Market Clues

After a bruising correction on Tuesday, the stock market made a big stand on Wednesday. But, that didn't keep option speculators from betting on further downside as they bought a tremendous amount of puts. This tends to dampen rallies and lead to further weakness, but the silver lining is that those puts will have the opposite effect as we move closer to options expiration on the third Friday of March.

Here's how the market performed on Wednesday:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+0.43%	+52.39
DIAMONDS TRUST SER 1 (DIA)	+0.86%	+105.48
Ultra Dow30 ProShares (DDM)	+0.40%	+49.17
UltraShort Dow30 ProShares (DXD)	-1.17%	-143.10
S&P 500 (index)	+0.55%	+67.49
S& P DEP RECEIPTS (SPY)	+1.17%	+142.95
Ultra S&P500 ProShares (SSO)	+2.01%	+245.78
UltraShort S&P500 ProShares (SDS)	-1.81%	-221.20
Russell 2K (index)	+0.01%	+1.69
ISHARE RUS 2000 INDX (IWM)	+1.14%	+139.50
Ultra Russell 2000 ProShares (UWM)	+1.28%	+156.80
UltraShort Russell 2000 ProShares (TWM)	-1.41%	-172.60
NASDAQ-100 (index)	+0.32%	+39.09
NASDAQ 100 TR SER I (QQQQ)	+0.32%	+39.60
Ultra QQQ ProShares (QLD)	+2.02%	+246.18
UltraShort QQQ ProShares (QID)	-1.61%	-196.61
S&P MidCap 400 (index)	+0.09%	+10.50
ISHARE SP MC 400 INX (IJH)	+0.81%	+98.35
Ultra MC400 ProShares (MVV)	+1.43%	+174.10
UltraShort MC400 ProShares (MZZ)	-1.17%	-143.48
Amex Gold (index)	+1.40%	+170.78
MKT VECT GOLD MNRS (GDX)	+2.33%	+285.12
Semiconductor Sector (index)	+0.11%	+13.95
Ultra Semiconductors ProShares (USD)	+0.11%	+13.77
UltraShort Semiconductors ProShares (SSG)	-1.04%	-127.31

Despite the bounce, the "China Syndome" still has the potential to drag stocks down near term. But, that is likely to just give investors additional buying opportunities in a market which has not given many opportunities in the last nine months.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 9:49 PM

After rampant speculation in China's stock market, the Chinese government basically said, "Enough is enough!" And, the market crumbled.

This caused the Chinese market to lose 10% and the rest of the world's stock markets to tremble, with the NYSE Composite losing almost 3½% for the day. With the NYSE Composite off 150 points intraday, the connection between the NYSE and the Chicago stock index futures market was disconnected (a program trading collar was put on the market), which caused panic and a rush of selling as investors all tried to squeeze through a narrow door before it was shut on them. After the collar was imposed, the NYSE Composite fell another 178 points, for a total of over 327 points lost for the day. This has happened before, but the exchange persists in this exercise in the "self-fulfilling" prophecy every time. Traders have learned their lesson well: if the collar is coming on, sell now, don't wait.

In any case, the cycle low we were projecting for Tuesday's session came in right on schedule, albeit enhanced greatly by meddlesome officials in China and New York. But, we won't complain too much since every large drop carries within it the seeds of its own redemption, at least historically it has.

Since today's selloff came right on the ideal cycle low, it has great implications for the future course of this market.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 9:50 PM

CNBC-TV has been warning of a correction or bear market. Now, that's a great contrary sentiment indicator if there ever were one!

Of course, they may be right. But, when the crowd gets cautious, it usually pays to buy dips. And, that's probably the best way to approach this market.

Monday was another corrective session, but did little price damage to the market:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-0.12%	-15.22
DIAMONDS TRUST SER 1 (DIA)	-0.03%	-4.00
Ultra Dow30 ProShares (DDM)	-0.38%	-47.55
UltraShort Dow30 ProShares (DXD)	+0.53%	+67.63
S&P 500 (index)	-0.13%	-15.86
S& P DEP RECEIPTS (SPY)	-0.08%	-10.45
Ultra S&P500 ProShares (SSO)	-0.26%	-32.34
UltraShort S&P500 ProShares (SDS)	+0.34%	+42.78
Russell 2K (index)	-0.40%	-50.94
ISHARE RUS 2000 INDX (IWM)	-0.23%	-29.32
Ultra Russell 2000 ProShares (UWM)	-0.78%	-98.13
UltraShort Russell 2000 ProShares (TWM)	+1.01%	+127.47
NASDAQ-100 (index)	-0.50%	-63.66
NASDAQ 100 TR SER I (QQQQ)	-0.49%	-61.48
Ultra QQQ ProShares (QLD)	-0.91%	-114.98
UltraShort QQQ ProShares (QID)	+0.80%	+100.68
S&P MidCap 400 (index)	-0.41%	-51.90
ISHARE SP MC 400 INX (IJH)	-0.22%	-27.73
Ultra MC400 ProShares (MVV)	-0.44%	-55.84
UltraShort MC400 ProShares (MZZ)	+0.79%	+99.80
Amex Gold (index)	+1.23%	+155.92
MKT VECT GOLD MNRS (GDX)	+1.24%	+157.22
Semiconductor Sector (index)	-0.10%	-13.20
Ultra Semiconductors ProShares (USD)	-0.51%	-64.38
UltraShort Semiconductors ProShares (SSG)	+0.41%	+51.35

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:31 PM

Although still bearish, John Mauldin, in his latest weekly email, Thoughts From the Front Line, now concedes the chances of a recession in 2007 are only 50-50. That's quite an admission from this permabear, since he was firmly in the recession camp formerly.

Still, he hasn't given up hope yet. And, we get the impression that quite a few investors are in John's camp, growing poorer as they short the rallies and are rudely forced to cover their bad bets when the market scores successive new highs. Even if they aren't shorting, their investments are earning only a measly one percentage point after inflation and taxes are factored out.

