-bear survey released last Wednesday by Investo's Intelligence, the bulls declined from 53.7% to 52.1 %, a favorable change. Unfortunately, the bears also fell, dropping from 28.4% to 26.0%, which is unfavorable. The net effect is that this indicator remains neutral. Until next week, continue buying into the recommended mutual funds on market down days, and hold on to your S&P 500 futures contract(s).” (12-Nov-06)

[da_cheif]

US Market Timing Advisors Sentiment 22 November 2006 By Mike Burke & John Gray Overview The ongoing record highs for the Dow Jones Industrials are starting to attract the bulls like flies to molasses. This week we saw the bulls up to 58.5%, up from 56.4% and 52.1% the prior two weeks. The bears were unchanged at 22.3% over the last week. The remaining 19.2% are classified as correction, and that group declined from 21.3% a week ago. Those advisors are looking for shorter term weakness, but are longer term bullish. Overall sentiment holds last week’s bearish shift. As we have seen quoted many places, the current levels don’t signal an imminent decline, but due warn that risk is increasing in a big way. Historically, bulls are 55%-60% when indexes achieve record highs. Those extreme levels of optimism often prove negative as they reflect fully invested positions leaving little cash for additional purchases. At market tops we typically see the bears in the low 20%s. The advisors have made a large move from mid-June, when the bulls and bears were even at 35.6%. That was a very positive signal that stocks were trading at a low risk area, and buying was in order. With the shift of recent weeks the sentiment has almost duplicated the extremes shown at the end of 2005, when there were 60.4% bulls, 20.8% bears and 18.8% correction. Other market indicators remain bullish, but at overbought levels where they have held for over seven weeks. There are again some new caution flags hoisted, but we again await confirming bearish signals. The difference between the bulls and bears was 36.2%, from 34.1% and 26.1% the prior two weeks. This must also be considered as negative. Short term opportunities have been indicated after the spread between the bulls and bears contracted to 15% or lower, and then expanded. It was ‘0” mid-June and has been widening ever since. Sentiment Charts Bullish Themes “The DJIA continued to record new all-time highs the last two weeks as did many of the Worlds’ major Stock Indices. Steady worldwide growth and historically low interest rates are fuelling the worldwide rally. Even the Global 300 Index hit new high, which includes the top stocks of the world. With Markets strong worldwide and with November-January the strongest period for stocks, we should enjoy some very profitable opportunities in coming weeks. This is especially true now the rally is broadening out.” Tomorrow’s Stocks, POB 14111 Scottsdale, AZ 85267-1411 “Both the long-term NYSE Weekly Advance/Decline indicator and the short-term Daily Advance Decline line have been marching upward with the stock market. This confirmation of broad participation by the majority of stocks is one of the best arguments for continued progress. In fact, since this indicator is typically a leading indicator, we should witness a divergence/deterioration in the breadth prior to the stock market’s actual price peak. Thus far, so such divergence exists. The technical “green light” continues to shine brightly.” The Primary Trend, First Financial Centre, 700 North Water St, Milwaukee, WI 53202 Bearish Themes “The stock market, as represented by the Dow Jones Average, continues to trade in record territory. Even the most minor of market dips, such as the one that developed the first week of November, brings in a new round of buying. When the momentum in this ever more speculative market legs begins to ebb, which is not a matter of if, but when, it will likely be a real donnybrook. Part of the enthusiastic momentum in the market is due to the increased bullishness of the technologies. NASDAQ leader Microsoft moved to a four year high, and a bullish forecast by the second highest NASDAQ weight, Cisco Systems, sent that issue up sharply. There is nothing like hot-running technologies to get investors really excited. That said, the current market advance is running on four months, which puts it at the long end of intermediate advances. The sizzling technologies have put the market into an afterburn. However, the longer the market goers with a correction to let off some steam, the more significant will be the correction when it does develop. Short-term risk may be low in a momentum-driven market, but longer-term risk is increasing.” The Renaissance Report, 1540 Cambridge Ave, Flossmoor IL 60422 “With the ongoing inverted yield curve, widespread media assurances of a “soft landing” and some talking heads even suggesting the housing downturn has hit bottom….I’ll remain very skeptical. Resolution of the recently narrow 1390/1360 on the S&P will be instructive.” Ian McAvity’s Deliberations, POB 182, Adelaide St Station Toronto, ONT M5C 2J1 Canada Newsletter Extracts Late in the Cycle Universal Economics | Paul Macrae Montgomery, Editor | 753 Thimble Shoals Blvd, Suite B, Newport News VA 23606 | 757-597-9528 “Another possible sign that we are late in the current bull cycle is the explosion in Stock and Commodity Exchange IPOs and various other Exchange-related deals. On Friday the New York Mercantile Exchange went public at an IPO price of $59 a share, and rose immediately to $133 a share. At the latter price the company is priced at 20 times revenue, 33 times book and 72 times current earnings. Another fact of interest is that seats on the NYMEX were recently selling for $5 Million, the same price incidentally as