“With the likelihood that the U.S. will go over the so-called "fiscal cliff," OptionMonster's Jon Najarian said Thursday he has exited all his positions.
‘For the first time in 31 years in the market, I'm completely out of everything,’ he said. "I see no reason to stick with this thing – no reason to get short, either." Full story at…
http://www.cnbc.com/id/100341721
I thought this was a very curious story. My Sentiment indicator (now at extreme
bullish levels) is based on Guggenheim (formerly Rydex) mutual funds so it is
not considered “smart money” because mutual funds are not a very sophisticated
way to hedge or use options. Extreme
bullish sentiment by “dumb-money” is bearish for the stock market. When everyone thinks the market is going up –
it goes down.
Jon Najarian as the founder of Options Monster
would be considered “smart money”. So
the dumb money is betting there will be a big relief rally after a Fiscal Cliff
settlement – the smart money (at least one of them) is taking a position of
extreme caution. Actually, there are two
of us since I am almost out of everything too.
(Unfortunately, I don’t really consider myself smart money – the real,
smart-money people have access to more information and resources.)
I thought this was curious because if
Najarian’s attitude becomes widespread amongst the pros, the correction will continue
at a more vigorous pace.
I’ve experimented with my own “smart-money”
index that tracks market moves in the last hour of trading and that is supposed
to be when the smart money moves. The
NTSM Smart Money indicator is trending down, but not at an extreme rate. I still don’t have much confidence in this
experimental indicator – it needs work.
CHART OF THE DAY – (DECLINING) CLAIMS NOT
TRANSLATING INTO (INCREASED) JOBS (From dshort advisors re-posted from
StreetTalk Live, originally written by Lance Roberts)
"There are roughly 127 million people who receive
government transfers or benefits. Sixty-one million recipients of Social
Security and Medicare and 66 million people receiving welfare (SNAP food
stamps, housing credits, Medicaid, etc.) Since there
are about 115 million full-time jobs in the U.S., this means there are 1.1
government dependents for every full-time worker in the U.S.” From the King
Report at http://www.streettalklive.com/off-the-street/1412-king-report-structural-end-game-to-fiscal-cliff.html
“This brings us to the chart of the day which compares initial jobless claims (inverted scale) to full-time employees relative to the population. While the media has spun the idea that current levels of initial jobless claims are supportive of a strengthening economy - the reality is that full-time employment remains stymied near its lowest levels on record. Low levels of full-time employment keeps incomes suppressed, and dependency on government support programs high, which are not supportive to stronger economic growth rates.”
MARKET RECAP
Friday
the S&P 500 was down 1.1 % to 1402 (rounded). VIX was UP almost 17% to 22.72.
The options boys have
suddenly gotten very nervous and the VIX has exploded to the upside by
increasing nearly 25% over the last 3-days.
VIX is the best indicator in the NTSM system based on back testing to
2006.
The Volume over the last
3-trading days has been about 75% of the pre-Holiday volume; light, but not
extremely low. I’d expect very low
volume on Monday unless there are new developments in the Fiscal Cliff
negotiations.
NTSM
The NTSM analysis switched back to SELL Friday.
That is based on the huge spike in the VIX
over the past 3-days and the continuing extreme bullish sentiment, exceeding
66%-Bulls over a 5-day moving average, in the Guggenheim funds that I track.
MY INVESTED POSITION
Based on the SELL signal, 7 November 2012, I
moved out of the stock market at 1377 on the S&P 500. Because of the negativity I have noted from
Hussman and others, I am currently invested in a range of near 15% invested in
stocks. 
