Summary
Monday, March 20, 2006... a day that will live in stock-market infamy? Perhaps, but it has not done so yet. Nevertheless, my strong "sell-stocks" recommendation of that date stands!
_____
Foreword
At the end of January, "Market Thoughts" replaced "Last Week in the Markets..." The successor publication will be very much like the former one, but carries what I believe is a more appropriate title.
_____
Interest Rates
This edition of MT is mostly about stocks. Nevertheless, today is important on the interest-rate front, and in the period ahead, the behavior of open-market interest rates should take on an increasingly important role in influencing the US stock market.
* At 1415 ET today, the Federal Open Market Committee is all but certain to announce its decision to raise the Federal Funds rate by 25 basis points, to 4.75%. If so, it will mark the 15th quarter-point hike since June 2004.
* The item of greatest interest regarding today's meeting will be the wording of the FOMC's post-meeting statement, and whether it sheds any substantive light on possible Fed rate actions going forward. Based on yesterday's closing run in federal funds futures, that market was placing a sizable bet on another 25 basis-point increase in the funds rate sometime this summer, as early as the FOMC's two-day meeting at the end of June.
Federal Funds Futures (3/27 Close)
----------------------------------
Contract Yield FOMC Meetings
----------------------------------
Mar. '06 4.59% March 27th-28th
Apr. '06 4.77% No Apr. Meeting
May '06 4.89% May 10th
June '06 4.94% June 28th-29th
July '06 5.00% No July Meeting
Aug. '06 5.02% August 8th
----------------------------------
* Emphasis was placed a moment ago on "open-market" rates, as opposed to the ones directly administered by the Federal Reserve, the primary rate in the latter category being the Federal Funds Rate. Traditionally, as you go farther out on the yield curve, open-market rates increasingly represent expectational forces, especially ones influenced by inflation. Primarily because of the Greenspan-driven machinations of recent years, there has been a major disconnect in this historical relationship, although I expect it to increasingly reassert itself in the months ahead.
* Alan Greenspan, now out on the very expensive speaking circuit while pimping multi-million-dollar book deals, has left behind a giant mess for his successor, Ben Bernanke. The United States has terribly serious financial problems and is in acute need of a real central banker at the helm of the Fed, not another politician. We will find out soon enough whether Bernanke is the former or merely a Greenspan clone.
Following is a recap of the relatively recent behavior of open-market interest rates, using the Treasury yield curve as the proxy.
-------------------------------------------------
TREASURY YIELD CURVE AS OF 03/27/06
-------------------------------------------------
90-Day 2-Yr. 5-Yr. 10-Yr. 30-Yr.
Date Bill* Note Note Note Bond
-------------------------------------------------
03/27/06 4.63% 4.73% 4.69% 4.70% 4.73%
02/03/06@ 4.46% 4.57% 4.48% 4.52% 4.63%
12/31/05 4.08% 4.40% 4.35% 4.39% 4.54%
03/31/05 2.78% 3.78% 4.17% 4.48% 4.75%
-------------------------------------------------
BASIS-POINT CHANGE TO 03/27/06 FROM:
-------------------------------------------------
02/03/06 17 16 21 18 10
12/31/05 55 33 34 31 19
03/31/05 185 95 52 22 -2
-------------------------------------------------
YIELD-SPREAD DIFFERENTIALS
-------------------------------------------------
90D-> 02Y-> 05Y-> 10Y-> 90D->
02Y 05Y 10Y 30Y 30Y
---------------------------------
03/27/06 10 -4 1 3 10
02/03/06 11 -9 4 11 17
12/31/05 32 -5 4 15 46
03/31/05 100 39 31 27 197
-------------------------------------------------
*Coupon-equivalent yield. @Friday closest
to Greenspan leaving Fed chairmanship.
-------------------------------------------------
* Under Greenspan, US monetary policy became more and more a casino-like operation. One gesture Bernanke could use to indicate his intention to run at least an above-board casino is to give back weekly reporting of money measure M3. The circumstances surrounding its disappearance (gone as of last Thursday, 3/23), simply stink!
* And as it makes its exit, perhaps the recent, highly visible acceleration in its growth rate is the correct explanation for its disappearance? For the three months ended February 2006, M3 grew at a 9.0% annual rate, with its year-over-year growth in February standing at 8.0%. This was up from 6.4% in September. As of February 2005, M3's year-over-year growth stood at 5.9%, well below the recent 8.0% figure. The bottom line of all this is that the Fed has raised interest rates significantly, while leaving a high rate of overall liquidity growth intact! (See Table 1 in the Table Appendix at the end of the text.)