a NYSE seat recently sold for. Typically high and/or rising seat prices occur during bull markets in the subject investment vehicle; and low and/or falling seat prices tend to occur during bear markets. This being the case, as long as NYSE and NYMEX seat prices keep rising, the bull markets in Stocks and in Commodities will probably be okay. However, we could be late in the "seat cycle" as well. It is virtually impossible for us to guess how high is too high for a seat on any exchange, however, we recall that for a period of time in the mid 1970s, several seats on the New York Stock Exchange sold for $50,000 or less. This amount was less than the contemporaneous price of a New York City Taxicab Medallion. We commented at the time, that if people were willing to pay more to drive a cab than to trade on the floor of the New York Stock Exchange, then we were probably at some mammoth, long term low point in the stock market. Today by contrast, the price of a NYSE seat is more than 18 times the price of a NYC taxi medallion--viz., $5,000,000 versus $275,000. We do not know what "seat to medallion" ratio will constitute the ideal Sell signal for the stock market-­but we are fairly sure that the current ratio of 18¼-to-1 is not a Buy signal.“ (20-Nov-06) Canadian Income Trust Changes Personal Finance | Neil George, Editor | 7600 Leesburg Pike, West Bldg #300, Falls Church, VA 22043 | www.pfnewsletter.com “Never expect a politician to craft smart policy, especially when it comes to the markets. Cynical? You decide. Within days of praising income trusts as a boon for Canada’s markets and economy, the Tory-led Canadian government, headed by Prime Minister Steve Harper and Finance Minister Jim Flaherty, completely and abruptly changed course. The Dept of Finance announced a proposal for a new tax on dividend distributions on many trusts. Although the initial fallout has been big, it doesn’t doom the entire invest­ment sector. Even if you’re a newcomer to this market, the initial selloff has been big, but it hasn’t erased trusts’ overall pos­itive impact on our Portfolios for the past 12 months. That shows that despite the big pullback this month, the broad market for trusts has generated a total return exceeding 10 percent. That’s on top of the nearly 120 percent total return for the past five years, more than five times the S&P 500’s return. It’s time to move past the shock, denial and anger with the Canadian politicos and assess the reality of these tax changes. Politicians may apologize and ei­ther delay or rescind the tax changes. Or they may give some exemptions for specific trusts, such as the petrol trusts in Alberta, Canada. However, we can’t hold and hope for what mayor may not come. We need to focus on the most-realistic outcome. Pensioners on both sides of the border have been relying on trusts to bailout insolvent retirement and pen­sion funds. And the trusts have helped bolster the Canadian econo­my, along with employment and investment flows that generate plenty of taxes. Still, politicians aren’t always the brightest bulbs in the room. Changes The pending regulation will impose a tax on trust distributions for dividends amounting to as much as 45.5 percent, bringing trusts in line with regular Canadian corporate tax rates. For Cana­dian investors, the net impact is nil - it comes with an overall tax cut of 0.5 per­cent. Non-taxable investors, such as pension or retirement funds, will see a tax rate of 31.5 percent, up from zero. The pending regulations will impose a tax on trust distributions for dividends amounting to as much as 45 percent, bring trusts in line with regular Canadian corporate tax rates. For Canadian investors, the net impact is nil – it comes with an overall tax cut of 0.5 percent. Non-taxable investors, such as pension or retirement funds, will see a tax rate of 31.5 percent, up from zero. In the US and other countries with tax treaties with Canada, the tax rate will go from 15 percent to 41.5 percent for taxable investment ac­counts, which is pri­marily recoverable against US income tax liabilities. And the tax rate is the same for non-tax­able accounts in the US without any recovery mechanism. The tax changes will be implement­ed for existing trusts in 2011 and im­mediately for any new trusts. However, the tax law won't be levied against all segments of the trust market. There are four major segments of this market: petrol com­panies, business trusts, real estate in­vestment trusts (REITs) and power generators and utilities. The former two segments are sub­ject to the new tax changes, while the latter will be unaffected by it. And some specific trusts that are struc­tured to pay taxes-i.e., hybrid trusts, stapled shares, preferreds and con­vertibles-won't face changes either. The Impact Investors initially dumped about every trust in the market the morning after the announcement. But after the bombshell, traders and investors have begun to deal with the changes, re­sulting in some renewed buying and price recovery. Dealing with the changes is what we've been doing with our current holdings inside the Growth and Income Portfolios. We're reviewing each trust segment and our individual trusts in the Canadian market. The key to re­member is that, even with the shake-up in this market, many of the trust continue to justify our investment. Just because we’ve been hit with the sudden tax changes doesn’t alter the fact that the structure of the trusts favors shareholders more so than most other security structures in and outside Canada and the US. By paying the bulk of their profits from their solid business to shareholders, rather than to management or stockpiling, many trusts have and continue to generate solid returns and dividends for us.” (22-Nov-06)

