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ICI Reports Largest Equity Fund Outflow In Two Months, Coinciding With Short Covering Market Surge
Remember how the market surged last week? One would think this may have been driven by something as fundamental as actual capital instead of HFT channel stuffing, frontrunning, and other no volume gimmicks, and that retail might actually be participating in a rally for once... One would be wrong. According to ICI even as the market was surging, once again - on no volume, it was merely an orchestrated means for mutual funds to sell out of stocks at slightly better prices to cover another week of massive outflows. In the week ended July 7, ICI reports that domestic equity mutual funds saw $4.1 billion in outflows, the largest outflow in the past 2 months, and the third biggest weekly redemption in 2010! This is also the tenth sequential outflow, amounts to $34 billion in total outflows YTD, and represents a losing streak even worse than that of the BDIY.... Yet stocks jumped. One day we hope congress will ask the Fed to explain this particular observation. And yes, in other lack of news, investors no longer trust stocks period: $6 billion in capital was allocated to taxable bond funds. Nobody cares about 10% returns with the possibility of a total wipe out. 4%, capital preservaton, and staying away from the corrupt and broken stock market is more than enough for most Americans nowadays.
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Equity Funds? So 1990. Today, we are ALL investors in the Big Daddy of all managed portfolios:
http://www.federalreserve.gov/econresdata/releases/statisticsdata.htm
Closed for redemptions, but try again next millennium.
Nobody cares about 10% returns with the possibility of a total wipe out. That is a scream! It makes me want to go out and buy more canned food.
For once the little guys sell into a rising market. YAY!
Something that actually makes sense, yes! The talking heads were really fooling me into believing few people were catching on yet, all the while, look at the flood to the exits!
Been telling my folks to keep selling their mutual funds into these senseless rallies so yeah I have been doing my part in the outflows. Once most people are out, there wont be any punt returns from all the punters out there.
Of course the reason why the little guy keeps selling is because his unemployment insurance is running out and he is liquidating his 401k.
But EURUSD daily chart is still bullish.
http://stockmarket618.wordpress.com/about
nothing new here.. sell stocks and dollars.. go long 10yr
Did everybody see the dollar weakness as coming next?
Erm, not me. Euro about to break 1.30. Many see this as a continuing trend (?)
Looks like short covering to me.
trend is your friend...
lol
This is an interesting stat in itself, but is there one that covers total equity market flows that anyone knows of?
It would be very handy to see how significant this number, and what other in/outflows there are.
Comments??
There's no way to measure it for a number of reasons, such as "private" transactions between funds, pensions and other private money such as hedge funds. Most private money managers/investors consider their transactions to be proprietaryinformation and so do some of the exchanges. Then there is the so called "shadow" markets/exchanges. And how do you filter out the HFT churning or should you even try?
Looks like the death cross is being confirmed as we speak. I see the NASDAQ has now crossed, the DOW (which already crossed) managed to make it back up through the 50 dma and kiss the 200 dma before reversing, the S&P (which already crossed) barely made it up to the 50 dma before reversing and the Russell is a few days away from the death cross.
Unless the PPT puts in a very strong showing today and tomorrow, watch out for renewed selling across the board. "Real" selling I mean.
I don't think momentum algos put as much faith in charts as we do. Charting has been a pointless endeavor for me over the last year. It doesn't matter if support is breached, head and shoulders, double top, double bottom. it's always the same no momentum churn up on low volume, and then a no-bid mad rush for the exits as the trap drops.
I agree to some extent. When the "machine" has good control of the market and is pushing it up, TA doesn't work well.
But when the market begins to fall, TA is very helpful in recognizing resistance points and potential short term bounces. If there is a lot of selling, I will ignore minor resistance. But even during the Sept-Nov 2008 plunge and again during Jan to Mar 2009, major resistance points were respected by the market, even if it was only for a pause or a short and violent bounce of a few days to a week.
I don't concentrate on any one indicator. But some are more valid than others during times of market stress.
It's like struggling to get your bearings during a storm at sea. What works well on calm waters becomes difficult when you can't even hold the compass on a surface that's not being thrown around. But you sound like a die hard with lots of experience. Maybe keep on eye out for others and help them avoid the rocks?
Really, I just wanted to say that it makes sense to me that resistance levels are still significant, if not mostly for their psychological component, but it's the predicting which way that defies the old rules, no?
"...but it's the predicting which way that defies the old rules, no?"