The recession camp seems to be pinning their hopes on the housing sector. But, despite a huge drop in home sales and even a decline in prices, that doesn't have the power to pull the economy down into recession. Admittedly, it has chopped growth about in half, but that has its bright side. The Fed has gone into an extended intermission in its tightening phase, waiting to see whether the slowed growth rate will bring inflation under control from its breakneck pace of 2006. With full employment and rising commodity prices, that is a tough call and the odds are probably 50-50 as to whether the Fed's next move is a hike or a cut. But, one thing that's reasonably sure is that their stand-still policy is going to be with us for the foreseeable future. And, that's good for the economy and for the stock market.

The other hope the recession camp seems to hold out has to do with the inverted yield curve. It's true that inverted yield curves have always been the best predictor of a recession ahead. We have had an inverted yield curve now for almost 7 months. Historically, an inverted yield curve for three months meant a recession would hit the economy about 9 months later. But, things are different this time. This inverted yield curve is not predicting a recession, but a boom instead. We explain this unexpected conclusion in the Notes page linked below.

As for Friday's market, it was a dull affair as the bears did their best to push prices lower. But, the results of their efforts were mediocre at best. However, as we expected, we did not get an all-time new high in the leading sectors. That's the first time in over a week that we haven't. But the dip was ever so slight and amounted to less than one Dow point. Even the strongest athlete has to rest from time to time:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-0.18%	-22.62
DIAMONDS TRUST SER 1 (DIA)	-0.30%	-37.97
Ultra Dow30 ProShares (DDM)	-0.47%	-59.27
UltraShort Dow30 ProShares (DXD)	+0.54%	+68.12
S&P 500 (index)	-0.36%	-45.15
S& P DEP RECEIPTS (SPY)	-0.39%	-49.51
Ultra S&P500 ProShares (SSO)	-0.54%	-68.65
UltraShort S&P500 ProShares (SDS)	+0.70%	+88.59
Russell 2K (index)	-0.32%	-40.63
ISHARE RUS 2000 INDX (IWM)	-0.53%	-67.66
Ultra Russell 2000 ProShares (UWM)	-0.64%	-81.40
UltraShort Russell 2000 ProShares (TWM)	+0.51%	+64.17
NASDAQ-100 (index)	-0.34%	-43.31
NASDAQ 100 TR SER I (QQQQ)	-0.35%	-44.63
Ultra QQQ ProShares (QLD)	-0.90%	-114.15
UltraShort QQQ ProShares (QID)	+1.13%	+142.79
S&P MidCap 400 (index)	-0.01%	-0.73
ISHARE SP MC 400 INX (IJH)	-0.15%	-18.98
Ultra MC400 ProShares (MVV)	-0.01%	-1.40
UltraShort MC400 ProShares (MZZ)	+0.26%	+32.64
Amex Gold (index)	+0.13%	+16.73
MKT VECT GOLD MNRS (GDX)	+0.07%	+9.09
Semiconductor Sector (index)	+0.69%	+87.49
Ultra Semiconductors ProShares (USD)	+0.83%	+105.04
UltraShort Semiconductors ProShares (SSG)	-0.57%	-72.78

The Semiconductor shares continued their excellent rally, though, gaining well over 100 Dow points for the day. This "lead dog" for the whole market is pointing higher.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 7:59 PM

The bears are really getting desperate for the market to go down. Someday, it actually will. It might even go down Friday -- after all, we've seen 6 straight days where the MidCap and Russell 2000 indices hit successive, all-time highs, so it must be time for a rest. At least as a prelude to the next run to new highs. In any case, the bears got some satisfaction as the bluer chips lost ground:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-0.54%	-68.31
DIAMONDS TRUST SER 1 (DIA)	-0.46%	-58.01
Ultra Dow30 ProShares (DDM)	-0.69%	-87.29
UltraShort Dow30 ProShares (DXD)	+0.67%	+85.03
S&P 500 (index)	-0.09%	-10.92
S& P DEP RECEIPTS (SPY)	-0.08%	-9.60
Ultra S&P500 ProShares (SSO)	-0.18%	-22.50
UltraShort S&P500 ProShares (SDS)	+0.16%	+20.59
Russell 2K (index)	+0.30%	+37.58
ISHARE RUS 2000 INDX (IWM)	+0.35%	+45.00
Ultra Russell 2000 ProShares (UWM)	+0.57%	+72.42
UltraShort Russell 2000 ProShares (TWM)	-0.69%	-88.10
NASDAQ-100 (index)	+0.31%	+39.73
NASDAQ 100 TR SER I (QQQQ)	+0.51%	+64.83
Ultra QQQ ProShares (QLD)	+1.06%	+134.82
UltraShort QQQ ProShares (QID)	-0.92%	-116.84
S&P MidCap 400 (index)	+0.11%	+14.11
ISHARE SP MC 400 INX (IJH)	+0.23%	+29.42
Ultra MC400 ProShares (MVV)	+0.20%	+25.36
UltraShort MC400 ProShares (MZZ)	-0.38%	-49.03
Amex Gold (index)	+0.19%	+24.39
MKT VECT GOLD MNRS (GDX)	+0.55%	+70.48
Semiconductor Sector (index)	+2.54%	+323.90
Ultra Semiconductors ProShares (USD)	+4.61%	+587.47
UltraShort Semiconductors ProShares (SSG)	-4.31%	-548.82

Notably, the leading tech indices scored nice gains with the Ultra Semiconductors up the equivalent of 588 Dow points. The permabears can only groan and bear it.

Speaking of which, we received an email from an outspoken organization of professional permabears today which criticized Cliff Droke, the author of an article entitled, The Cult of the Bear, published at http://www.safehaven.com/article-6923.htm on 15 February. The permabears complained that this is just another example of the kind of article which is published at "The Top". You can decide for yourself, but the article makes an interesting read in any case.