_____
The Stock Market
The Recent Sell Recommendation
* Last Monday morning (3/20), I put out an unequivocal sell recommendation on the stock market. A summary of the recommendation itself follows:
"Over the years, I've rarely done something like this. However, I sense that we are at or near such an important inflection point, it is worth the risk of looking foolish. Moreover, I believe that if I should look foolish, that condition will not take terribly long to correct itself.
"I suspect -- and strongly -- the stock market either is at or is very close to what will prove a major inflection point, and not one that will leave people in the dust on the upside. Everyone has somewhat different investment objectives, accompanied by varying thresholds of pain. But for people who place a high premium on the preservation of capital, I believe sales made at around current levels will hold them in good stead."
Using the DJIA, S&P 500 and NASDAQ 100 as proxies, here is what has transpired so far:
Summary of Stock-Market Sale
Recommendation Made on 3/20/06
--------------------------------------
03/27 03/20
Close Value* Change
--------------------------------------
DJIA 11,250 11,275 -0.2%
S&P 500 1,302 1,306 -0.3%
NASDAQ 100 1,681 1,687 -0.4%
--------------------------------------
*Level of respective measure
at time of recommendation.
--------------------------------------
* As you would expect, I raised more than a few eyebrows with the call. The action was predicated on an amalgam of fundamental, technical and gut judgments. Several of these will be discussed in the balance of this missive.
* Paradoxically, the last time I expressed a feeling this strong about the stock market was when I, someone who for a long time has been and remains a devout secular bear, turned strongly bullish on the market in the spring of 2003, just as the Iraq War was kicking off. My positive views were expressed at the time in a detailed missive entitled, "Do Stocks Have Life After War?" The conclusion was a vehement "yes."
* As the above summary indicates, there has thus far been only a very small reward for following the sell recommendation. But as I said at the time and reiterate now, "I suspect...the stock market either is at or is very close to what will prove a major inflection point...and sales made at around current levels will hold [people] in good stead." I certainly did not expect to hit the top, just what in due course will represent an acceptable area. (For people wanting to sell in a firm, orderly environment, selling at a top is frequently not as desirable as selling into a top.)
* The above said, I would not have done what I did unless I believed the prospects for an on-balance decline of at least 5% to 10% were strong.
* Included prominently in the "gut-judgment" category in my current pessimistic forecast is a sense that there has been a material deterioration in the geopolitical landscape, one that is likely to continue. This goes for the domestic political backdrop as well.
* I am not going to spend additional time on these areas in this missive, although I will come back to them elsewhere, because I view them as highly critical and potentially, quite negative. I will merely opine here that I sense a very major and definitely growing sense of disgust and distrust by the majority of Americans with everyone in Fantasyland on the Potomac.
"Slope Modification"
* Table 2 in the Appendix breaks out price-only returns over various periods for my seven-measure tracking group. Through last Friday, the group's average year-to-date return was 6.1%.
* This 6.1% average return worked out to an annualized figure of roughly 26.4%. The lead performer among the group was the Russell 2000, with a price-only 2006 gain through last Friday of 12.0%. In turn, this worked out to an annualized return of about 52%. I don't believe these represent "reasonable" expectations for 2006 as a whole, so at some point, "slope modification" will set in. This is most likely to occur either via a relatively protracted period of sideways movement or via a meaningful pullback in prices. The latter possibility is the one consistent with my sell recommendation and the one I believe more likely.
Valuations
* At last, full-year earnings are in for the Dow Jones Industrial Average, and they were not good! Reported fourth-quarter 2005 earnings were down almost 34% from the fourth quarter of 2004. Moreover, this represented the fifth consecutive quarter in which earnings declined from the same quarter a year earlier.
* As for trailing four-quarter earnings, for all of 2005, these came in at $515.86, a decline of 8.4% from four-quarter earnings as of 9/30/05, and down 12.5% from the four quarters ended 12/31/04. (See Table 3 in the Appendix.)
* Lower and contracting earnings and a paltry dividend yield have resulted in a very, very pricey DJIA from a historical perspective. Moreover, rising interest rates and flagging earnings have not been the historical prescription for investor willingness to bid up price-earnings multiples.