The toughest lesson that I must repeatedly (re)learn is to let go of old "rules" that no longer work. In fact, I can get stuck in a self defeating spiral downward by demanding that they are just temporarily broken or that they should work but don't because of "them" and their artificial influences. So I have a tendency to hold on for too long. My ego gets in the way.
I do think that the manipulators, official or otherwise, will and do use TA to their advantage when markets are falling. They make money proving TA to be correct by manipulating the markets to bounce (and fall) precisely when they "should" bounce (and fall).
Why an indicator(s) works or doesn't is becoming less and less important to me as I push past my ego and recognize my job isn't to be "right" but to make money for my clients. That doesn't mean I can justify immoral or unethical behavior. But it does mean that I can "read" the market, including any manipulation, and do my job.
The side effect is that at the end of the day, when I have made some money for my clients, I can brush off my ego and hand it a wad of dollar bills to have some fun at the strip club. "There there poor ego, go out and have some fun and forget all about your hurt feelings". :>)
I've learned that I have the "wrong" temperament for this type of work. But I've also learned how to adjust to and compensate for my temperament. And after all, that's how we all finally succeed, don't we?
Sounds good to me..are you interested in adding to your client base?
"I do think that the manipulators, official or otherwise, will and do use TA to their advantage when markets are falling."
Here is a big problem you must honestly confront. When you go to take profits, taking profits is all you should be thinking about. Nothing else. I made a stupid trading error today, as i am sure a lot of you have.
Today i was up 90 points on a gold short, and had wholesome intentions to buy back at the clear rising trendline that has developed over the past few days. But get this…when it hits my target i start mulling over who is involved in the move, and right on cue all the shyte i have been reading at zerohedge (whether its true or not) comes bubbling up like a mad brew at the back of my mind. I am just sayin, consideration of the “Evil Empire” of the JMP & Co market manipulators, is not a variable to be thrown into the mix AT ANY STAGE of a trade, period…especially when you start depending on them on to break support! WTF? Anyhoo, closed out flat. The end.
Cant you folks see this...you are all spooked out. And today was a big insult to me, i feel like a filthy dunce for thinking that shit. I have gained nothing financially from reading the material on this site, does anybody remember how consistently bearish this site was through 2009? Thank fuck I didn’t read it. How are you people feeding yourselves?
The market is random, it doesn’t matter if its manipulated into being random or not!! Get it? It's still randomness. TA will enable you view the randomness in terms of probabilities, you find your edge with the TA, behave yourself and let central limits theorem do its job. You don’t try to work out who’s manipulating shit, who cares. Manipulators cant make anything more, or less random. lol i am gone.
Who says I make the same mistakes you do? I'm very rigorous in taking profits and taking the loss and moving on. Long term holding, medium term holding, even holding for more than a week or so is so dead as to be decomposed. Make some money, put it in your pocket, wait for the next set up, make more money.
Wash, rinse, repeat.
c'mon, be honest. If you think the markets are being manipulated, if you believe it i.e. you have accepted it at a significant level of your being, then you will factor it into your trading psychology. Now, dont bullshit me man, the word "manipulation" throws up all manner of connotations in a traders mind...none are positive, or neutral. Today, i said to myself...well, if "they" have took it down this far, they may aswell take their chance now and wreck the market. That was the one belief that did me today. So sad.
I'd just love to hear you expand on WTF that's supposed to mean.
Actually, nm.
Yeah, no worries Thespian I will explain it for you,
I suppose i could place Brownian motion at the heart of what i am trying to explain here and where i suspect you are misunderstanding me. If you are an observer of random Brownian motion of any sort, you should only concern yourself with one thing. That it is random, and that each phase is statistically independent. It really doesn’t matter what is driving each individual phase of the motion, whether the motion is driven by nature or elsewhere is irrelevant to the observed outcome. From a market perspective, whether the brownian motion is reacting to the bids and offers of the retail investors, or moving under the bids of the fed, its still moving, still moving randomly.
The market is in a constant state of manipulation, every time you trade you are manipulating it, thousands of traders will randomly manipulate it every second of every day. Only one thing is constant; the overwhelming majority of the times you interact with it you wont know why something is going to happen, who’s going to do it, why they are doing it, when its going to happen, how big or small it will be or how long it will last. Every moment is unique(i.e. most times you wont know the shit has the fan till its all over your glasses). So under those circumstances, as a gambler trying to work out your odds, why should you worry who moves the market as it will be just as random regardless? you getting me? In fact, ideas about manipulation maybe detrimental to your decision making...for example if you are long gold you might be watching every down move , and every leg down would have you considering whether its JPM or not. We trade on beliefs, and if you believe that someone with the clout to crush your bids is hiding behind the curtain, then you will pay for it in cortisol.