The permabears don't realize it, but there's a key behavior in investors which appears just after "The Top" which identifies it like a fingerprint. And, that behavior has yet to appear in this market. It's much better to recognize the top in retrospect rather than calling it ahead of time -- untold dozens of times, in the case of the permabears.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:10 PM

Wednesday's minor dip was a reminder to investors that we are in an economy which has been suffering from an inflation rate which was too high and still needs to come down to satisfy the Fed. January's Consumer Price Index had some anomalous rises (such was Texas' more than 300% hike in cigarette taxes) which are one-time events, so while the higher-than-expected news unnerved the market, it actually did not prevent the strong portions from scoring fresh all-time highs by the end of the day:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-0.38%	-48.23
DIAMONDS TRUST SER 1 (DIA)	-0.23%	-29.05
Ultra Dow30 ProShares (DDM)	-0.55%	-70.89
UltraShort Dow30 ProShares (DXD)	+0.40%	+50.95
S&P 500 (index)	-0.14%	-17.96
S& P DEP RECEIPTS (SPY)	-0.04%	-5.25
Ultra S&P500 ProShares (SSO)	-0.19%	-23.95
UltraShort S&P500 ProShares (SDS)	+0.22%	+27.61
Russell 2K (index)	+0.15%	+19.05
ISHARE RUS 2000 INDX (IWM)	+0.24%	+31.22
Ultra Russell 2000 ProShares (UWM)	+0.23%	+29.81
UltraShort Russell 2000 ProShares (TWM)	-0.17%	-22.07
NASDAQ-100 (index)	+0.37%	+46.79
NASDAQ 100 TR SER I (QQQQ)	+1.14%	+145.95
Ultra QQQ ProShares (QLD)	+0.65%	+83.49
UltraShort QQQ ProShares (QID)	-0.77%	-98.67
S&P MidCap 400 (index)	+0.25%	+31.95
ISHARE SP MC 400 INX (IJH)	+0.34%	+42.96
Ultra MC400 ProShares (MVV)	+0.59%	+75.38
UltraShort MC400 ProShares (MZZ)	-0.67%	-86.13
Amex Gold (index)	+3.94%	+503.54
MKT VECT GOLD MNRS (GDX)	+3.72%	+475.35
Semiconductor Sector (index)	-0.27%	-35.04
Ultra Semiconductors ProShares (USD)	-1.34%	-171.92
UltraShort Semiconductors ProShares (SSG)	+1.29%	+165.49

Tonight, for subscribers, we discuss the coming turning point in the stock market and the significance of it and related markets to an analogous period in market history.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:44 PM

They say bull markets climb a Wall of Worry. So far, this uptrend has indeed climbed a Wall of Worry. Every month, option speculators bought puts. And, every month, the market refused to go down very much and ended up making those puts worthless by expiration. This last Friday, we saw new all-time highs.

Now, typically, puts are bought after expiration to replace those which expired worthless. This put-buying causes market makers to sell puts short and hedge this position by selling futures short. That selling pressure tends to depress the market until the speculators are loaded up with puts -- and possibly seeing minor gains in their value temporarily. But, as the next monthly expiration approaches, time value in those puts has wasted away and option sellers buy back those puts -- and also buy back their short futures positions, stimulating a rally in the stock market.

It's different this time. On Tuesday, the degree of put buying was small in comparison to call-buying. As you might expect, call-buying causes the market to rise temporarily as the obverse of the put-buying mechanism works on the market. And, indeed, that's exactly what happened on Tuesday. The market rallied:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+0.15%	+19.07
DIAMONDS TRUST SER 1 (DIA)	+0.07%	+9.01
Ultra Dow30 ProShares (DDM)	+0.13%	+16.24
UltraShort Dow30 ProShares (DXD)	+0.11%	+13.89
S&P 500 (index)	+0.28%	+36.31
S& P DEP RECEIPTS (SPY)	+0.21%	+27.16
Ultra S&P500 ProShares (SSO)	+0.48%	+60.78
UltraShort S&P500 ProShares (SDS)	-0.34%	-43.50
Russell 2K (index)	+0.94%	+119.54
ISHARE RUS 2000 INDX (IWM)	+0.90%	+114.83
Ultra Russell 2000 ProShares (UWM)	+2.16%	+275.35
UltraShort Russell 2000 ProShares (TWM)	-1.82%	-232.10
NASDAQ-100 (index)	+0.67%	+85.65
NASDAQ 100 TR SER I (QQQQ)	-0.07%	-8.57
Ultra QQQ ProShares (QLD)	+1.16%	+147.94
UltraShort QQQ ProShares (QID)	-0.94%	-120.12
S&P MidCap 400 (index)	+0.68%	+86.24
ISHARE SP MC 400 INX (IJH)	+0.69%	+87.88
Ultra MC400 ProShares (MVV)	+1.32%	+168.35
UltraShort MC400 ProShares (MZZ)	-1.15%	-147.04
Amex Gold (index)	-1.74%	-222.57
MKT VECT GOLD MNRS (GDX)	-2.10%	-268.20
Semiconductor Sector (index)	+0.27%	+34.81
Ultra Semiconductors ProShares (USD)	+0.01%	+1.73
UltraShort Semiconductors ProShares (SSG)	-0.02%	-1.92

And, calls predominated in many popular ETFs:

IWM March 2007 options $-weighted put/call: 0.59 (call$: $5254286; put$: $3074228).

SPX March 2007 options $-weighted put/call: 0.60 (call$: $90472850; put$: $54661931).

SPY March 2007 options $-weighted put/call: 0.60 (call$: $2915891; put$: $1746099).

DIA March 2007 options $-weighted put/call: 0.44 (call$: $2030240; put$: $889087).

Now, one days' worth of call-buying isn't the death knell for the uptrend. However, it does diminish that Wall of Worry which has been pushing stocks higher. And, a few more weeks of this could cause that wall to come tumbling down.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:50 PM

Note that US markets are closed Monday for Washington's Birthday. Also note that most Americans mistakenly think it's called President's Day, but no such holiday legally exists!

Friday's market saw stocks glide to a landing as option sellers pocketed most of the premium they had sold to speculators over the last month. This process of reversion to the mean works in favor of option sellers and to the detriment of option buyers almost every month. MidCaps and SmallCaps (S&P 400 and Russell 2000 indices) regained all of the momentum they had lost earlier in the week and closed at fresh, all-time highs.