[da_cheif]

its been many months since the number of bulls from INvestors intell breached 50%and here we are continueing to float up into uncharted territory.......now allmost 300 handles above that supposedly insurmountable 1170 level on the sp 500.....its just a matter of time before the sp500 makes it into historic territory.......and eventually the naz will do the same.....and much sooner than most expect...alll of course imho

[da_cheif]

US Market Timing Insider Activity 1 February 2007 By Mike Burke & John Gray Current Insider Activity Broad averages all show major bullish trends intact after the choppy trading of the past week. Wednesday’s Fed meeting minutes spurred a new upside surge that carried some indexes up to new highs. The Fed appeared to confirm the ‘goldilocks’ scenario of modest economic growth with low inflation. That is the best of all possibilities and, while the chances for a rate cut have diminished, there is also almost no chance for a rate hike. While indicators have still not confirmed the index strength with similar highs of their own, they have strengthened over the past week with a general resumption of bullish signals. Previous action had flashed warnings but avoided sell signals. The recent sideways stock trading, prior to yesterday’s rally, caused a sharp new slow down in the pace of insiders selling. That followed a large increase in their sales at the mid-January index highs. Insiders action has been closely following the averages over the last year, and they have sold into any rally. It would be very favorable if the insiders do not react in a similar fashion to the up move that started on Thursday. That would show they have higher expectations for their stocks and wish to hold on for more gains. The current readings remain bearish and are still far away from even a shift to neutral status. However they are closer than a week ago. The last favorable period of insider activity was seen in August 2006, which was also the last good general buying opportunity.

