Market Outlook for May 1st and beyond

Friends and visitors, I wrote a note to a close friend tonight and thought I should post this here about my view of the market today and what I expect in the next week or so. Here's what I told him.

"I have been watching the Put to Call ratio and it has been relatively low which means higher probability of correction than a market advance. It closed today at 0.85 and opened at 0.65. I put a chart on the Blog on April 18th showing the recent year and a half range and when the number approaches the low of the range it is a sell signal and if it is at the top it is a buy signal.

So best to just sit and be as patient as one can right now, until we get a clear signal. The Volume today was a little ahead of yesterday and the market closed down, not up. When volume increases and the price drops, it is a >u>bearish sign. One other thing. I have been tracking Insider Trading and I can tell you as fact, Insiders are selling more than buying, and the amount of cash raised by selling is much more significant a Dollar amount. It has been that way since the market dropped last Fall and nothing has changed that. If Insiders saw a better picture of the economy going forward, they would be buying, not selling."

As I wrote in the previous post, the Stress Test results for the 19 largest banks are not going to be released until the end of May. Banks are most likely under capitalized as we have heard this past week by as much as $1 Trillion. These bank assets need to be dealt with by either creating good vs bad banks or something like Chapter 11 bankruptcy to wipe out shareholders, instead of using more government money. But then we are back to a lack of confidence in the banking system, a possible run on the banks or complete collapse of the banking system and President Obama isn't going to allow that to happen while he is in charge. Toxic assets are still on the books and no lipstick is going to make that Pig look any better and that is the problem!

Speaking of Swine Flu, it seems to me that current technological advances in communications using the internet, cell phones and television, has allowed healthcare officials to get a very quick handle on this outbreak, which has the effect of minimizing its affect on humanity. Contrast that to 1918, where it took weeks and months to realize what was going on and to mobilize precautionary measures for use by the public. It was too late then and I lost my Mom's parent during that period, but now, everyone in the world knows to wash their hands frequently, cover their mouths when coughing and avoid large gatherings or enclosed spaces. VP Joe Biden got himself into trouble today, for saying what everyone knows was the truth. There is something very refreshing about having a VP that is wired to just say the truth and can't help himself. You got to love him!

Market Outlook: Thursday March 25th and beyond (UPDATE)

Well we closed up for the day yesterday. A battle is going on between the Bulls and the Bears. Yesterday the Bulls won but it was touch and go for most of the day. We are in no mans land on the Dow and S&P 500 because it has not been determined if we are going up or going down yet, even though we closed up yesterday and back up over 800 on the S&P. The Put to Call ratio closed up yesterday to 0.86 from 0.76 on Tuesday and 0.70 on Monday.

Market is opening up but I tell you we can still go in any direction because the trend is not clear as I write this. The Weekly Jobless claims came in at 652,000 while the number of people getting weekly benefits rose to 5.5 Million recipients.

We still don't know if the banks will sell toxic assets and we won't for at least a month. So many are still in limbo as Geithner's toxic asset plan is based upon bank participation.

The auction yesterday for Treasury's did not go as well as hoped. This caused the market to drop mid-day. So skepticism remains strong and we have a less than enthusiastic investors which makes for a tight range on the Indexes. It looks like we will stay here for a while but as we approach the end of the quarter watch investors buy some bank stocks to dress up their portfolios because they moved up nicely from their lows and they want to show those having accounts with them that they owned those stocks during the quarter. It's all a game for show and after the end of the quarter they can and often sell some of these shares bought at quarters end.

I think a wise strategy is to have some cash right now and not be fully invested. When the trend becomes more clear then changes can be made to either buy stocks or raise more cash. But that's where I am currently.

UPDATE 9:45am PST

The Dow and the S&P 500 are clearly above the 50 day and now 60 day Moving average. The Dow is now at 7,839 and the S&P 500 is at 824.

UPDATE 3:00pm PST

I decided to sell my TZA at a loss today for $48.50. That was a big loss of $10/share. However my TNA shares remaining and SSO shares have made the loss in TZA as an insurance policy worth it.