For the year to date, this steady outperformance on the upside has well rewarded investors as our table of index and ETF returns demonstrates:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+2.44%	+304.42
DIAMONDS TRUST SER 1 (DIA)	+2.54%	+316.56
Ultra Dow30 ProShares (DDM)	+4.18%	+521.05
UltraShort Dow30 ProShares (DXD)	-3.50%	-436.16
S&P 500 (index)	+2.63%	+327.24
S& P DEP RECEIPTS (SPY)	+2.90%	+361.70
Ultra S&P500 ProShares (SSO)	+4.67%	+582.00
UltraShort S&P500 ProShares (SDS)	-4.11%	-512.24
Russell 2K (index)	+3.97%	+495.30
ISHARE RUS 2000 INDX (IWM)	+4.02%	+501.53
Ultra Russell 2000 ProShares (UWM)	+6.50%	+809.57
UltraShort Russell 2000 ProShares (TWM)	-7.98%	-994.72
NASDAQ-100 (index)	+3.71%	+461.87
NASDAQ 100 TR SER I (QQQQ)	+3.59%	+447.59
Ultra QQQ ProShares (QLD)	+6.49%	+808.94
UltraShort QQQ ProShares (QID)	-6.30%	-785.10
S&P MidCap 400 (index)	+6.75%	+841.65
ISHARE SP MC 400 INX (IJH)	+6.92%	+862.80
Ultra MC400 ProShares (MVV)	+13.26%	+1652.95
UltraShort MC400 ProShares (MZZ)	-11.06%	-1378.37
Amex Gold (index)	+2.39%	+298.11
MKT VECT GOLD MNRS (GDX)	+2.58%	+321.65

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:27 PM

The stock market, after a rousing rally which was concentrated in the blue chips mostly, was content to drift sideways on Thursday. This is typical of an options expiration week. Volatility tends to take place several days before expiration, then settle down.

The market is short term overbought and many optionable indices are trading above their ideal resting place for expiration, so there is likely to be some downward pressure Friday and that pressure could spill over into early next week.

The action Thursday was uninspiring, so we are going to present the year-to-date table of returns today:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+2.42%	+301.86
DIAMONDS TRUST SER 1 (DIA)	+2.70%	+336.60
Ultra Dow30 ProShares (DDM)	+4.23%	+527.06
UltraShort Dow30 ProShares (DXD)	-3.27%	-407.81
S&P 500 (index)	+2.72%	+338.40
S& P DEP RECEIPTS (SPY)	+2.95%	+367.86
Ultra S&P500 ProShares (SSO)	+4.69%	+584.89
UltraShort S&P500 ProShares (SDS)	-4.23%	-527.25
Russell 2K (index)	+3.61%	+449.52
ISHARE RUS 2000 INDX (IWM)	+3.51%	+437.64
Ultra Russell 2000 ProShares (UWM)	+6.04%	+753.37
UltraShort Russell 2000 ProShares (TWM)	-7.41%	-924.05
NASDAQ-100 (index)	+3.82%	+475.49
NASDAQ 100 TR SER I (QQQQ)	+3.94%	+490.90
Ultra QQQ ProShares (QLD)	+6.85%	+853.53
UltraShort QQQ ProShares (QID)	-6.43%	-801.12
S&P MidCap 400 (index)	+6.63%	+825.85
ISHARE SP MC 400 INX (IJH)	+6.90%	+859.69
Ultra MC400 ProShares (MVV)	+12.88%	+1605.22
UltraShort MC400 ProShares (MZZ)	-11.17%	-1392.33
Amex Gold (index)	+3.24%	+403.42
MKT VECT GOLD MNRS (GDX)	+3.23%	+402.84

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:12 PM

Fed Chairman Bernanke spoke before Congress Wednesday and his remarks were music to the markets' ears. He didn't say anything to ruffle any feathers on Wall Street and, in fact, his remarks were simply a rehash of what the Fed has been saying for some time now.

Although there really should not have been such a joyous celebration about Bernanke's testimony, the markets celebrated anyway:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+0.69%	+87.01
DIAMONDS TRUST SER 1 (DIA)	+0.67%	+84.95
Ultra Dow30 ProShares (DDM)	+1.45%	+183.34
UltraShort Dow30 ProShares (DXD)	-1.41%	-177.89
S&P 500 (index)	+0.76%	+96.73
S& P DEP RECEIPTS (SPY)	+0.66%	+83.11
Ultra S&P500 ProShares (SSO)	+1.52%	+191.96
UltraShort S&P500 ProShares (SDS)	-1.13%	-143.50
Russell 2K (index)	+0.17%	+21.19
ISHARE RUS 2000 INDX (IWM)	+0.09%	+10.98
Ultra Russell 2000 ProShares (UWM)	+0.24%	+30.47
UltraShort Russell 2000 ProShares (TWM)	-0.09%	-11.56
NASDAQ-100 (index)	+1.53%	+193.61
NASDAQ 100 TR SER I (QQQQ)	+1.69%	+213.51
Ultra QQQ ProShares (QLD)	+2.99%	+378.78
UltraShort QQQ ProShares (QID)	-2.98%	-377.26
S&P MidCap 400 (index)	+0.65%	+82.78
ISHARE SP MC 400 INX (IJH)	+0.55%	+69.97
Ultra MC400 ProShares (MVV)	+1.24%	+156.84
UltraShort MC400 ProShares (MZZ)	-0.96%	-120.95
Amex Gold (index)	+1.20%	+151.97
MKT VECT GOLD MNRS (GDX)	+1.64%	+207.61

The good news is that our lead dog index, the NASDAQ-100, rallied sharply higher as it recovered from the bottom of its recent trading range to close at the top of it. But, the bad news is that the broad market underperformed the blue chips. Where the broad market goes, the blue chips are sure to follow at some point in the future.

The bond market rose as they had apparently been worried that the Fed would need to hike rates. This is surprising because all of the data has been pointing toward a Goldilocks situation in the economy: inflation falling to the Fed's target of approximately 2% while the economy grows near trend, 2¾-3%.