[da_cheif]

US Market Timing Buy/Sell Climaxes 5 February 2007 By Mike Burke & John Gray Climaxes Total Nasdaq 100 S&P 500 S&P MidCap 400 S&P SmallCap 600 Other Buying 44 0 2 5 5 32 Selling 37 0 0 0 4 33 There were just 46 buying climaxes last week, a good sign, with the Dow Jones Industrials and Transports both moving to an all-time high. The few new buying climaxes means that stocks are holding the majority of their gains at the end of the week. The prior week saw 135 buying climaxes and, while higher levels were shown in December and January, none reached the very high numbers we associate with market tops. That shows there is not much in the way of distribution and is a still favorable sign. We normally see readings well over 200 at peak areas, and we counted over 600 buying climaxes at the early May 2006 high. There were only 37 selling climaxes and this is similar to recent readings, reflecting that few stocks are trading at new 52-week low levels. Markets are still trading in a strong seasonal period and the latest earnings also provide support. Additionally, last week’s Fed meeting provided confirmation of the economic soft landing. Our short and medium term indicators are almost universally positive. There were only 2 S&P 500 stocks with buying climaxes. This follows large numbers of 25, 24 and 30 the previous three weeks. There were no S&P 500 stocks with selling climaxes. Buying climaxes take place when a stock makes a 12-month high, but finishes the week with a loss. They are a sign of distribution and indicate that stocks are moving from strong hands to weak ones. Selling climaxes occur when a stock makes a new 12-month low, but then closes the week with a gain. They are a sign of accumulation and show that stocks are passing from weak hands to strong ones. Our work shows that sellers into buying climaxes and buyers into selling climaxes are right about 80% of the time, after four months.

[da_cheif]

from merlin......on cb forum......one of the few geniuses over there.....

http://www.chartsedg...ages/020307.gif

[da_cheif]