* Going forward, the increase in interest rates already in place will take on growing importance with regard to corporate-profit growth. This is particularly true for companies who face a major amount of refunding of debt that was sold, say, two or three years ago, or for companies who have significant amounts of floating-rate debt. Of course, such companies who also hold large amounts of cash benefit from something of an offset.
This is an area on which I want to do additional work, but the following table gives some indication of the magnitude of what I'm talking about. To be conservative and to avoid possible double counting, I've broken out only corporate debt of the nonfinancial sector. The following data are from the latest Federal Reserve flow-of-funds data (12/31/05 data latest available), and I've used 6/30/04 as the starting point, since it matches perfectly with when the Fed began raising rates. Through the rate increase I am presuming will be announced in a short while, the Federal Funds Rate will have risen 375 basis points from the end of June 2004 forward. Of course, for a variety of reasons, you cannot apply this increase to the numbers below. Nevertheless, over coming months, many individual companies will be facing a major increase in their pretax interest expense. Since many corporations are now operating at low effective tax rates, much of the pretax increase in interest expense will flow to the bottom line.
US Nonfinancial Sector
Corporate Debt Outstanding
----------------------------------
Amount Change From
Date (Billions) 06/30/04
----------------------------------
12/31/05 $5354.1 $405.1 8.2%
06/30/05 $5214.5 $265.5 5.4%
12/31/04 $5064.8 $115.8 2.3%
06/30/04 $4949.0 -- --
----------------------------------
* For some very important reasons, none of which I will go into now, I view the decade of the 1950s as an almost ideal environment for common-stock investors. And retrospectively, the returns generated from 1950 through 1959, inclusive, go a long way towards proving that statement. During those 10 years, the DJIA's price-only return was a rather spiffy 240%. There were only two negative years (minus 3.8% in 1953 and minus 12.8% in 1957), and 1954 was a +44.0% year! (As a matter of historical interest, 1954 was the first time the DJIA exceeded its September 1929 closing high of 381.17, set on 9/3 of that year.)
* Nevertheless, when you examine key DJIA valuation criteria for those 10 years, you realize how skewed the current situation really is. In addition, most analysts would acknowledge that accounting practices in that earlier period were "purer" than those presently employed. The DJIA's respective average and median price-earnings multiple for those ten years were 14.1 and 15.4, versus yesterday's multiple of almost 22 times. The average and median dividend yields were 4.87% and 4.78%, respectively, compared with yesterday's 2.23%. Moreover, the interest-rate environment during most of the decade of the 1950s was quite hospitable for stock valuations. (See Table 4.)
Potpourri
* Sentiment is mixed, depending on what you look at. For instance, the numbers from Investors Intelligence were nothing short of ebullient earlier in the year, with a major decline in the euphoria setting in over the last several weeks. Yet, this decline in optimism was not triggered by anything major in the way of a decline in prices, which is a bit puzzling.
Investors Intelligence Readings
---------------------------------
Week
Ended Bulls Bears Correction
---------------------------------
2006
03/22 46.3% 30.5% 23.2%
03/15 42.3% 33.0% 24.7%
03/08 42.7% 31.3% 26.0%
03/01 42.6% 30.8% 26.6%
02/22 45.3% 29.5% 25.2%
02/15 48.9% 27.7% 23.4%
02/08 51.6% 25.3% 23.1%
02/01 52.6% 25.8% 21.6%
01/25 53.7% 25.3% 21.0%
01/18 57.3% 22.9% 19.8%
01/11 56.8% 22.1% 21.1%
01/04 55.7% 23.7% 20.6%
2005
12/28 60.4% 20.8% 18.8%
---------------------------------
Average, Last 10 Weeks,
1/18 - 3/22, Inclusive
---------------------------------
48.3% 28.2% 23.5%
---------------------------------
* On the other hand, using the CBOE Volatility Index (VIX) and various put/call data, you get a considerably different picture, one that is a much more consistent with the market's actual behavior. Thus, I would side with these numbers, which are very suggestive of an abundance of enthusiasm. In turn, since this is a contrary indicator, I read these numbers as bearish. (See Table 5.)
* Although several highs of different varieties have been set in recent weeks (an all-time high for the Russell 2000, multi-year highs for the DJIA and S&P 500, etc.), the overall market has not been able to achieve an out-and-out breakout to the upside. Perhaps one is right around the corner.
* But perhaps one is not right around the corner. A measure I use to keep tabs on something like this is one I began monitoring several years ago, which is short-term rate of change. The one I employ is a two-week compounded change, which purposely produces large positive and negative swings (purposely because they are easier to look at and interpret). Examine the data in Table 7 and you will see what I mean about the market's inability to achieve a definitive upside breakout.