In Bernanke's question and answer session following his prepared remarks he responded to a question about the implications of the 8-month inversion of the yield curve (a situation which in the past had led to recession down the road) by saying that this condition could last a considerable period of time and did not necessarily pose a threat to the economy. It appears that structural changes in the economy have mitigated against an adverse outcome of this condition. Thus, there appears to be no reason to think that the inverted yield curve has any predictive value of future recession at the present time.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:17 PM

Fed Chairman Ben Bernanke speaks to Congress over the next two days, putting the bond market on pins and needles as they fear he will say something that will negatively influence bonds. However, they probably should have nothing to fear. That's because the Philadelphia Fed released their quarterly Survey of Professional Forecasters, a publication which polls distinguished professionals about their outlook for inflation, on Tuesday. The survey has some very good news for inflation, the economy and the unemployment rate.

For the first time, professionals were asked to forecast the rate of PCE inflation. That's the measure of inflation the Fed uses to set policy. PCE stands for "Personal Consumption Expenditures" and is a more accurate reflection of costs to the average person. The Fed would like for the core PCE (that's the headline PCE with volatile food and energy expenditures removed) to fall to the 2.0% area -- it has been running closer to 3% in the past year and has been the impetus for the Fed's long series of rate hikes.

The good news from the survey is that forecasters expect the core PCE inflation rate to drop to 2.0% this year. What's even better is that they expect that headline PCE (i.e., including food and energy components) will average 2.0% over the next ten years. According to this forecast, the inflation genie is well-contained and the Fed has done its job well. If that's part of the message Bernanke will deliver to Congress, we have a hard time imagining they and the bond traders would dislike that news.

In stocks, the market had a nice rally as we expected it would:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+0.81%	+102.30
DIAMONDS TRUST SER 1 (DIA)	+0.83%	+103.95
Ultra Dow30 ProShares (DDM)	+1.63%	+204.35
UltraShort Dow30 ProShares (DXD)	-1.58%	-197.85
S&P 500 (index)	+0.76%	+95.37
S& P DEP RECEIPTS (SPY)	+0.84%	+105.88
Ultra S&P500 ProShares (SSO)	+1.52%	+190.43
UltraShort S&P500 ProShares (SDS)	-1.48%	-186.24
Russell 2K (index)	+0.82%	+102.35
ISHARE RUS 2000 INDX (IWM)	+0.82%	+103.53
Ultra Russell 2000 ProShares (UWM)	+2.19%	+274.56
UltraShort Russell 2000 ProShares (TWM)	-1.63%	-204.95
NASDAQ-100 (index)	+0.52%	+65.01
NASDAQ 100 TR SER I (QQQQ)	+0.37%	+45.96
Ultra QQQ ProShares (QLD)	+1.09%	+137.29
UltraShort QQQ ProShares (QID)	-0.93%	-117.31
S&P MidCap 400 (index)	+0.93%	+116.41
ISHARE SP MC 400 INX (IJH)	+0.85%	+107.24
Ultra MC400 ProShares (MVV)	+1.98%	+248.26
UltraShort MC400 ProShares (MZZ)	-1.94%	-243.99
Amex Gold (index)	+1.66%	+208.96
MKT VECT GOLD MNRS (GDX)	+1.57%	+196.48

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 10:51 PM

The market continued its correction Monday and ended up turning the OEX crowd overly-bearish (our Dollar-Weighted OEX Call-Put Ratio closed at the significant 2:1 level, a contrary indicator). The results of the day's trading follow:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-0.22%	-28.28
DIAMONDS TRUST SER 1 (DIA)	-0.23%	-28.98
Ultra Dow30 ProShares (DDM)	-0.61%	-76.34
UltraShort Dow30 ProShares (DXD)	+1.06%	+133.60
S&P 500 (index)	-0.33%	-41.03
S& P DEP RECEIPTS (SPY)	-0.34%	-42.83
Ultra S&P500 ProShares (SSO)	-0.84%	-105.30
UltraShort S&P500 ProShares (SDS)	+0.42%	+52.93
Russell 2K (index)	-0.09%	-11.70
ISHARE RUS 2000 INDX (IWM)	-0.25%	-31.37
Ultra Russell 2000 ProShares (UWM)	-1.08%	-136.10
UltraShort Russell 2000 ProShares (TWM)	+0.72%	+91.11
NASDAQ-100 (index)	-0.40%	-50.10
NASDAQ 100 TR SER I (QQQQ)	-0.32%	-40.18
Ultra QQQ ProShares (QLD)	-0.80%	-100.10
UltraShort QQQ ProShares (QID)	+0.60%	+75.70
S&P MidCap 400 (index)	-0.34%	-42.88
ISHARE SP MC 400 INX (IJH)	-0.41%	-52.03
Ultra MC400 ProShares (MVV)	-1.11%	-139.77
UltraShort MC400 ProShares (MZZ)	+1.27%	+159.19
Amex Gold (index)	-1.08%	-135.42
MKT VECT GOLD MNRS (GDX)	-1.25%	-156.83

With the current sentiment backdrop overly-bearish, as well as Max-Pain -- a registered trademark of BCA Software -- now above the market, the market is likely to resume its trend soon. Cycles point toward a second low, so perhaps Monday's low was the left side of a double-bottom low.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:34 PM

The stock market dipped on Friday as short term traders sold to pocket profits on the recent rally. The day saw the blue chip indices weaker than the broad market as they gave far more points gained on the prior rally. Ultrashort ETFs finally put in a gain due to the selloff:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-0.45%	-56.80
DIAMONDS TRUST SER 1 (DIA)	-0.47%	-58.96
Ultra Dow30 ProShares (DDM)	-0.74%	-94.02
UltraShort Dow30 ProShares (DXD)	+0.41%	+51.66
S&P 500 (index)	-0.71%	-89.44
S& P DEP RECEIPTS (SPY)	-0.74%	-94.12
Ultra S&P500 ProShares (SSO)	-1.18%	-149.72
UltraShort S&P500 ProShares (SDS)	+1.51%	+191.14
Russell 2K (index)	-1.21%	-153.41
ISHARE RUS 2000 INDX (IWM)	-1.02%	-129.42
Ultra Russell 2000 ProShares (UWM)	-2.05%	-259.45
UltraShort Russell 2000 ProShares (TWM)	+1.95%	+246.88
NASDAQ-100 (index)	-1.38%	-174.57
NASDAQ 100 TR SER I (QQQQ)	-1.37%	-173.43
Ultra QQQ ProShares (QLD)	-3.12%	-394.10
UltraShort QQQ ProShares (QID)	+3.20%	+404.66
S&P MidCap 400 (index)	-0.71%	-89.69
ISHARE SP MC 400 INX (IJH)	-0.39%	-49.09
Ultra MC400 ProShares (MVV)	-0.88%	-111.62
UltraShort MC400 ProShares (MZZ)	+0.76%	+96.23
Amex Gold (index)	-0.21%	-26.06
MKT VECT GOLD MNRS (GDX)	-0.37%	-47.08

