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SPY Volume Back To 2010 Lows As Equity Mutual Funds Run Out Of Cash

Tyler Durden's picture


At 112.8 million shares traded, the SPY just recorded its lowest volume day for 2010. One of the possible reasons for this: mutual funds are rapidly running out of cash to buy stocks. As Bloomberg notes, "equity mutual funds are burning
through cash at the fastest rate in 18 years, leaving them with
the smallest reserves since 2007 in a sign that gains for the
Standard & Poor’s 500 Index may slow. Cash dropped to 3.6 percent of assets from 5.7 percent in
January 2009, leaving managers with $172 billion in the quickest
decrease since 1991, Investment Company Institute data show. The
last time stock managers held such a small proportion was
September 2007, a month before the S&P 500 began a 57 percent
drop, according to data compiled by Bloomberg.

The chart below shows that the entire upswing in ES has occurred on below average volume!

David Rosenberg also has something very comparable to say:

The VIX is at 17; the TED spread at 8bps; CDS has tightened in to six-week lows; the nasdaq and small cap indices have broken out to new recovery highs; oil is back above $82/bbl … and, as charts below from the ICI illustrates, portfolio managers have been so nervous to miss any up-moves that they have run down their cash holdings to 3.6% of assets from nearly 6% a year ago — the largest decline in 19 years. Equity cash ratios are back to where they were in September 2007, just as the stock market was hitting its peak.


Ironically, Bloomberg and Rosie seem to have some rather strikingly comparable (verbatim) thoughts.

Is this merely the preamble to rotation from Fixed Income funds into equities? With a near 70% bounce from the lows, and with fixed income investors traditionally far more cautious than the equity variety, we would be somewhat skeptical to say this is even a remote option.


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Mon, 03/08/2010 - 17:34 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

Chasing Performance, the Great American Pastime.

Mon, 03/08/2010 - 17:43 | Link to Comment rubearish10
rubearish10's picture

Bring it on Dude! Consumer spending up, housing gifts up, US debt up, Carry Trade On/Up....

Let's bring this to completion, hey? Can't wait to see SPY test coming soon and then, well, then we'll know for sure if this is a "real" move or not. 'Cause many models suggest we turn down hard but probably NOT without some news,,,,'cause otherwise, yes otherwise, BUY BUY BUY!! 


Nah, not really drunk just in shock that this could happen. It feels like we're living in a Synthetic world.


OK, I'm drunk. Good luck everyone! Love ya ZH!

Mon, 03/08/2010 - 17:43 | Link to Comment Whizbang
Whizbang's picture

Banks are offering 0.5% who the hell would be in cash now? Except for me. I'm paying off all my debts and hoarding cash for the next defationary pop. 

Mon, 03/08/2010 - 17:51 | Link to Comment rubearish10
rubearish10's picture

Umm, not sure it's going to happen this way again. Beware.

Once the next correction happens (not inconceivable sub S&P 600), markets may actually normalize as the world will then be different yet again. In other words, don't expect another liquidity swell unless you're talking about QE II now.

Tue, 03/09/2010 - 01:01 | Link to Comment painequalschange
painequalschange's picture

You are thinking it will go to 600 - and stay there - for some time.  Say 5-10 years?

Mon, 03/08/2010 - 17:49 | Link to Comment Attitude_Check
Attitude_Check's picture

Falling knife catching... if the first time didn't work.....

Mon, 03/08/2010 - 17:50 | Link to Comment Attitude_Check
Attitude_Check's picture

Maybe this next fall will take us to fair value (sub 500 IMHO).  Then my cash reserves will break out!

Mon, 03/08/2010 - 18:09 | Link to Comment Orly
Orly's picture

484, to be exact...

Now, as far as timing...

Wait, my pot roast is burning!

Mon, 03/08/2010 - 17:53 | Link to Comment Missing_Link
Missing_Link's picture

Man, this just makes me want to hit all of those Jim Cramer buttons at once.

Mon, 03/08/2010 - 18:04 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

If you hit baby and then shotgun and then decapitate while thinking about how big a baby Cramer is, it satisfies primal urges of savage blood shed.

