As Retail Investors Flood Into Stocks, Professionals Are Dumping Speculative Longs

Tyler Durden's picture

"Fear of missing out" is quickly becoming the go to phrase for what's left of America's stock market investors. As The Wall Street Journal reports, investors have poured money into stocks through mutual funds and exchange-traded funds in 2017, with global equity funds posting record net inflows in the week ended March 1 based on data going back to 2000, according to fund tracker EPFR Global. Inflows continued the following week, even as the rally slowed.

“People went toe in the water, knee in the water and now many are probably above the waist for the first time,” said JJ Kinahan, chief market strategist at TD Ameritrade.

That brings individual investors increasingly in line with Wall Street professionals. A February survey of fund managers by Bank of America Merrill Lynch found optimism about the global economy improving while investors were holding above-average levels of cash, leaving room for them to drive stocks still higher.

Bullishness among Wall Street newsletter writers reached 63.1% - the highest level since 1987 - a week ago in a survey by Investors Intelligence, before falling to 57.7% this past week.

George Bohmfalk, a 69-year-old retired neurosurgeon from Charlotte, increased his stock allocation to around 80% from 70% in recent months after cutting back on bonds, saying he has faith that remaining loyal to a low-cost passively managed portfolio is more productive than trying to pick winners and losers. But he is concerned about what the Trump administration may do, and he worries about U.S. stocks’ lofty valuations.

 

“What do you do? If you take your investment out and stocks go up another 1,000 [points], you’re going to be pretty miffed,” he said. “I’m slightly concerned that there might be a pullback, but I’m not losing sleep over it.”

 

“It feels like this is a hated rally, because people are underinvested, and they’re just catching up,” said Matthew Peron, head of global equities at Northern Trust Asset Management.

 

Another retiree, Peter Gallavin, 72, of Grand Rapids, Mich., who previously worked for General Motors Co. and as regional personnel director at Delphi Corp., said he is concerned about President Donald Trump and what his policies may do to the market but remains 60% invested in stocks...

 

“I’ve been investing in the market for long enough to know that sooner or later after it comes up, it’s going to go down, but when that may or may not happen none of us know,” he said.

Even though his financial adviser warns:

“What we’ve seen in the last eight years is not going to continue,”

Perhaps they should be paying attention to the insiders (who are selling like never before)...Ned Davis Research points out that insider selling has been elevated enough to trigger his firm's in-house bearish signal for 11 weeks in a row, the longest stretch since 2014.

Insider selling is generating a “sell” signal to analysts at Ned Davis Research Inc., a research firm that uses technical analysis. Insider selling at firms whose shares trade on the New York Stock Exchange, Nasdaq Stock Market and American Stock Exchange triggered its in-house bearish signal for 11 straight weeks, the longest stretch since 2014.

 

“The fact that we’ve gotten more selling is a sign of concern that maybe the market has gone a little too far too fast,” said Ed Clissold, chief U.S. strategist at Ned Davis. “We wouldn’t be surprised if there was a modest pullback given how far the market has run.”

Insider Buys

And the utter lack of breadth in the market's most recent advance...

 

However, despite all that exuberant money flow from the FOMO-followers, not everyone's buying it as speculators have entirely erased their massive record net long position...

 

Swinging to net short for the first time since the week before the election...

 

Finaly, we note that this week saw chaos in emerging market stocks, high yield credit, Treasuries, crude, copper, Chinese money markets, and risk-parity funds... and US stocks clung to gains ahead of next week's FOMC meeting:

 

While Millennials may have been the SNAP IPO greater fools, it appears the retirees are the broad market's greatest fool, getting neck-deep in stocks at record high valuations, once again buying high, only to sell low.

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Logan 5's picture
Logan 5 (not verified) Mar 11, 2017 4:54 PM

Translation:

 

jews get richer

goy get burned

 

...same as it ever was

Escrava Isaura's picture

If I told you that the stock market will be the last to fold, would you call me crazy?

Not sure?