* My "conventional" technical work (advance-decline data, up-down volume numbers, new highs and lows, closing ticks, etc.) all indicate a market that has been and remains meaningfully overbought. (See Table 7 and Table 8.)
* Finally (for now), even if the market's up-trend is to be interrupted as opposed to aborted, one would expect periodic pullbacks to long-term moving averages along the way. Using the DJIA, S&P 500 and NASDAQ Composite as market proxies, none of the three have been at or below their respective 200-day moving averages since last October. Were such an event occur right now, it would require respective declines of approximately 5.2%, 4.7% and 5.1%. (See Table 9.)
_____
Conclusion
There's a good deal more that filters, directly and indirectly, into my current thinking, and I'll be exploring these areas in future work. The domestic political landscape, for instance, is very important, and I believe it will become increasingly so as we move closer to November's elections. (I view this area as decidedly negative for the economy and the markets.) Similarly, the geopolitical backdrop is potentially nothing short of perilous, therefore, bearish.
As to the economy, I'm not looking for great prospective news here, either, particularly when you examine the situation beyond Washington's highly sanitized numbers and the additional incredible spin put on them by Wall Street and conservative talk radio. (In the name of disclosure, I again point out I am a devout political conservative, but the Limbaugh/Hannity analysis of the economy is nothing short of terrifying!)
And a final thought on a couple areas not covered in this missive: the dollar and gold. Simply stated, I remain very pessimistic about the former, very constructive on the latter.
_____________
Table Appendix
Table 1.
-------------------------------------------------------
GROWTH RATES FOR MONETARY MEASURES
M1, MZM, M2, M3, AND IN THE ST. LOUIS
FEDERAL RESERVE BANK'S MONETARY BASE*
-------------------------------------------------------
Change From Same Month One Year Earlier
-------------------------------------------
L3 02-2005/
Mo.@ Feb. Jan. Dec. Nov. Oct. Sep. 02-2004
-------------------------------------------------------
M1 1.4% 0.4% 1.1% -0.2% -0.3% 0.6% 0.5% 3.8%
MZM 5.9% 3.5% 3.5% 2.5% 2.1% 2.3% 1.9% 3.5%
M2 6.8% 4.7% 4.7% 3.9% 3.8% 4.0% 3.9% 5.3%
M3 9.0% 8.0% 8.0% 7.6% 7.3% 7.2% 6.4% 5.9%
-------------------------------------------------------
Base 7.5% 3.9% 4.0% 3.4% 2.9% 3.0% 3.2% 4.9%
-------------------------------------------------------
*Seasonally adjusted; subject to revision.
@Annual rate of change, three months ended Feb.
-------------------------------------------------------
Table 2.
-------------------------------------------------------------
SELECTED STOCK-MARKET MEASURES
(GRA Seven-Measure "Tracking
Group," Listed by YTD Returns)
-------------------------------------------------------------
03/24
03/24 2006 12/31 Week From 2006 YTD
2006 High 2005 Ended 2006 as of as of
Close Close* Close 03/24 High High 03/24
===== ===== ===== ===== ===== ===== =====
Russ. 2000 754 754 673 1.0% 0.0% 12.0% 12.0%
Value Line (G) 444 444 413 0.3% 0.0% 7.6% 7.6%
NYSE Comp. 8252 8272 7754 -0.2% -0.2% 6.7% 6.2%
DJIA 11280 11317 10718 +0.0% -0.3% 5.6% 5.2%
Wilsh. 5000 13167 13177 12518 -0.1% -0.1% 5.3% 5.2%
S&P 500 1303 1307 1248 -0.3% -0.3% 4.7% 4.4%
NASDAQ 100 1680 1758 1645 -0.4% -4.4% 6.9% 2.1%
-------------------------------------------------------------
Average +0.0% -0.8% 7.0% 6.1%
Median -0.1% -0.2% 6.7% 5.2%
-------------------------------------------------------------
*Russell and Value Line highs set on 3/24.
DJIA high set on 3/22. S&P, Wilshire and NYSE
highs set on 3/17. NASDAQ 100 high set on 1/11.
-------------------------------------------------------------
Table 3.
-------------------------------------------------
DJIA EARNINGS -- LAST 16 QUARTERS
-------------------------------------------------
% Change
--------------------------
Earnings Qtr./ 4-Qtr. 4-Qtr.