Mon, 03/08/2010 - 17:53 | Link to Comment Reductio ad Absurdum
Reductio ad Absurdum's picture

Gotta love the (bearish) wishful thinking in the last chart ( (And why is the name "madoff" in the link address?)

Mon, 03/08/2010 - 18:00 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

uh oh!  them mutual fund managers are just squirrels trying to get some nuts, and now we have some bad news...there are no more nuts!

Mon, 03/08/2010 - 18:02 | Link to Comment RobotTrader
RobotTrader's picture


REITs, consumer stocks, tech leading again.

Gold being sold, the dollar being bought.

What else is new??

Piling into bankrupt office building REITs again??

Everyone loves their "Crackberries"...

Remember Travel Zoo from 2004???

Mon, 03/08/2010 - 18:07 | Link to Comment mynhair
mynhair's picture

Dang, forgot what I was gonna!


Something about FDO.

Tue, 03/09/2010 - 00:53 | Link to Comment Anonymous
Tue, 03/09/2010 - 00:56 | Link to Comment Anonymous
Mon, 03/08/2010 - 18:11 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think a huge reversal is at hand.  Not that Cisco is not going to go through the roof over the next year, but Macys?  I mean, Macys.  wow.  as far as gold, Asia bought at $1135 last night so obviously NY took the price down for themselves.  Buy low, sell high.  As for the doelarr, she is treading water at 80 before she gets officially Double Xrossed.  Y?  Because they don't like you!

Mon, 03/08/2010 - 18:20 | Link to Comment Bear
Bear's picture

Is that a Robot Zipper allowing for sand free movement?

Mon, 03/08/2010 - 18:32 | Link to Comment Anonymous
Mon, 03/08/2010 - 19:17 | Link to Comment pooplagrande
pooplagrande's picture

The market is poised to take a quick, painful, nose-dive...just like this zipper right here.

Mon, 03/08/2010 - 20:01 | Link to Comment Careless Whisper
Careless Whisper's picture

RIMM fill that gap to 82 ?

TEAR ZOOM EJ   oh. my. god. did someone's black box hit a magnetic field?

... and my day?...



Tue, 03/09/2010 - 00:50 | Link to Comment delacroix
delacroix's picture

thats the first thing I thought too, when I saw that zipper (nose dive)

Mon, 03/08/2010 - 22:15 | Link to Comment wackyquacker
wackyquacker's picture

i just went long.

Tue, 03/09/2010 - 18:51 | Link to Comment Anonymous
Mon, 03/08/2010 - 18:02 | Link to Comment Anonymous
Mon, 03/08/2010 - 21:27 | Link to Comment deadhead
deadhead's picture

 but no big drops unless a country defaults or there is another war

sorry to see that you have elected to forgo even the most basic reading of economic history.

Mon, 03/08/2010 - 18:11 | Link to Comment Bear
Bear's picture

Market slides Tues through Friday ....

Mon, 03/08/2010 - 18:19 | Link to Comment Anonymous
Mon, 03/08/2010 - 18:20 | Link to Comment Anonymous
Mon, 03/08/2010 - 19:15 | Link to Comment carbonmutant
carbonmutant's picture

 Long after the humans are gone solar powered quant bots will still be trading numbers and optimizing algos across self repairing networks.

Mon, 03/08/2010 - 19:21 | Link to Comment Rick64
Rick64's picture

WGO up $2 in 3 days. Up 320% in 52 wks. Jesus they must be really selling those winnebagos or there some deal we don't know about.

Mon, 03/08/2010 - 19:48 | Link to Comment Liberdadedescolha
Liberdadedescolha's picture

Hope u like some forex charts and SP500. Fast movements soon on some assets.

Mon, 03/08/2010 - 21:06 | Link to Comment Gimp
Gimp's picture

Man that is the most enticing zipper I have seen for a long time.

All Ponzi schemes end when they run out of cash. Keep it simple.

Tue, 03/09/2010 - 07:03 | Link to Comment nathan1234
nathan1234's picture

So does this mean that if mutual funds get a call on the funds that they have leveraged we will see the markets moving downwards at last.!

Tue, 03/09/2010 - 09:48 | Link to Comment Anonymous
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