US Market Timing Advisors Sentiment 7 February 2007 By Mike Burke & John Gray Overview As a small surprise, the number of bulls retreated slightly to 52.2%, after moving up to 53.3% last week. That slippage occurred despite the highs achieved for almost all market averages, including the Dow Jones Transports and Industrials. That was a Dow Theory confirmation. We had anticipated the bulls to continue to rebound from their fifteen week low at 50.5%, on 12-Jan. The bears were higher for the third week, at 22.2%. That is up from 21.1% and 20.9%. These low levels are not usually good for stocks, and the bears show only a small change from 19.6%, on 22-Dec. That as a sixteen month low. There are way too few bears at the moment. Advisors looking for a correction were unchanged at 25.6%. Those looking for a correction are short term bearish, but longer term bullish. They are looking for market dips as opportunities to buy. It is favorable for the markets that advisors did not jump onto the bullish bandwagon with the new index highs. Markets climb a ‘wall of worry’ is an old Wall Street mantra, and some still committed bears show that not everyone is currently fully invested. Sentiment readings are still rated as overall negative, based on the recent high bulls and low bears. Historically, bulls are 55%-60% when indexes achieve record highs, and they reach their extremes prior to the index tops, and can remain there for weeks. The peak in advisor optimism was 8-Dec, at 59.8%. Extreme levels of bullishness ultimately prove negative as they reflect fully invested positions, leaving little cash for additional purchases. At market tops we typically see the bears in the low 20%s and about the same level calling for a correction. We have achieved both of those levels. That certainly contrasts to June 2006 June, when the bulls and bears were even at 35.6%. (That was also the week of the advisors-correction high.) The June Sentiment was a very positive signal that stocks were trading at a low risk area, and buying was in order. Data extremes most often occur before the final index tops or bottoms. The end of 2006 readings almost duplicated those negative extremes at the end of 2005, when there were also about 60% bulls and 20% bears and correction. The difference between the bulls and bears was 30.0%, down from 32.2% and 31.8% the past weeks. That spread had been contracting since it was above 38% in mid-December, and this latest data is again moving in the right direction, after increasing the prior two week. Short term opportunities have been indicated after the spread between the bulls and bears contracted to 15% or lower, and then expanded. It was ‘0” mid-June and the spread was positive, until the difference exceeded 30% in October. Sentiment Charts Bullish Themes “Both equity-only put-call ratios are on buy signals again. The weighted ratio rolled over to a buy signal over two weeks ago, but the standard ratio just chimed in yesterday. These buy signals are not emanating from a deeply oversold level (i.e. not from high on their charts) but that doesn’t really matter a lot. These buy signals will now remain in effect until the ratios roll over and begin to rise once again.” (1-Feb-07) The Option Strategist Hotline, www.optionstrategist.com “Yogi Berra once commented ‘Its tough to make predictions, especially about the future’. But here it goes. The economy is on track to thread the eye of the needle. A most amazing feat, particularly since an inverted yield curve almost always has resulted in a recession. It appears the economy is slowing just enough to dampen the pulse of inflation and keep corporate earnings on an upward trajectory. Another amazing accomplishment is the broken housing bubble is not imploding as have all other manias. Rather housing is unwinding at an acceptable pace. The levelling off of the homebuilding stocks over the last six months confirms this outlook. The stock market is just simply relieved that a recession is unlikely and the aftermath of the pierced housing bubble will be manageable. In summary, a moderation of business activity which in turn will reduce inflationary pressures is the ideal outcome that will support an improved stock and bond market.”(Feb-07) Sadoff Investment Management, 250 West Coventry Ct, # 109, Milwaukee, WI 53217 Bearish Themes “Last week I reviewed my 17-Jan sell signal based on my observation that 17 days into every new quarter there is a strong tendency for a change in trend. Those critical ‘change of trend’ days are January 17, April 17, July 17 and October 17. The thing I most want to add to the original finding is that no market miracles are expected to take place specifically on the 17th but are expected within the time vicinity of that date. We see that until proved otherwise the Dow saw its peak on January 24th when the Dow intra day high peaked at 12,623.45. Of the four quarterly turn dates the January high is the most important because it calls the trend for the year. The key example of that is the market top of January 11th 1973. Some other examples include 19-Oct-87, a crash bottom, the 14-Jan-00 high and the 22-Jul-02 low. This evidence suggests that the highs and lows alternate. In the current case the technical evidence is so overwhelming that this is a major top that I doubt if we have to be concerned now with any near term market bottoms.” (1-Feb-07) The Granville Market Letter, PO Drawer 413006, Kansas City, MO 64141 “The NASDAQ’s five wave rally