($s) Same Qtr. Over Over
Quarter ------------- Prior Prior 4-Qtr.
Ended Qtr. 4-Qtr Year 4-Qtr. Prior Yr.
-------------------------------------------------
2006
03/31 <----------- Not Available ---------->
=================================================
2005
12/31 92.53 515.86 -33.8 -8.4 -12.5
09/30 134.07 563.06 -8.5 -2.2 -6.2
06/30 153.22 575.51 -1.8 -0.5 0.1
03/31 136.04 578.25 -7.7 -1.9 6.1
=================================================
2004
12/31 139.73 589.54 -7.2 -1.8 13.4
09/30 146.52 600.33 20.8 4.4 31.0
06/30 155.96 575.07 21.5 5.0 29.7
03/31 147.33 547.47 23.0 5.3 33.5
=================================================
2003
12/31 150.52 519.96 69.5 13.5 34.9
09/30 121.26 458.23 13.9 3.3 18.5
06/30 128.36 443.43 34.9 8.1 16.5
03/31 119.82 410.19 25.8 6.4 12.5
=================================================
2002
12/31 88.79 385.58 -1.4 -0.3 4.3
09/30 106.46 386.81 6.3 1.6 8.0
06/30 95.12 380.54 20.3 4.4 -2.5
03/31 95.21 364.46 -5.0 -1.4 -20.4
-------------------------------------------------
Table 4.
-----------------------------------------------
DJIA VALUATIONS AND TREASURY YIELDS --
1950 THROUGH 1959, AND AS OF 03/27/06
-----------------------------------------------
DJIA Mkt./ Treas. Yields@
As of Annual P-E Div. Book --------------
12/31 Ret.* Ratio Yield Ratio 90-D# 10-Y
-----------------------------------------------
1950 17.6% 7.7 6.85% 1.21 1.35% na
1951 14.4% 10.1 6.07% 1.33 1.74% na
1952 8.4% 11.8 5.29% 1.37 2.10% na
1953 -3.8% 10.3 5.73% 1.15 1.61% 2.59%
1954 44.0% 14.4 4.32% 1.62 1.15% 2.51%
1955 20.8% 13.7 4.42% 1.80 2.56% 2.96%
1956 2.3% 15.0 4.60% 1.75 3.24% 3.59%
1957 -12.8% 12.1 4.96% 1.46 3.06% 3.21%
1958 34.0% 20.9 3.43% 1.88 2.79% 3.86%
1959 16.4% 19.8 3.05% 2.00 4.54% 4.69%
-----------------------------------------------
Avg. 14.1% 13.6 4.87% 1.56 2.41% 3.34%
Med. 15.4% 12.0 4.78% 1.54 2.33% 3.21%
-----------------------------------------------
As of
03/27 [1] [2] [3] [4] [5] [5]
2006 5.0% 21.8 2.23% 3.35 4.63% 4.70%
[6] 21.7% -- -- -- -- --
-----------------------------------------------
*Price-only (excluding dividends). #Coupon-
equivalent yield. @Constant maturity, average
of business days in December of each year.
[1]2006 year to date. [2]Calculated on trail-
ing four-quarter earnings as of 12/31/06 of
$515.86. [3]Calculated on latest 12-month
dividends as of 3/27/06 of $251.36. [4]Cal-
culated on book value of $3359.70 (most re-
cent available). [5]Actual as of 3/27/06.
[6]Approx. annualized as of 3/27/06.
-----------------------------------------------
Table 5.
