May 30, 2012

CHRISTOPHER CADBURY
Suite LT, 520 East 72nd St.
New York, NY 10021
212-510-7019
website: www.christophercadbury.com
email: ccadbury@rcn.com

Ranked #1 in the U.S. by Timer Digest for 11/17/11 to 2/17/12

Ranked #1 in the U.S. by Timer Digest for

2000 to 2009

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Market Fax No. 4527 May 30, 2012

SHORT TERM OUTLOOK
S.&P. 500: UP 0.9% TO 1345 OR MORE AT JUN. 8th CLOSE
S.&P. 500: UP 1.2% TO 1349 OR MORE AT JUN. 15th CLOSE

The rally (after the lows last Wednesday from similar lows of a week ago last Friday) has so far become a successful test. Somewhat bullishly too, yesterday the stock market was able to shake off an unfavorable consumer confidence report. Consumer confidence unexpectedly dropped from 68.7 in April to 64.9 in May, a four-month low. A reading of 69.6 had been forecast. Yesterday the S.&P. 500 gained 14.6 points to close at 1332.4 while the Dow rose 125 points to 12,580 and the Nasdaq Comp. climbed 33 points to 2870. If the S.&P. 500 index advances to 1338 or more or declines to 1322 or less, a long position is recommend using an intraday stop of five S.&P. 500 points. The two entry levels are mutually exclusive. The entry levels and stop do not apply to the first ten minutes of a session.

Favorably as well, AMG/Lipper announced a net withdrawal of $4.6 billion from the equity mutual funds and equity ETF’s for the week through last Wednesday. Most weekly net withdrawals of $4.0 billion or more in a bull market occur at a bottom. Also for the week through Wednesday AAII reported 9% more bears than bulls; 39% bears vs. 30% bulls. The percentage of AAII bulls has now exceeded the percentage of AAII bears in six out of the past seven weeks, a very long duration. Moreover Market Vane’s bullish percentage of 52% last week was a five-month low and the Investors Intelligence bullish percentage fell to 38.3%, a six-month low.

For the first time in three years or longer the value for the McClellan Oscillator has been positive for only twelve sessions during a period of significantly more than three months. Friday’s McClellan Oscillator reading was -20. For the first time in history, the S.&P. 500 yield has surpassed the ten-year Treasury yield for an amazing 21 out of the last 22 sessions. On Friday the S.&P. 500 yield stood at 2.08% and the ten-year Treasury at 1.75% for a difference of .33%. Yesterday the S.&P. 500 yield of 2.05%, was .32% greater than the and the ten-year Treasury yield of 1.73%. On Friday Yahoo’s 14-day relative strength indexes for the major stock market averages were not far from an oversold level of 20 or less at 29 for the S.&P. 500; 21 for the Dow; and 30 for the Nasdaq Comp. On Friday as well, the Trendline Oscillator was nearly oversold for a bull market with a value of -4.0 or less at -3.9.

All the other indicators have been neutral lately; none have become overbought. Friday’s Rydex ratio, the ratio of the net inflow into the Rydex bull fund divided by the net inflow into the Rydex bear fund, was dead neutral. The speculation index on Friday, the Nasdaq volume divided by the NYSE non-consolidated NYSE volume, continued to be only somewhat above a median level around 2.00. Friday’s speculation index was 2.17. Again the reading for the CBOE equity put-call ratio remained mid-range between .60 and .87 at .66 Friday and .67 yesterday. The 5-day total for the closing Arms index was again neutral between 4.00 and 5.99 at 5.44 Friday and 4.72 yesterday. There have been no extreme intraday or closing up or down tick readings the last two sessions.