The selloff took the blue chip OEX Index (S&P 100) right to the rising daily support polytrendline our subscribers have access to. The index hit the support line and reversed there, right to the penny. That turned out to be the exact low of the day.

Now, while that might be amazing, it doesn't guarantee that trendline won't be retested and broken. Any market which goes straight to a trendline and bounces off it has to be suspected of trying to test it again. So, we'll be watching Monday to see whether that's the case.

Despite the selling pressure, buyers were again lining up to buy the dip. That's the kind of sentiment we'd rather not see, but it's not a sign of a transition to a bear market just yet.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 4:37 AM

The big blue chips fell on Thursday with the Dow giving back half of its recent rise before rebounding to cut those losses somewhat. But, the broad market, starting the session at fresh all-time highs, only dipped slightly, then set new all-time highs once again by the closing bell. Gold stocks did very well as they continue to recover.

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	-0.23%	-29.24
DIAMONDS TRUST SER 1 (DIA)	-0.25%	-31.97
Ultra Dow30 ProShares (DDM)	-0.53%	-66.96
UltraShort Dow30 ProShares (DXD)	+0.57%	+72.45
S&P 500 (index)	-0.12%	-14.94
S& P DEP RECEIPTS (SPY)	-0.13%	-16.57
Ultra S&P500 ProShares (SSO)	-0.20%	-25.43
UltraShort S&P500 ProShares (SDS)	+0.25%	+31.63
Russell 2K (index)	+0.08%	+10.25
ISHARE RUS 2000 INDX (IWM)	-0.16%	-20.28
Ultra Russell 2000 ProShares (UWM)	-0.01%	-1.68
UltraShort Russell 2000 ProShares (TWM)	+0.05%	+5.85
NASDAQ-100 (index)	-0.02%	-2.87
NASDAQ 100 TR SER I (QQQQ)	-0.02%	-2.85
Ultra QQQ ProShares (QLD)	+0.04%	+4.44
UltraShort QQQ ProShares (QID)	-0.14%	-17.18
S&P MidCap 400 (index)	+0.06%	+7.74
ISHARE SP MC 400 INX (IJH)	+0.02%	+2.98
Ultra MC400 ProShares (MVV)	-0.17%	-21.76
UltraShort MC400 ProShares (MZZ)	+0.30%	+38.25
Amex Gold (index)	+1.89%	+239.42
MKT VECT GOLD MNRS (GDX)	+2.42%	+306.12

Those who are short-sightedly concentrating their attention on the stodgy blue chips are missing the very positive action in the broad market. You may recall that this is reminiscent of the action in 2003 as the broad market led the recovery out of the recessionary bear market. At the time, the tardiness of the blue chip Dow and S&P 500 to recover was pointed to as evidence that the bear market would soon take stocks back down into the abyss. And, today, the bears are very concerned that such a turn to the downside is close at hand. While history never repeats exactly, it often rhymes and this market may be about to teach the recalcitrant bears one more lesson in market dynamics.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:29 PM

The bearish majority is still trying to sell the market short and the market just keeps moving higher. One of the bears' favorite short sales candidates is the NASDAQ-100 Trust Stock QQQQ and we told you last time that the bears were betting heavily that it would break through support at $44 -- this despite the fact that put open interest was at a maximum at that strike price. That is usually a strong support price and that's exactly what it proved to be as the NASDAQ-100 rallied enough to halve the value of those options in just one day. Easy come, easy go, they say.

Many traders are enamored of technical analysis but often don't know how to use the tools provided by free sites on the Internet. They think that those tools have been telling them to sell the NASDAQ-100 Trust short. The only thing getting shorter is the size of the equity in their trading accounts!

That fact is quite clear as we look at what the stock market did on Wednesday:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+0.00%	+0.56
DIAMONDS TRUST SER 1 (DIA)	+0.11%	+14.00
Ultra Dow30 ProShares (DDM)	+0.09%	+11.91
UltraShort Dow30 ProShares (DXD)	-0.18%	-22.60
S&P 500 (index)	+0.14%	+17.67
S& P DEP RECEIPTS (SPY)	+0.22%	+27.98
Ultra S&P500 ProShares (SSO)	+0.35%	+43.95
UltraShort S&P500 ProShares (SDS)	-0.67%	-85.28
Russell 2K (index)	+0.72%	+91.81
ISHARE RUS 2000 INDX (IWM)	+0.92%	+116.52
Ultra Russell 2000 ProShares (UWM)	+1.63%	+206.27
UltraShort Russell 2000 ProShares (TWM)	-1.59%	-201.42
NASDAQ-100 (index)	+1.05%	+132.87
NASDAQ 100 TR SER I (QQQQ)	+0.93%	+117.89
Ultra QQQ ProShares (QLD)	+2.38%	+301.51
UltraShort QQQ ProShares (QID)	-2.27%	-287.87
S&P MidCap 400 (index)	+0.39%	+49.48
ISHARE SP MC 400 INX (IJH)	+0.30%	+37.39
Ultra MC400 ProShares (MVV)	+0.99%	+125.97
UltraShort MC400 ProShares (MZZ)	-0.85%	-107.08
Amex Gold (index)	-0.54%	-68.94
MKT VECT GOLD MNRS (GDX)	-1.06%	-133.90

The biggest winner in the list Wednesday was -- you guessed it -- the leveraged version of QQQQ with ticker symbol QLD, up the equivalent of about 300 Dow points. Meanwhile, the Dow Industrials themselves bobbed up and down, then unceremoniously closed unchanged for the day. The broad market, however, was well represented by the Russell 2000 and S&P 400 MidCap leveraged ETFs, closing up 206 and 126 Dow points, respectively.