from July is reversing against a persistent low percentage of bearish traders. As this high-beta index rolls over, the blue chip indexes should subdivide into their final fifth-of-a-fifth wave, which when complete, will mark a major top. US Treasury notes remain in a decline that should draw prices to the June low and eventually below”. (Feb-07) Elliot Wave Financial Forecast, POB 1618, Gainesville, GA 30503 Newsletter Extracts Option Advisor | Bernie Schaeffer, Senior Editor | 5151 Pfeiffer Rd, Suite 250, Cincinnati, OH 45242 | www.schaeffersResearch.com “Today, the Dow Jones Industrial Average plunged by 119 points, the day after it had rallied 88 points to an all-time high. Lots of ‘reasons’ were cited for this abrupt shift from fifth gear into reverse, ranging from a disturbing rise in long-term interest rates to a weak housing number to indications from fourth-quarter reports that earnings growth is slowing. While I'm not an official card-carrying member of the Joe Granville ‘What do earnings have to do with the market? Nothing!’ school, I do think most investors have rightfully learned to scoff at these ‘instant analysis,’ fundamentally based explanations for day-to-day market moves, particularly when it lurches sharply higher and then sharply lower on consecutive trading days. In this spirit, I think it would be constructive to give you a snapshot of where we at Schaeffer's Investment Research focus in attempting to understand the recent market action. First, the market, as measured by the S&P 100 Index (OEX), has closed between 660 and 670 in 21 of the past 27 trading sessions. This is an extremely tight range of about 1.0-1.5 percent from top to bottom. In fact, so narrow is this six-week range that the market managed to traverse it from top (669.99) to bottom (660.73) during the course of today's session. Such price behavior has little (if anything) to do with such matters as the State of the Union address, and much to do with: 1. Technicals - Trading ranges tend to perpetuate themselves. Declines to the lower end beget ‘hurry up and wait’ rallies back to the upper end; when the upper end is reached there is a similar rush back down to the bottom. 2. Option activity - The huge growth in derivatives activity in our hedge-fund-based world has had a major impact on the market's price behavior and most of this impact has had the effect of dampening volatility and perpetuating mean-reverting, trading-range behavior. The fact is that over the period we're discussing, there has been a heavy preponderance of put open interest in the OEX at the 660 strike and below and a heavy preponderance of call open interest at the 670 strike and above. Suffice it to say for purposes of this discussion that the net result of this option open interest profile is to create a major bid under the market on declines toward 660 and major overhead resistance on rallies toward 670. The other major day-to-day driver of the market - far removed from the musings of Ben Bernanke - is the level of the options based volatility indices. The market has simply not accepted CBOE Market Volatility Index (VlX) readings below 10. When the VlX has moved into single digits, two factors seem to come into play in earnest: 1. Buyers of put options step in to take advantage of "cheap portfolio protection" on the expectation that, if past is prologue, the VlX will not remain ‘on sale’ below 10 for very long. These stepped-up put purchases result in the accumulation of short futures and short exchange-traded fund (ETF) positions by those hedging the other side of the trade, which adds significant selling pressure to the market. 2. Potential stock buyers hang back while some incremental sellers move in, due to the expectation (which has been 100-percent correct so far) that a VlX close below 10 will precede a market pullback. We now note the close by the VlX below 10 on Wednesday, and the violent VlX rally today. This potent combination of put buying, inhibited stock purchases, and accelerated stock sales was put into motion after the single-digit VIX close, and in my opinion, accounted for a major portion of the market's weakness today. I understand I've been hyper-focused in this market commentary on two days' worth of price action, but I believe this served a much bigger purpose if it helped reinforce to you how superficial and irrelevant the usual explanations of market behavior can be, and how option activity can literally call the tune for the market during the short term. As far as the 2007 time horizon is concerned, I remain quite bullish on the prospects for the market. My favorite sectors include automotive, retailing, utilities, financial services, homebuilders and REITs. Sectors that I see as vulnerable to major downside include emerging markets, energy, medical insurers, and the major Internet names.” (25-Jan-07) The Renaissance Report | Richard L. Evans, Editor | 1540 Cambridge Ave, Flossmor IL 60422 | 708-957-4246 “The rally in the last few days in January and early February resulted in a nice move for the Transports. The Transports finally confirmed the Industrials by rising past 5,000, which is bullish at face value. The implication of a confirmation, though, which belatedly comes 9 months late, is not all that inspiring. The Dow Utilities remain bullish. It would take a move under 445 to suggest a change in trend. The major trend of the market is bullish. However, a ‘real’ secondary correction is long overdue.” (5-Feb-07)”

