Since there isn't much to discuss about Monday's market, I want to begin with a sort-of follow-up to the 1975 scenario I wrote about Monday. I see that the folks at Newsweek have given us the cover story that the recession is now over.

More Meisler
Lumpy and Bumpy

Whether it is or it isn't I will leave to the economists and the folks who forecast such things. I, however, use Richard Russell's fantastic annual charts with his notes on them for some historical context. So I flipped to the chart of 1975, and what I saw for August was fascinating. His notes said: August economy picks up strongly; recession is over.

Now, how can you read that and not think of this Newsweek cover? Conventional wisdom would say the recession is over so stocks go up. In fact, that would be logical and that would make so much sense. But instead, as we noted in the 1975 chart Monday, stocks broke out of the head-and-shoulders bottom and then went sideways. So much for conventional wisdom; so much for logic!

The other interesting tidbit from late 1975 was that was the time when New York City was on the brink of failure. Russell notes on May 14, 1975, that New York was virtually insolvent and there were fears of default. Later that year, in October and November, the city received support and got saved.

I am not fully versed on the situation in California, but isn't there a similarity here? Two major economic forces (one a state, one a city) in the U.S. and both were on the verge of bankruptcy and both got saved.

As long as I'm sharing news from the mid-1970s, I may as well note that in the fall of 1975, W.T. Grant, which was the second- or third-largest five-and-dime store at the time (Woolworth being the first, I believe) closed more than 200 stores. I have no idea how many stores they had back then, but we can be sure the average retailer of today has well more than W.T. Grant had then.

But that's not all. In early 1976 the company went bankrupt and liquidated. Gosh, and the recession at the time was over already.

Back to 2009, there was a big shift in the International Securities Exchange call/put ratio Monday, as the equity-only portion closed at 196%. It rarely has gotten that high. The last two times we had readings around 200% were mid-June, when the following two days found the S&P 500 lose 35 points, and late May, when the S&P fell nearly 17 the next day. This is the first time we've seen sentiment move toward giddy in this two-week rally.

Speaking of sentiment, would anyone care to wager what those Investors Intelligence readings will bring this week when they are reported on Wednesday? I'll start the guessing by saying bulls will be in the upper 40% range and bears will be in the upper 20% range. The charts are shown below for your reference. Last week's readings were 36% bulls and 35% bears. Let the guessing begin!


For more explanation of these indicators, check out The Chartist's primer.


Know what you own: Meisler mentioned the S&P 500. Stocks in the index include Allergan (AGN), Aetna (AET), Franklin Resources (BEN), Noble Energy (NBL), Kellogg (K), Coca-Cola Enterprises (CCE), Nike (NKE) and Union Pacific (UNP).

At the time of publication, Meisler had no positions in any stocks mentioned, although holdings can change at any time.

Helene Meisler writes a daily technical analysis column and TheStreet.com Top Stocks. For more information, click here. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback; click here to send her an email.

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