------------------------------------------------------
THE BEHAVIOR OF CBOE SENTIMENT-RELATED MEASURES
AND THE S&P 500 FROM 09/09/05 THROUGH 03/24/06
------------------------------------------------------
CBOE Options S&P 500
Date --------------- --------------------
or Put/Call Ratios Vs. 10/29/04
Week CBOE -------------------- Prior 1130.2 =
Ended VIX* All Equ. Ind. Tot.@ Close Week 100.00
------------------------------------------------------
2006
03/24 11.19 0.84 0.63 1.55 0.82 1303.0 -0.3% 115.29
------------------------------------------------------
03/17H 12.12 0.79 0.61 1.05 0.83 1307.3 2.0% 115.67
------------------------------------------------------
03/10 11.85 0.87 0.53 2.02 0.81 1281.6 -0.4% 113.40
03/03 11.96 0.87 0.66 1.41 0.82 1287.2 -0.2% 113.89
02/24 11.46 0.93 0.64 2.07 0.82 1289.4 0.2% 114.09
02/17 12.01 0.83 0.51 1.36 0.81 1287.2 1.6% 113.89
02/10 12.87 0.68 0.86 0.57 0.82 1267.0 0.2% 112.10
02/03 12.96 1.08 0.70 2.50 0.83 1264.0 -1.5% 111.84
01/27 11.97 0.80 0.59 1.45 0.84 1283.7 1.8% 113.58
01/20 14.56 1.08 0.69 1.91 0.88 1261.5 -2.0% 111.62
01/13 11.23 0.78 0.59 1.64 0.87 1287.6 0.2% 113.93
01/06 11.00 0.68 0.58 0.87 0.86 1285.5 3.0% 113.74
======================================================
2005
12/30 12.07 0.80 0.50 1.39 0.86 1248.3 -1.6% 110.45
12/23 10.27 0.69 0.51 1.39 0.85 1268.7 0.1% 112.25
12/16 10.68 0.82 0.54 1.27 0.88 1267.3 0.6% 112.13
12/09 11.69 0.82 0.58 1.37 0.87 1259.4 -0.5% 111.43
12/02 11.01 0.84 0.58 1.65 0.87 1265.1 -0.2% 111.94
11/25 10.88 0.91 0.61 1.59 0.86 1268.3 1.6% 112.22
11/18 11.12 0.62 0.46 0.86 0.88 1248.3 1.1% 110.45
11/11 11.63 0.68 0.49 1.13 0.87 1234.7 1.2% 109.25
11/04 13.17 0.88 0.51 2.05 0.88 1220.1 1.8% 107.95
10/28 14.25 0.84 0.68 1.20 0.88 1198.4 1.6% 106.03
10/21 16.13 1.02 0.66 1.65 0.86 1179.6 -0.6% 104.37
10/14 14.87 1.06 0.70 1.65 0.86 1186.6 -0.8% 104.99
10/07 14.49 0.95 0.61 1.68 0.88 1195.9 -2.7% 105.81
09/30 11.92 0.83 0.53 1.73 0.89 1228.8 1.1% 108.72
09/23 12.96 0.95 0.63 1.87 0.89 1215.3 -1.8% 107.53
09/16 11.22 0.80 0.52 1.30 0.91 1237.9 -0.3% 109.53
09/09 11.98 0.78 0.51 1.60 0.90 1241.5 1.9% 109.85
------------------------------------------------------
VIX Highs and Lows (Including Intraday)
---------------------------------------
Year High Date Low Date
---------------------------------------
2006 14.56 01/20 10.81 01/06
2005 18.59 04/18 9.88 07/20
2004* 22.67 03/22 11.14 12/23
2003 41.16 03/12 14.83 12/15
2002 56.74 07/24 18.87 03/28
------------------------------------------------------
*New series, all of 2004 forward. @All
products. H-Highest S&P close during
since 2002 lows were established.
------------------------------------------------------
Table 6.
--------------------------------------
DJIA, S&P 500 AND NASDAQ 100 -- TW0-
WEEK COMPOUND ANNUAL RATES OF CHANGE
-- 29 WEEKS ENDED 03/24/06
--------------------------------------
Week S&P NASDAQ
Ended DJIA 500 100
--------------------------------------
2006
03/24 61% 54% 64%
03/17 83% 49% 2%
03/10 3% -15% -36%
03/03 -20% -0% 15%
02/24 40% 58% 22%
02/17 115% 60% 18%
02/10 3% -29% -52%
02/03 36% 5% -17%
01/27 -12% -8% -42%
01/20 -50% -39% -59%
01/13 79% 124% 375%
01/06 18% 41% 121%
==================================
2005
12/30 -32% -33% -49%
12/23 29% 21% -14%
12/16 -1% 5% -27%
12/09 -31% -17% -12%
12/02 31% 42% 57%
11/25 81% 101% 109%
11/18 78% 81% 126%
11/11 101% 117% 376%
11/04 121% 141% 179%
10/28 34% 29% 24%
10/21 -18% -30% 17%
10/14 -50% -60% -61%
10/07 -27% -34% -23%
09/30 -16% -17% 4%
09/23 -47% -43% -45%
09/16 62% 52% 54%
09/09 100% 117% 124%
--------------------------------------
Table 7.