On the flip side, as a responsible human being, if you want to take it upon yourself to right a few perceived wrongs, go for it. If you think that political will is currently driving your markets, then you have a right to be upset and to become involved in some kind of activism. But remember, as a trader, its only extra baggage. If you are only out to make money so you can do your thing, it dosent make sense to bring elaborate concerns into the market, cause what you know about how certain entities might behave wont change anything for your bottom line, they will either act at a point or they wont, its binary, and if they don’t somebody else will and the market will be moving regardless. If you have a strong conviction that "they" will act, or are in the process of acting, then you might run into problems. In fact you will run into problems.
Trade what you see, if its good enough for the algos its good enough for me.
We bouced off a fib and stopped at a moving average, and now sitting on support which should have been resistance. Its the newest short term trend until it changes, the new normal I hope.
I do not see how even this market can ignore fundamentals especially with the Empire number this morning. Then again this market seems to like rumors over data.
Is this the PPT's last stand?
Nope. Not when all the wicked Central Bankers (the PPT) have the multi-trillion dollar ATM of the FX at their disposal. It is one big-ass shell game, one they will perpetuate for a LONG time, come deflation or hyperinflation, it matters not to them.
Probably gets easier to manipulate a market when there are only a few manipulators left, too.
Traders like rumours, and can buy and sell. The ICI data suggests many fewer 'investors', more traders. The more the funds flow away, the more traders dominate, and more choppy the market gets.
Also I think its more dangerous. You see, tracker funds dont sell much. We can go down 20% in a day, some won't sell until they get redemption orders. They actually give some stability as they don't chase the herd. The more I see technical choppy markets, and fund outflows, the more scared of a complete crash I get.
Last night's report from Dr. McHugh states that his proprietary PPT Risk Indicator fell to negative and states, "...we are now in a zone where the PPT will have trouble stopping a plunge, should one occur..."
This is one of his most reliable indicators.
Are you talking about this guy? If so, what is your opinion of him? I don't know him so I'm just asking.
https://www.technicalindicatorindex.com/
Yes, it is the link that I gave to you last week or the week before with the info that he provides a 30-Day Free Trial with just a first name and any e-mail address.
His PPT Risk Indicator has been extremely accurate.
OK, thanks. I just signed up. It will be interesting to see where he and I agree and disagree. I suspect that I'm the true amateur here.
CD I'm fn ready.
http://gothamist.com/attachments/jen/2008_10_dow1000.jpg
COG's
This will confirm yesterday's(MARKET FLY) mission as a success as those trip wires we set at 200DMA held the sucker back.
MISSION STATUS REPORT:
CEILING SECTION 1100SPX SECURE.
"SIR,THERE ARE STILL SMALL POCKETS OF RESISTANCE"
"CORPORAL COG, TAKE COMMANDER CODY AND PRIVATE LONESTAR AND SET UP A TACTICAL POSTION JUST ABOVE 200DMA".
"AND CORPORAL,USE THE HEAVY ARTILLERY.YEAH,THE TWIN JET SHOOTER"
http://www.thecolektr.com/Hot%20Shot.jpg
"SGT.TYLER REMAIN VIGILANT COS YOUR STILL ON LOOK OUT DUTY "
"NOW MOVE IT SOLDIERS"
LOL
"Yes Sir, I have my finger on the trigger, Sir."
so the H&S was real after all
We shall only know after the fact. But this recent market rise looks to be stalled so take profits and wait for the next set up. Which appears to be short but hasn't rolled over quite yet. Take an initial small short position and wait.
My second biggest mistake is thinking it's an "all or nothing" game. The big kill is the amateur in me that wants to come out all the time. Think smaller and I survive longer.
Demographics of the baby boomers retiring are going to be a powerful headwind against stocks. Younger (20-30) folk have no faith in the market. 40 year olds have seen no appreciation for 13+ years, and have seen 3 crashes/bear markets (1997, QQQ, 2008).
5-10 years from now, the stock-owning culture will finally be wiped out, and people at a cocktail party will laugh at you when you tell them you own stocks.