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US Market Timing Advisors Sentiment 21 February 2007 By Mike Burke & John Gray Overview The % of bulls fell further to 50.0%, down from 51.1% and achieving a low since 29-Sep-06, when we counted 49.5%. The fact that the advisors have not been impressed by the new highs shown by all three of the Dow Jones Averages [Industrials, Utilities and Transports] has to be seen as a positive. It shows they are not expecting the rally to continue and we contrarians take that as a good sign. Advisors are most often reluctant to avoid a rising market as their subscribers can always go elsewhere for advice. The ongoing scepticism means there is plenty of cash on the sidelines. Markets got off to a sloppy start early this year and that caused a drop in bullishness that is still shown, despite the index rebound and new highs. The bears moved up to 22.2%, advancing by the same amount as the bulls declined. Low bearish readings are not usually a good sign, except when the bulls are also falling. That combination avoids a negative scenario for now. Advisors looking for a correction were unchanged at 27.8%. This group is short term bearish, but longer term bullish. They are looking for market dips as opportunities to buy. Our short term indicators are positive but overbought. The immediate trend of the market is higher. While the recent sentiment changes have been positive the overall sentiment readings must still be viewed as having a negative bias. That is based on the December readings, with high bulls and low bears. Historically, those include bulls at 55%-60% and bears near 20%. That condition held for over two months and the latest drop in the bulls has almost ended the signals, which were early in predicting a market top. Last June, 2006, sentiment readings were very positive, with the bulls and bears exactly even at 35.6%. (That was also the week of the advisors-correction high.) That was a positive signal that stocks were trading at a low risk area, and buying was in order. The December sentiment showed risk was high. While some individual stock breakdowns have occurred, there has not been any general market weakness. The difference between the bulls and bears narrowed to 27.8%, after two weeks at 30.0%. That spread has been generally contracting since it was above 38% in mid-December. Short term opportunities have been signals after the spread between the bulls and bears contracted to 15% or lower, and then expanded. It was ?0? mid-June and the spread indicator held that positive signal until the difference exceeded 30% in October. It is currently neutral and an expansion would be increasingly negative while a further move back toward 20% would be positive. Sentiment Charts Bullish Themes ?The models for equity markets, both foreign and domestic, remain on their summer 2006 buy signals, so position accounts should remain invested. The models for equity-like debt are also positive: e.g., Junk Convertibles, Emerging Market Bonds etc. We are now trading Treasuries from the long side, but we do not expect anything but a bear market rally from this sector. The Gold models are still positive and we are still long, but the current advance lacks confirmation, and appears to be rapidly running out of gas. Our Forex models are net positive, but there are so many crosscurrents that we are standing aside. Yesterday was a new moon and tomorrow is an important Bank of Japan meeting, so various markets may get rolled. We also will have two Cycle Days and one equinox in the coming weeks. Float shrink, however, remains very bullish.? (19-Feb-07) Univeral Economics, 753 Thimble Shoals Blvd, Suite B Newport News, VA 23806 ?Company share buybacks are a continuing important source of equity demand. Last week, when announcing 2006 profits of almost $40B, a record for any US company, Exxon Mobil indicated its share repurchases had amounted to $30B over the course of the year. Large buyback programs like Exxon?s (XOM and 35 other companies have each repurchased over $2.5B over the past four quarters) are responsible for the lion?s share of the additional liquidity and resulting upward pressure on stock valuations.? (5-Feb-07) Thomas McManus, Bank of America Equity Research, 9 West 57th St, NY, NY 10019 Bearish Themes ?Our technical indicators remain negative with the market at overbought levels. Some indicators are improving, but the odds favor a frustrating environment. These are times it takes patience to wait for the right moment. Sentiment indicators are bearish (too many bulls) and seasonality, meanwhile, remains positive. Outlook: The financial and economic environments spell bull market. Bull markets, however, do not go up in a straight line. This is one of those times when stocks pause, regroup, and then move higher again.? (12-Feb-07) The Peter Dag Portfolio Report, 65 Lakefront Dr., Akron, OH 44319 ?Early warning indicators of weaker stock prices include Joe Granville?s Net Field Indicator. This indicator is the net difference of On-Balance-Volume trends among the Dow Jones 30 Industrial stocks. It has just broken a ?shelf? of support that has held since last November 13th.? (12-Feb-07) Crawford Perspectives, 6890 East Sunrise Dr, #120-70 Tucson , AZ 85750-0840 Newsletter Extracts What is Your Money Worth? Over My Shoulder | Al Thomas, Editor | www.mutualfundmagic.com ?Years ago Senator Everett Dirkson, the great oratorical Senator from Illinois said, "A million here and a million there and before long you are talking about real money". Today he would be a cheapskate. Now we talk in billions and trillions. The mergers and acquisitions (M&A) market seems to deal in nothing but 9-figure buyouts. The 6-figure deals hardly get a mention. Even the 9-figure transactions are small when you take into consideration what countries