Sunday's Notes From The Trading Turret: Two Garbage Truck Drivers Loaded With GM And Pfizer 1/8/06 6:41 PM....Abridged From Alchemy Live Site

"The NYSE new-highs list expanded from double digits to 300 names Wednesday, a day in which the TICK Indicator reached levels rarely seen." -- Barron's, January 9, 2005

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What in the world are those Commercials in the S&Ps and Nasdaq 100 futures up to? (See New Section With COT Charts)

And I guess we should ask the same question of the Large Traders since they are taking the opposite side, especially in the S&Ps.

Bianco Research counsels that we should fade the Large Traders in financial futures as opposed to piggybacking the Commercials per se, but at this point no matter how you slice it, this is a potentially bearish alignment.

I say "potentially" because at certain times the Commercials will abandon a move as they realize they were plainly wrong, but this is usually the lower probability event.

And the way these short positions have erupted on the face of the market like a puss-filled boil tells me that an excellent short-selling opportunity is closing in.

Another thing.....what is Mark Cook thinking?

Well, we know that he's been publicly Bearish since mid-November, saying explicitly and daringly that "The Top Is In...You Heard It Here First...."

We also know that his Cook Cumulative Tick Indicator (CCT) was probably off-the charts bearish back then before he'd make such a statement, and this week TICK got only more extended as that quote at the beginning testifies.

I think it was Tuesday(?) when I saw a nearly +1500 TICK recorded, and after I picked myself off the floor I knew that Cook must be recording some outrageous numbers, and probably building his Long Index Put Position with greater fervor.

If you read a back issue of Active Trader from August 2001, you'll see an in-depth interview with Cook, and I'll put some of that in the Alchemy Weekly Newsletter -- which, incidentally, may not be out for a couple of days since I've been in bed most of weekend with the flu.

In the meantime, note that according to Cook the "time window" for the indicator is "three weeks to three months."

If that's the case, we may be approaching a very interesting point since Cook has Street Cred in my judgement.

Yes, he really does, and I was a subscriber at one time and saw how he was able to pinpoint these big trades with his CCT, although $400 a month is little outlandish if you can't soft dollar it.

But anyway, I'm alert, watching, on guard and ready for one of these big trade opportunities should it become clearer and more obvious....right now things remain a little foggy.

Let's move on now.

Internals Say Higher, But........

That chart just above is a Weekly view of the NYSE Advance/Decline line, and you can see that it's broken out to a new all-time high, confirming the move in the NYSE Composite.

Yes.

Not only that, but you can also see that the chart of the Percent Of NYSE Sticks Above 150 Day m.a. has broken above the downtrend line in place since last August.

Also keep in mind that market tops are usually associated with divergences between A/D lines and new price highs in indices

At the moment the S&P 500 and other major indices -- as opposed to the NYSE Comp -- are showing lagging A/D lines, but they are catching up quickly and could confirm price moves shortly.

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Bond King Eloquently Makes The Case For Treasuries......But This Isn't The First Time

"....Yields have peaked in the bond market and will soon peak in Fed Funds producing an economic slowdown in 2006. If the Fed goes beyond 4½% and inverts the yield curve, the possibility of recession will increase. But for now, hopefully you can take solace from a new timing indicator that says the worst is over for bonds and an indicator that should keep on giving in terms of its reliability for years and years to come. Enjoy and Happy New Year…for bonds! -- Bill Gross, January 2006

So what do you buy if this rally is going to continue upward for a couple months or longer and you want to spread your money around?

How about T-Bonds?

I am candidly intrigued by the Bond King's latest missive on the Pimco web site, and that's something you may want to check out here.

There will no doubt be a good trade where you can load the boat with Treasuries, but is it here yet? I'm not convinced at this point.

What about Gold?

That's not my strong point I must admit -- in fact I run the Moron-A-Thon in record time in the precious metals -- but these two charts give the impression that things are a bit frothy in precious metal-land at the moment.

First, the 52 Week Rate Of Change (ROC) is at a level that has corresponded with other significant short-term cracks.

Secondly this other chart shows how far price is extended above the 55 and 200 Day Exponential m.a.

Extended?

Yes, but listen carefully, very carefully, to what I'm about to tell you.

I've been following BCA Research since 1987, and they've been very properly and essentially correctly bearish on Gold since that time but.....

......they are no longer bearish on the outlook for Gold, and see the price reaching $1,000 at some future point, although they haven't said precisely when they expect that to occur.

So I must tell you that their outlook carries significant weight with me, and it probably means that pullbacks are buyable.

Here are a few other details:

"BCA's Most Surprising New Forecast

"BCA has not been a big fan of gold since the mid-1970s when inflation was soaring. In fact, BCA has mostly been bearish on gold since they recommended selling it in late 1979. However, in December, the editors published a Special Report on gold in which they predicted that gold will rise to near $1,000 per ounce over the next several years. Given their outlook for continued low inflation for at least the next several years, it no doubt comes as a surprise to many readers that they have taken such a bullish position on gold. However, BCA's latest bullish stance on gold is more in line with their predictions for other commodities over the last year or two. In other words, they are bullish on gold more for supply and demand reasons than out of concern for inflation."

Let's Close Now And Take A Look At Those Charts Of Interest

Stephen