BTW, CNBC is in full hopium mode today. Anchors almost angrily asking for some optimism from guests.
Same as Japan in the 90's. Demographics is the key. US Equity market done.
Good points. Smart baby boomers shifting towards capital preservation and retirement spending - negative capital outflows from markets. Only desperate money hanging in there (to be corned and clobbered). Most others (younger people) either have no disposable income to invest or aren't going to throw it willy-nilly into this rigged market knowing they are going to fleeced by the big boys.
Corporated faith was lost long ago. Market faith now history - as in obliterated. Faith in government soon to be wiped out too. What will be left is an every-man-for-himself environment. Party is over for sure.
A little Schiff, was he lucky or a good call on the dollar?
http://www.youtube.com/watch?v=rDfjBBwdHWE&playnext_from=TL&videos=xXk7QoEFd20
Well, people are borrowing against their 401k accounts (or just pulling out at 30% loss) They have to keep up appearances of not being bankrupt to impress their (also bankrupt) neighbors. I've had to answer a lot of stupid questions about whether someone should take a 30% tax hit to get current on a mortgage that they are definitely going to default on. Anyways, this should be a continuing and accelerating trend, as baby boomers will be retiring. As they start living off of their retirement accounts, watch the outflows to continue, and equities to plunge.
It ain't just retiring boomers. It's most of the country burnin' through cash. THat's what happens when you get a burst credit bubble without attendant deflation to re-equilibrate prices. The Fed's reflation policy has kept the cost of living high relative to the amount of economic activity. Meanwhile people's equity in real estate is deflating, jobs get lost or hours get reduced and incomes are continuing their deflation of the last 3 decades.
So people tap whatever store of value they can to tread water. 401K's are a prime target, as are insurance policies. I keep saying that all retirement assets are deflating since you also have to consider reduced social security and medicare in the future.
That sounds probably right. It's like savings accounts were done away with years ago because of inflation so people had to invest in retirement accounts instead. Now, that too is being trashed. Santa Oz is such the trickster!
EOM
BINGO! With declining access to credit, continuing loss of income (via lost employment, reduced hours and profits etc) more and more people are tapping into their 401K's, IRA's and burning through savings accounts. MSM has convinced these people that things are recovering and that they will get better. They are further convinced that things will 'return to normal' and so they are tapping out their nest eggs without screaming about it too loudly. I was wondering why we're not hearing/seeing thousands of panicked, angry people protesting the expiration of their UE benefits and then it occurred to me that a huge percentage of people do have some type of 401K, IRA etc and they're likely tapping those heavily. But, I seem to recall that the average 401K balance is only about $22k (take away 30-40% tax & penalties, you get about $13k) once those balances empty, watch out! There may be desperate measures for desperate times.
For sure. Its all about cash flow right now. In this environment, with assets declining, it is difficult to liquidate. First stop is to cash out the retirement savings - if they haven't already been tapped. With credit contracting, most businesses and people simply don't have anywhere else to turn. Borrowing from credit cards right now is suicidal given the current rates. But, for some, in desperation will be a hail-mary play for a little more time. Along with fire-sale liquidation of everything that is not nailed down. Once cash flow comes to a stop - regardless of the P&L says - it is game over.
What is amazing is how long some businesses and personal situation can seem to hold on. most situations are pretty dynamic and can manuever in pretty "creative" ways. But, it has been my experience that eventually it catches up. And when it does, it feels like full halt... like hitting a wall.
Agree. Good point about those who expect a "return to normal" burning through savings quietly. Keep in mind many are hog-tied to mortgages, HELOCs or other debt they have to pay at yesterday's prices using today's wages or profits. These people will get angrier as their savings dwindle, their assets and incomes continue to deflate but costs remain buoyant. As for lack of protests due to expiring UE benefits, I don't hold much hope. They regrettably get so demoralized and outcast that their voice is rarely heard. But once they do get mad they are the ultimate nightmare for TPTB: food riots in the USA? Happened in the 1930s. I suspect it's one hidden motive for foreclosure prevention (keep 'em quiet by keeping off the streets)
Where is the domestic outflows going? Just bonds? Oh, I hope they're not just people down and out cashing in stocks to pay bills. Maybe buying gold, silver?
If people buy physical metal, does this make consumer spending look better than it is and savings look worse, even though it means the opposite?
I don't know ... isn't mutual fund the "dumb money"? If dumb money is getting out of equities and into bonds (or cash, or GOLD), would it not make sense to short bond (cash, GOLD) and buy equities?
self irony?