like China, India, Britain, Germany, Japan and others are doing. Our trade deficit every month expresses the huge amounts that are taking place. The trade deficit shows the amount we owe them. That deficit must be met and it is. Much of it by printing money of thin air. That is what the Federal Reserve does. Each time they create more it dilutes the cash you have and that is where the major cause of inflation comes from. Of course, the Fed will never admit they are the prime cause of inflation. For a definitive study of the how, when and where of the Federal Reserve the book, Creature from Jekyll Island lays out the gory details. It reads like a detective novel and is shockingly true. Every world central bank does exactly the same thing. It is a catastrophic collusion. The results of their efforts can be seen in the exchange rates of the dollar to the currency of their country. For those who trade in the daily multibillions they pay close attention to the spreads between all countries. This is a 24/7 effort. Mistakes can be horrendous. A few years back one of the world's largest banks, Bering & Co, was bankrupted by just one of their traders. Few people of the general public realize their money whether it is dollars, yens, pounds, francs, deutschmarks or whatever has no backing at all. It is merely a piece of paper the central government has designated as legal tender. Years ago paper dollars could be redeemed for so many ounces of gold or silver. Not any more. There is no government gold standard. It has been abdicated. Yet gold remains the standard of wealth. Dollars may be redeemed for gold. It is up to the individual to do it. Many investors realize gold is the one investment that cannot be diluted by their government. If a country had to pay for its wars in gold there would be very few wars. Only with the ability to print false wealth can a war be financed. Politicians could scream all they chose, but without money nothing happens. Today's wars are being fought more and more on the field of economics. See who can out produce and/or out print their rivals. Guns remain in the background because so much is invested in the land of their enemy they dare not destroy him without hurting themselves. Over the next 20 years it will be interesting to see what happens to the value of our dollars.? (18-Feb-07) Still Overvalued and Due for a Fall The Klein-Wolman Investment Letter | Roger Klein, Editor | 1Nami Lane, Mercerville, NJ 08619 | 609-588-9168 ?The housing recession will lead to a slowing, if not an actual decline, in housing related jobs. Housing related employment has been a major component in the growth of jobs during the current economic expansion. But builders are now laying-off workers as houses are completed. Builders are walking away from options to purchase land indicating that they do not expect the weakness in the demand for new homes to end soon. Their customers too are walking away from signed contracts for new homes. Workers in related industries such as mortgage banking are also losing their jobs. In real time it is difficult to recognize a market top. In retrospect it is obvious. The peak in house prices and residential investment expenditures is behind us. At the same time, commercial real estate is replacing housing as the investment of hope. Seasoned professional real estate investors, unlike the rookies who buy homes, are supposed to do the math and calculate expected returns. They are not supposed to get carried away in the excitement of a bidding war. Yet this market too is reaching an irrational extreme. There are no cheap assets. Commercial property valuations have been hitting record highs. The bidding war between Blackstone and Vornado for Equity Office Properties may be a sign of a speculative peak. Blackstone won the prize, Equity Office Properties, but they had to pay $3 billion more than their original bid. The final price was $39 billion. Vornado Equity Office Properties are real estate investment trusts, REITs. REITs have been stock market super stars over the past several years. Like the Energizer Bunny they have not stopped going. Traditionally this asset class has provided a conservative and attractive dividend yield, but not superior capital gains opportunities. Commercial real estate, like residential real estate, has benefited from plentiful and cheap credit. So it too is vulnerable to credit tightening. Over the past several days REITs, have suffered through a little correction. Is this a market top? Capitalization rates, the rental income divided by the price of the property, have fallen to new lows. Capitalization rates of 5% or less are now common and when the expenditures necessary to maintain the property are included the capitalization rate falls to 4.3%. That's below the yield on a ten-year Treasury note. The real estate market, residential and commercial, has been running on emotion. It has joined the army of other overvalued markets such as domestic equities. The danger for investors is twofold: (1) the housing recession spreads to the economy or (2) it doesn't and the economy reaccelerates resulting in inflation pressures. Neither outcome is favorable for stocks. The best case outcome is steady economic growth with inflation pressures subsiding. Investors should be prepared for the worst case and hope for the best case. We will need to monitor the housing sector and the related mortgage market for evidence that the housing recession is continuing. It will show up in the inventory of unsold homes and in residential construction expenditures. It will also be reflected in the stock prices of home builders and mortgage lenders. The stocks of homebuilders and sub-prime lenders have fallen sharply. We will be watching for another down leg.? (15-Feb-07)

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