Swing Trader

In the last edition of Swing Trader (published October 30), I noted that we were seeing a dramatic unwinding of uncertainties that could foreshadow a bullish turn. In addition, I noted that the market was not remotely held in a complacent manner, with several key markers suggesting contrarian buy signals:To make matters more interesting, all of this comes out of a context of clear bearish positioning across the market, with the 10-day average of the CBOE Put/Call ratio getting as high as 1.2 in October--a level only a handful of times over the past decade, each of which marking at or near a significant low followed by strong gains over ensuing months.Another similar mark is a 4-year high in net short interest among hedge funds according to the HFRX/SPX correlation model. Finally, in its most Fund Manager Survey, Bank of America just signaled its contrarian buy signal as cash allocations among large portfolio managers ratcheted up to 5.3%, which is a significant threshold of risk...