There's always a possibility of a total wipeout. What's changed this time around is that many of the small people have lost their shirts playing Housing Market Roulette. Risk-taking is proportional to back-stopping, except for gambling addicts in vegas.
Also, unemployment payments that have run out are possibly causing citizens to dump their portfolios. And with the govt raiding public pension funds and rattling their sabers about regulating the freedom to take early withdrawals on private retirement accounts, I'm surprised there hasn't been a huge run on 401k's yet. I know some of the people on ZH have dumped their 401k ponzi accounts and taken the tax hit now rather than face an uncertain tax structure in the future.
Did that 3 years ago and bought gold at $600.
gap @ 1078.75 still open but took some SPXU profits at 33.60;
my guess is people are withdrawing $ from funds to pay bills and survive and they smell crash; over the past month I have helped friends/clients move out hundreds of thousands of dollars from equities
just look at the 10yr.. its not flinching...
DEFLATION BITCHES
If you mean deflation of all of those things we've inflated, such as housing, stocks, education, etc, but if you mean a strong dollar in the years to come... pause, include the dollar as just another over inflated commodity that will also see a correction. No?
I joked that this would be the case. Well well well....
The market rallies from manipulation by the banksters and from that only
This will be true so long as price makes no sense
so long as the markets are a madoff joke
and criminals reside at the top
tyler warned the other day that there was distribution and yet perverse increasing price and bids; i watched bids and asks float higher on NO trades on options and equities;
this finreg is poison - will destroy smaller fin institution and reduce credit even more; corruption between TBTF and gov cabal will increase - its reformed corruption
Visions of the Fall of 1720 dance in my head.
Do you remember when talking heads everywhere would scream : "Our economy rewards Risk Takers! Be a risk taker!!" Well, that little maxim is dying a grim death as the bodies pile up. It's easier to take risk when you can fall back on a rising economy if you fail. Now there's no more net.
Lots of news coming all at once now. Let's see what kind of stick save they think they can pull off this time.
Keep buying them dips, metup will continue. :)
http://finance.yahoo.com/tech-ticker/get-out-while-you-can!-dow-headed-to-5000-charles-nenner-says-520577.html?tickers=%5Edji,%5Egspc,spy,%5Eixic,qqqq,dia,iwm&sec=topStories&pos=9&asset=&ccode=
Baby booms cashing out.
Baby boomers cashing out.
It looks as though the big banks and speculators are not going to have anyone to sell to.
This whole run up since March 09 has been done with the free money from the Fed.
Now, the big banks, who in my view have been the buyers of this rally, have no one to sell to. I bet part of the scheme from the fed and their under studies was to try to take advantage of people who sold at the market's low and to have they buy now at much higher prices. This would of helped the bank's to cover their bad mortgage bets.
Well, well, it looks like it ain't happening.
Good post. Ive been wondering since the bailouts and stock pumping began who will they sell to in the end? Seems they IMAGINED by now they'd fool the greater fools into believing its boom times again and pass off the pump to the public, but the public is broke. To me Its the worst conceived plan in history...sure they can make things look better for a bit by printing and pumping equities, but they'll end up being the biggest bagholders in market history! Of course now WE will get the bill, simple answer to that though- dont pay.
I don't think it was a horrible plan. It is really risk less from the bank's side. Free money from the fed. Moreover, I think they are making money off the people who still automatically invest for the retirement funds. It is those people who are way overpaying for stocks right now. This will only work for a limited time. I just think they were hoping for more money from an economic turn around that would drive everyone back into the market. I think the market is pretty much seen its peek. As mentioned, the baby boomers are done. A slow drawn out decline is what I expect as the baby boomers suck off the nipple of their shrinking asset tit.
If anything, a big mutual fund withdrawal week is a bullish indicator in the short term, although the info probably comes a bit too late to really do anything about it. Look at where the biggest INFLOWS were -- right at the tops. The biggest outflows are mostly the week after bottoms.
Frankly, if we remove the flash-crash outlier, buying on big withdrawal weeks is pretty clearly the best short-term strategy to be inferred from this chart. Of course, that would have been LAST week, and it's already happened. Surprise! It was an up week.
So...Mutual Funds offer supply at higher and higher levels, sucking in the retail investor. Meanwhile, they go on the tube with,"This is a great buying opportinity" B.S.
Love this market!!
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