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Not "Buying" The Santa Rally: In Week When S&P Rose 2.8%, The Smart Money Sold (Again)
Last week, when the S&P rallied 2.8%, the smartest money in the room sold. At least, that's what happened according to BofA's equity and quant team, which provides a weekly snapshot of what its clients do in any given period.
Here are the details:
"BofAML clients were net sellers of US stocks for the second week, in the amount of $0.7bn. Net sales were chiefly due to institutional clients last week, who have sold stocks for eight consecutive weeks. Private clients were also small net sellers for the second week. Hedge funds were the sole net buyers. Net sales were in both large and mid-caps, while small caps saw net buying for the third time in four weeks (with inflows into this size segment from hedge funds, private clients and institutional clients alike last week).
The breakdown
BofA's clients were not the only ones who sold: "our colleagues who track EPFR flow data have noted flows out of the US but into Europe and Japan in recent weeks."
What did clients buy, or rather sell? "Single stocks in all ten sectors saw net sales, while ETFs saw net buying."
Clients sold single stocks across all ten sectors last week, led by the cyclical sectors of Industrials, Tech and Financials. Defensive sectors generally saw the smallest outflows, which is true on a four-week average basis as well. Only ETFs saw net buying. Despite the bounce in oil prices last week, stocks in commodity-oriented sectors continue to have the longest and most consistent net selling trends as clients likely wait for evidence of a sustained recovery: Energy has seen net sales for the last eleven weeks, Materials has seen net sales in 15 of the last 16 weeks, and Industrials has seen net sales in 14 of the last 16 weeks.
Institutional clients were the biggest net sellers last week, which is true on a four-week average basis as well. Private clients also sold stocks, but remain net buyers on a fourweek average basis. Hedge funds were net buyers last week. Net sales were in large and mid-caps, while small caps saw net buying.
The rolling four-week average trend by sector:
- Net buying: None.
- Net selling: Materials since late June; ETFs since mid-Sept; Health Care since early Oct.; Consumer Discretionary and Energy since mid-Oct.; Telecom and Industrials since late Nov; Utilities since early Dec.; Staples, Financials and Tech since mid-Dec.
- Notable changes in trends: None
Was the traditional buyer of stocks, companies themselves, who was on the other side? It doesn't look like it: "Buybacks by corporate clients decelerated vs. the prior week, and YTD are tracking over $40bn, below last year’s record $45bn."
So the smart money was selling, companies were not buying back, and stocks rallied nearly 3%. One wonders just who was buying.
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I was reading on a investment board used by people in my country. It amased me the amount of people purchased stocks. The people where mostly or all non-professional investors. All desperate to buy the stocks because otherwise missing the rally. All making predictions that the stock will go to a certain price. I wish them their fortune, however I am afraid that those people will not enjoy long from it,
nonsense! What could possibly go wrong?
Santa's going to wake up with a reindeer head in the bed ?
@ZeroHedge
could you please show us a 7 year gaph with just TWO lines :
Line 1 : S&P500
Line 2 : Everything else
Just curious !
TIA
http://screencast.com/t/IeeCi3uG
You mean like the graph in the link above? It shows S&P500 with other indices, such as GKX (Agriculture), GJX (Energy), GYX (Industrial Metals), GVX (Livestock), and GPX (Precious Metals) from 2006 - 2015.
Thanks ... but 2 lines would have been better to expose the illusion of ever climbing markets.
So net sellers of stocks. Prices go up. Net buyers of physical Gold. And prices go down. Got it
HO HO HO bag holding bitchez...
My understanding of the Santa Claus rally was from 5 trading days before the New Year until 2 days after the New Year. So does BoAML just make up its own definition? (Rhetorical - don't answer)
Apparently the smart money owns so much they can sell every upswing.
oh, it will all go up because the dollar will be worth less...
your bet should against the dollar, eventually. long term, of course.
oil will be the next big play, when the bottom is put in, most likely 2016...
How do you get yield without risk? How do you put "money" to work? Since honest accounting has been killed off it is much more difficult to rely on corporate reporting. So you can invest in a company only to find out they were a sham. Of course their bonds or whatever shit they were selling were all well rated. Toshiba comes to mind as the most recent group of sister fuckers to admit they cooked the books.
The only safe bet is buying shares of war profiteering companies even though the end game is plain, death and destruction for ALL concerned.
Oligarchy/Plutocracy 2016! 2+2=5. Your vote is useless.
Oh...we just got dismissal on our foreclosure case where BofA, well known continuing criminal enterprise, used forged, fraudulent note AND assignment of mortgage. So a hearty FUCK YOU BANK OF AMERICA ( AND your drowning in debt attorneys). IF you want to believe anything they say, go for it.
If the private sector are net sellers then the net buyers of ETFs must be public sector. We know Bank of Japan is stuffed full of ETFs so my guess is the Fed is buying ETFs through its various agents. Shame we no longer have a Capitalist system. The Feds Socialist Creditism will fail.