We have an immediate position change in tonight's Notes link for subscribers, so please be sure to read it if you're a subscriber.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 9:55 PM

Sentiment surveys are showing that the average investor remains bearish stocks. The LowRisk.com survey reported today that 50% of the investors they survey every week are now bearish, as compared to 44% last week. Only 22% reported they were bullish, down from 34% last week. The neutral ("confused") contingent rose to 28% from 22% last week.

This comes even as the broad market indices are all at or near new all-time highs. This combination of positive price action and negative sentiment is a great catalyst for what could be an explosive move in stocks. Assuming the bearish contingent is sitting in cash or actually short, their buying power could light a fire under the market if they decide to buy.

Our own dollar-weighted call-put ratios show that while the OEX traders are beginning to move away from their severely bearish outlook toward the market, QQQ traders are still unabashedly growling their displeasure with the tech sector. On Tuesday, QQQ option players spent almost twice as much money on puts as calls -- and continued to buy puts which are below the strike with maximum put open interest. This is significant because they are so convinced that the NASDAQ-100 can only go down that they are confident that the buying power represented by that maximum put open interest will not be enough to hold the prices of stocks on a decline.

This disconnect from market logic suggests the average trader has not yet accepted the reality of the uptrend in this stock market.

At the same time, the S&P 400 MidCap Index hit another all-time new high on Tuesday. Since the end of 2006, that index has outperformed, as the following table of year-to-date performance illustrates:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+1.63%	+203.16
DIAMONDS TRUST SER 1 (DIA)	+1.80%	+224.40
Ultra Dow30 ProShares (DDM)	+2.47%	+307.83
UltraShort Dow30 ProShares (DXD)	-1.92%	-239.89
S&P 500 (index)	+2.09%	+260.98
S& P DEP RECEIPTS (SPY)	+2.31%	+287.77
Ultra S&P500 ProShares (SSO)	+3.52%	+439.03
UltraShort S&P500 ProShares (SDS)	-2.94%	-366.50
Russell 2K (index)	+2.93%	+364.62
ISHARE RUS 2000 INDX (IWM)	+3.09%	+384.93
Ultra Russell 2000 ProShares (UWM)	+4.69%	+584.79
UltraShort Russell 2000 ProShares (TWM)	-6.39%	-796.84
NASDAQ-100 (index)	+2.04%	+253.68
NASDAQ 100 TR SER I (QQQQ)	+2.06%	+257.00
Ultra QQQ ProShares (QLD)	+3.16%	+393.70
UltraShort QQQ ProShares (QID)	-3.03%	-377.67
S&P MidCap 400 (index)	+5.33%	+664.24
ISHARE SP MC 400 INX (IJH)	+5.64%	+702.68
Ultra MC400 ProShares (MVV)	+10.38%	+1293.41
UltraShort MC400 ProShares (MZZ)	-9.12%	-1137.00
Amex Gold (index)	-0.68%	-84.85
MKT VECT GOLD MNRS (GDX)	-0.45%	-56.21

Note that the MVV ETF which tracks that index has outperformed the Dow by a factor of better than 6:1, having advanced the equivalent of 1293 Dow points, a 10.38% gain in just a bit over a month.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:19 PM

Stocks were virtually unchanged Monday as last week's gains were cashed in. Option speculators continued to press the bearish case as OEX traders bet $1.66 that the market would fall substantially for every dollar bet on an upside continuation. This is quite unusual after such a large gain and tells us that the crowd is still betting on a top, something it has never succeeded in successfully calling.

QQQ traders were extremely bearish, betting 3.71 times as much money on the downside as the upside. The interesting thing about that figure is that peak put open interest in the QQQ lies at the $44 strike price and that's where the stock is trading (the close was 44.12). Since that open interest represents virtually guaranteed buying power, it's hard to understand the logic of buying puts at that price. But, that's how the strong collect the rent from the weak, a game as old as the hills.

Our short term indicators have been flashing sell signals, but in the context of the powerful uptrend, those sell signals are only "take profits" signals. Given the outstanding short term gains we enjoyed last week, the coming weeks are looking even better.

Monday's session was so flat, we're presenting year-to-date results in today's stock market table:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+1.59%	+198.59
DIAMONDS TRUST SER 1 (DIA)	+1.82%	+227.40
Ultra Dow30 ProShares (DDM)	+2.39%	+297.31
UltraShort Dow30 ProShares (DXD)	-1.94%	-242.07
S&P 500 (index)	+2.02%	+252.11
S& P DEP RECEIPTS (SPY)	+2.28%	+284.25
Ultra S&P500 ProShares (SSO)	+3.52%	+439.03
UltraShort S&P500 ProShares (SDS)	-3.27%	-407.22
Russell 2K (index)	+2.47%	+307.92
ISHARE RUS 2000 INDX (IWM)	+2.83%	+352.99
Ultra Russell 2000 ProShares (UWM)	+3.72%	+463.61
UltraShort Russell 2000 ProShares (TWM)	-5.84%	-727.93
NASDAQ-100 (index)	+2.22%	+276.67
NASDAQ 100 TR SER I (QQQQ)	+2.22%	+277.22
Ultra QQQ ProShares (QLD)	+3.63%	+452.14
UltraShort QQQ ProShares (QID)	-3.56%	-444.05
S&P MidCap 400 (index)	+4.81%	+599.47
ISHARE SP MC 400 INX (IJH)	+5.04%	+628.05
Ultra MC400 ProShares (MVV)	+9.05%	+1127.95
UltraShort MC400 ProShares (MZZ)	-8.02%	-999.37
Amex Gold (index)	-1.03%	-127.96
MKT VECT GOLD MNRS (GDX)	-1.08%	-134.28