-------------------------------------------------------------
SELECTED NYSE BREADTH MEASURES --
WEEKLY & CUMULATIVE DATA (10/29/04=0)
-------------------------------------------------------------
Average Net
Adv-Dec UVol-DVol 52W H-L Closing Tick
----------- ---------- ---------- -----------------
Week Vs.
Ended Week Cum Week Cum Week Cum Week Cum Prior
-------------------------------------------------------------
2006
03/24 -53 47636 0.12 19.95 609 40993 293 33669 1.009
03/17 4479 47689 2.41 19.83 1141 40384 676 33376 1.021
03/10 -1753 43210 -0.90 17.42 223 39243 382 32700 1.012
03/03 -256 44963 -0.31 18.32 802 39020 388 32318 1.012
02/24* 1199 45219 0.20 18.63 886 38218 606 31930 1.019
02/17 2965 44020 1.85 18.43 689 37332 514 31324 1.017
02/10 243 41055 -0.27 16.58 375 36643 440 30810 1.015
02/03 -1503 40812 -1.32 16.85 977 36268 502 30370 1.107
01/27 3805 42315 2.20 18.17 1243 35291 715 29868 1.025
01/20*-1204 38510 -1.51 15.97 599 34048 405 29153 1.014
01/13 1308 39714 0.16 17.48 1209 33449 586 28748 1.021
01/06* 5195 38406 2.99 17.32 992 32240 518 28162 1.019
=============================================================
2005
12/30* -978 33211 -1.05 14.33 -2 31248 313 27644 1.011
12/23 1091 34189 3.38 15.38 4 31250 378 27331 1.014
12/16 359 33098 0.78 12.00 265 31246 406 26953 1.015
12/09 -64 32739 -0.08 11.22 426 30981 457 26547 1.018
12/02 1471 32803 0.03 11.30 444 30555 454 26090 1.018
11/25* 2686 31332 1.81 11.27 356 30111 550 25636 1.022
11/18 146 28646 1.06 9.46 -259 29755 535 25086 1.022
11/11 999 28500 1.03 8.40 26 30014 579 24551 1.024
11/04 2974 27501 3.51 7.37 244 29988 703 23972 1.032
10/28 -150 24527 0.35 3.86 -440 29744 378 23269 1.017
10/21 -801 24677 -0.49 3.51 -588 30184 472 22891 1.021
10/14 -3911 25478 -1.80 4.00 -1066 30772 61 22419 1.003
10/07 -3174 29389 -2.64 5.80 -24 31838 133 22358 1.006
09/30 1986 32563 1.40 8.44 317 31862 446 22225 1.020
09/23 -3738 30577 -2.28 7.04 190 31545 -36 21779 0.998
09/16 -1842 34315 -0.27 9.32 465 31355 490 21815 1.023
09/09* 2269 36157 1.59 9.59 787 30890 721 21325 1.035
-------------------------------------------------------------
*Four-day trading week.
-------------------------------------------------------------
Table 8.
-------------------------------------------------------
NEW YORK STOCK EXCHANGE BREADTH MEASURES
-------------------------------------------------------
Volume* Issues 52-Week
---------------- ---------------- --------------
Week -A- -B- -A- -B- A/ H/
Ended Total Advan. B/A Adv. Decl. A+B High Low H+L
-------------------------------------------------------
2006
03/24 7.386 3.683 0.50i 8210 8263 0.50i 750 141 0.84
03/17 8.332 5.300 0.64 10478 5999 0.64 1268 127 0.91
03/10 8.211 3.576 0.44 7360 9113 0.45 417 194 0.68
03/03 8.172 3.882 0.48 8109 8365 0.49 927 125 0.88
02/24# 6.142 3.109 0.51 7221 6022 0.55 937 61 0.94
02/17 8.112 4.899 0.60i 9763 6798 0.59i 814 125 0.87
02/10 8.547 4.066 0.48 8412 8169 0.51 536 161 0.77
02/03 9.208 3.858 0.42 7541 9044 0.46 1122 145 0.89
01/27 9.456 5.778 0.61 10233 6428 0.61 1387 144 0.91
