Thursday, May 17, 2007

Market Notes for a Thursday

* Thursday makes the fifth consecutive trading session in which we've seen an ARMS Index below 1.0. Indeed, the five-day reading of .73 is one of the lowest readings we've had since 2005. Going back to 2005 (N = 592 trading days), we've had 97 occasions in which the five-day ARMS Index (or TRIN, as it's also known) has been below .90. Five days later, the S&P 500 Index (SPY) averaged a gain of only .07% (52 up, 45 down), much weaker than the average gain of .24% (298 up, 197 down) for the remainder of the sample. When volume is concentrated in the rising stocks over a five-day period, returns have been subnormal over the following week.

* Equity put/call ratios continue to drift lower, indicating no noticeable fear in the market despite the recent small cap weakness. Indeed, the five-day reading as of Thursday is the second lowest level since March.

* The small caps continue weak, with the Russell 2000 futures closing at their lowest level since mid-April. On Wednesday, we saw 20 new 52-week highs among S&P 600 small cap issues and 16 new annual lows! Thursday saw 21 highs against 12 lows. Hardly the stuff of roaring bull markets.

* Hats off to CXO Advisory's blog; they consistently summarize interesting research. Here CXO takes a look at companies that are good to work for and whether they're also good investments.

* The Kirk Report does a great job scouring the Web for news. The recent market watch links include James Altucher's look at 10 stocks with significant insider buying.

* Interesting new ETF from Claymore (CGW) is a way of trading companies involved in the clean water/water-as-natural-resource theme. The holdings are global, making this somewhat different from other investment alternatives.

* The scans are showing lots of NR7 patterns for Trader Mike.

* Yet another way of tapping home equity and keeping the boom going: Seeking Alpha. But Barry Ritholtz shows that housing needs more than a little stimulus.

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