While most of Wall Street has been calling for a shift out of the small- and mid-cap stocks into the blue chips, it's clear that the big winners and still champions are the small- and mid-cap stocks. The biggest single winner is Ultra MC400 ProShares ETF, up the equivalent of 1128 Dow points in the year-to-date table.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 11:27 PM

The broad market emerged to the upside from its 4-month long trading range last week, as expected:

Clearly, the consolidation phase helped re-invigorate the broad market as it gained considerable ground on the blue chips last week:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+1.33%	+166.47
DIAMONDS TRUST SER 1 (DIA)	+1.41%	+176.14
Ultra Dow30 ProShares (DDM)	+2.61%	+326.14
UltraShort Dow30 ProShares (DXD)	-2.66%	-332.61
S&P 500 (index)	+1.84%	+230.13
S& P DEP RECEIPTS (SPY)	+1.86%	+232.77
Ultra S&P500 ProShares (SSO)	+3.54%	+442.25
UltraShort S&P500 ProShares (SDS)	-3.37%	-420.24
Russell 2K (index)	+2.73%	+340.64
ISHARE RUS 2000 INDX (IWM)	+2.79%	+348.68
Ultra Russell 2000 ProShares (UWM)	+5.61%	+700.44
UltraShort Russell 2000 ProShares (TWM)	-5.21%	-649.95
NASDAQ-100 (index)	+1.42%	+177.20
NASDAQ 100 TR SER I (QQQQ)	+1.35%	+169.09
Ultra QQQ ProShares (QLD)	+3.11%	+388.07
UltraShort QQQ ProShares (QID)	-2.27%	-283.48
S&P MidCap 400 (index)	+2.88%	+360.00
ISHARE SP MC 400 INX (IJH)	+2.81%	+351.10
Ultra MC400 ProShares (MVV)	+5.88%	+733.99
UltraShort MC400 ProShares (MZZ)	-5.14%	-641.84
Amex Gold (index)	+0.36%	+44.82
MKT VECT GOLD MNRS (GDX)	+0.31%	+38.23

The Dow gained only 166 points, while the small- and mid-cap Russell 2000 gained the equivalent of 349 Dow points. The S&P 400 MidCap Index gained about the same at 351 Dow points. As you can see, the leveraged ETFs doubled those returns for the week.

This economic cycle of broad market outperformance started in April 1999 and continues to this day. In fact, it could theoretically continue until 2013 unless a major player makes a major mistake (which is always possible and one reason why we think trailing sell stops are a great idea).

The consolidation phase also corresponded to weakness in many commodity markets, but they are now rebounding from those lows as well. The US economy, which to many appeared destined for recession just a few months ago, now appears to be headed for strong growth accompanied by lower inflation, a Cinderella story which was almost inconceivable in mid-2006.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 1:45 PM

Stocks advanced Thursday despite weakness from bonds and little help from the tech sectors:

Security	Percentage Change	Change in Dow Industrials Points
Dow Industrials (index)	+0.41%	+51.99
DIAMONDS TRUST SER 1 (DIA)	+0.40%	+49.99
Ultra Dow30 ProShares (DDM)	+0.73%	+92.55
UltraShort Dow30 ProShares (DXD)	-0.87%	-109.77
S&P 500 (index)	+0.54%	+67.57
S& P DEP RECEIPTS (SPY)	+0.60%	+75.51
Ultra S&P500 ProShares (SSO)	+1.17%	+147.51
UltraShort S&P500 ProShares (SDS)	-1.14%	-143.83
Russell 2K (index)	+0.96%	+121.17
ISHARE RUS 2000 INDX (IWM)	+1.07%	+135.20
Ultra Russell 2000 ProShares (UWM)	+2.25%	+284.00
UltraShort Russell 2000 ProShares (TWM)	-2.14%	-270.33
NASDAQ-100 (index)	+0.05%	+6.77
NASDAQ 100 TR SER I (QQQQ)	-0.11%	-14.32
Ultra QQQ ProShares (QLD)	+0.12%	+15.13
UltraShort QQQ ProShares (QID)	+0.40%	+50.52
S&P MidCap 400 (index)	+0.93%	+117.73
ISHARE SP MC 400 INX (IJH)	+0.87%	+109.28
Ultra MC400 ProShares (MVV)	+2.49%	+313.95
UltraShort MC400 ProShares (MZZ)	-2.25%	-284.38
Amex Gold (index)	+0.92%	+116.60
MKT VECT GOLD MNRS (GDX)	+0.63%	+79.68

Although the report is now viewed with skepticism by most investors, the Bureau of Labor Statistics will release its January Employment Report Friday morning at 8:30am EST. After admitting the report is often grossly wrong at estimating new jobs created in the reporting month, revisions to prior month's figures often are important enough to sway traders' views of where the economy is heading and where inflation might be simmering.

The bond market, which had rallied Wednesday from an oversold condition -- helping pull stocks higher -- was unable to sustain the rally and fell back Thursday, retracing about half of its prior gains. Although stocks did rally Thursday, it was a very weak rally technically as breadth sank, causing short term indicators to move into sell mode. This underlines the critical nature of the bond market trend to the direction of the stock market.

Bonds are in a fragile condition, having undergone a downtrend which started at the release of the November Employment Report exactly two months ago. That downtrend does not appear to have ended, despite Wednesday's bounce, and new lows in bonds could undermine stocks. The latter market has benefitted from the influx of new investment cash which comes at this time of month. If the bond market reacts negatively Friday morning, it could have negative consequences for the stock market, especially since the period of monthly strength is soon to end.

Additional stock market commentary -- for subscribers only -- can be found here: Subscriber Notes (if you're reading this in plain text format or on the blog, visit the MyClues Home Page and click on "Subscriber Notes" in the Quick Links section at the top of the page).

Is Your ISP Censoring Your Email? Internet email is dying, being choked to death by spam and overzealous service providers. If you're not getting these updates via email and you should be, switch to RSS, the spam-free alternative. For instructions, just visit: http://www.marketclues.net/rss.html.

Subscriber Links: MyClues Home · Quarter-Hourly Chart Comments · Detailed Comments . . . .

posted by Bob Carver  # 10:47 PM