01/20# 7.220 2.827 0.39 6091 7295 0.46 699 100 0.88
01/13 8.393 4.193 0.50 9009 7701 0.54 1291 82 0.94
01/06# 7.294 5.094 0.70i 9341 4146 0.69i1081 89 0.92
=======================================================
2005
12/30# 4.325 1.594 0.37 6167 7145 0.46 307 309 0.50
12/23 6.909 3.526 0.51 8853 7762 0.53 449 445 0.50
12/16 8.480 4.553 0.54i 8525 8166 0.51i 767 502 0.60
12/09 7.918 3.852 0.49 8289 8353 0.50 750 324 0.70
12/02 8.229 4.072 0.50 9048 7577 0.54 768 324 0.70
11/25# 5.216 3.410 0.65i 7799 5113 0.60i 745 379 0.66
11/18 8.145 4.515 0.55i 8301 8155 0.50i 564 823 0.41
11/11 7.527 4.193 0.56i 8612 7613 0.53i 524 498 0.51
11/04 9.171 5.658 0.62i 9647 6673 0.59i 578 334 0.63
10/28 8.707 4.482 0.52i 8130 8280 0.50i 244 684 0.26
10/21 9.014 4.196 0.47 7763 8564 0.48 145 733 0.17
10/14 8.737 3.389 0.39i 6270 10181 0.38i 77 1143 0.06
10/07 8.913 3.086 0.35 6583 9757 0.40 497 521 0.49
09/30 7.779 4.530 0.58i 9197 7211 0.56i 726 409 0.64
09/23 8.570 3.096 0.36 6347 10085 0.39 667 477 0.58
09/16 8.357 3.979 0.48i 7265 9107 0.44i 688 193 0.78
09/09# 5.803 3.659 0.63i 7658 5389 0.59i 859 72 0.92
-------------------------------------------------------
*Billions of shares. #Four-day trading week.
-------------------------------------------------------
Table 9.
----------------------------------------------------------
DJIA, NASDAQ COMPOSITE AND S&P 500 CLOSING PRICES ON
SELECTED DATES VERSUS RESPECTIVE 20-DAY, 50-DAY AND
200-DAY MOVING AVERAGES (Percent or Portion Thereof)
----------------------------------------------------------
DJIA Vs. NAZ Comp. Vs. S&P 500 Vs.
--------------- --------------- ---------------
Date 20D 50D 200D 20D 50D 200D 20D 50D 200D
----------------------------------------------------------
2006
03/24 1.4 2.6 5.5 0.9 1.3 5.4 0.9 1.6 4.9
03/17 1.8 2.9 5.7 0.9 0.9 5.5 1.5 2.0 5.6
03/10 0.3 1.3 3.9 -0.8 -0.1 3.6 -0.1 0.3 3.6
03/03 0.2 1.0 3.5 1.1 1.1 5.7 0.6 0.9 4.2
02/24 1.0 1.6 4.2 0.5 0.7 5.6 0.9 1.3 4.7
02/17 2.2 2.2 4.7 0.4 0.6 5.3 1.2 1.2 4.5
02/10 0.9 0.7 3.0 -0.6 -0.2 4.8 -0.4 -0.2 3.2
02/03 -0.7 -0.6 2.1 -1.4 -0.1 5.6 -1.2 -0.4 3.4
01/27 0.4 0.6 3.4 1.0 2.0 8.0 0.6 1.4 5.3
01/20 -1.9 -1.5 1.2 -1.1 -0.1 5.6 -1.0 0.0 3.6
01/13 0.7 1.3 4.0 2.3 3.2 9.0 1.3 2.3 5.9
01/06 1.2 2.0 4.2 2.6 4.0 9.1 1.6 3.0 6.0
----------------------------------------------------------
2005
12/30 -1.0 0.1 1.9 -1.7 -0.2 4.5 -1.1 0.4 3.1
12/23 0.4 2.1 3.5 -0.0 2.6 6.9 0.5 2.8 5.0
12/16 0.3 2.6 3.5 -0.0 3.6 7.2 0.5 3.3 4.9
12/09 -0.3 2.1 2.5 0.8 4.4 7.7 0.5 3.1 4.3
12/02 1.2 3.4 3.5 2.4 5.8 8.8 1.7 3.9 5.0
11/25 2.7 4.3 4.1 3.4 5.9 8.5 3.0 4.4 5.3
==========================================================
10/21 -1.4 -2.3 -2.7 -0.6 -2.0 0.5 -1.5 -2.7 -1.6
10/14 -1.0 -1.9 -2.1 -1.9 -3.2 -0.4 -1.7 -2.5 -1.0
==========================================================
2004
12/31 0.9 2.9 5.1 1.1 4.0 10.4 0.9 3.0 7.3
12/24 2.0 4.4 5.7 1.1 4.8 10.1 1.4 3.9 7.4
----------------------------------------------------------
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