Well, check the blueprint below. It’s all there, in plain site.

https://www.youtube.com/watch?v=p5Ac7ap_MAY#t=1h02m15s 

 

Logan 5's picture
Logan 5 (not verified) Escrava Isaura Mar 11, 2017 4:58 PM

If I told you that the 96 billion your country spent on the Olympics would result in nothing more than the only thing that people rember from it was that Ryan Lochte came down & pissed on your buildings because you forgot to make toilets...

 

Would you call me crazy?

Escrava Isaura's picture

The goy is fucked even if all the Jews would disappear tomorrow. Wondering why?

The alternative is even worse: Shareholder-capitalism.

“It the 80’s was claimed that to end the recession and improved performance, Japan must shift from welfare-capitalism back to shareholder-capitalism. Yet remains unclear a country that had run a consistent and significant a trade of balance surplus would need to change its economic system to become more competitive.”

https://www.youtube.com/watch?v=p5Ac7ap_MAY#t=1h07m40s

 

prime american's picture
prime american (not verified) Escrava Isaura Mar 12, 2017 5:15 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

RagaMuffin's picture

Thanks for the link. Without having seen it, a strong case can made for your point because  the sovereign bond market has begun to tank , leaving equities as the last refuge. Due to dumb luck and not skill, the US will be a major beneficiary.......

Escrava Isaura's picture

America power you don’t ever underestimate. They know what they are doing, even that, in the end, it’s a losing battle.

 

theeseer's picture

The smart get richer and the sheep get sheared if that means Jews get richer I am still waitinmg for mine but thanks for the encouragment!

 

Goofball's picture

Only a simpleton loser would spout such anti-Semitic garbage. Go back to your safe space where you can rage away at your imagined enemy.

Arrow4Truth's picture

Definition: sem•ite - A member of a group of Semitic-speaking peoples of the Near East and northern Africa, including the Arabs, Arameans, Babylonians, Carthaginians, Ethiopians, Hebrews, and Phoenicians. Semitic generaly describes Arab/Hebrew. Historically, Palestinians are actually the true Semites. Where does it say anything about joos in the definition? You've obviously bought into the bullshit, and probably believe (interesting defintion, as well) that the Kenyan was murdering millions for "national security." Geezus Goof, put away the kool-aid. Emancipate yourself from mental slavery. None but ourselves can free our minds.

 
Goofball's picture

Right...... let's play semantics, fool!

In actuallity, "Palestininan" is a made up term and the existance of "Palestinians" is just a fallacy -- do your homework and maybe you'll learn something! Unless you're trying to tell me that the Palestinians (really just Arabs), are really derived from the ancient Philistines -- which they are not -- and are their own unique subset of Arabs -- they are not! Look at the etymology of the word!

Bricker's picture

Sit before the music stops

cyclingscholar's picture

I follow the A/D line that is on etfinvestmentoutlook.com, and it is nowhere as as "off" in the last few weeks. Nor is the one at IBD. THat is because their A/D line is based upon the S&P500 itself. A/D which include every "issue" on the NYSE, as I suspect yours is, include all kinds of repetitive closed end portfolios, REITS, and etf broad indices, which repeat the same decline over and over again. I agree that breadth is a concern---i don't mean to say your analysis is wrong---but i doubt the clarion call has been made yet. 

As for your vaunted buyer/seller ratio, it is just barely below its lows of February  2014, which was the beginning of a substantial rally. Curve fitting is risky enough without ignoring contrary data on your own charts. 

 

 

 

cyclingscholar's picture

I follow the A/D line that is on etfinvestmentoutlook.com, and it is nowhere as as "off" in the last few weeks. Nor is the one at IBD. THat is because their A/D line is based upon the S&P500 itself. A/D which include every "issue" on the NYSE, as I suspect yours is, include all kinds of repetitive closed end portfolios, REITS, and etf broad indices, which repeat the same decline over and over again. I agree that breadth is a concern---i don't mean to say your analysis is wrong---but i doubt the clarion call has been made yet. 

As for your vaunted buyer/seller ratio, it is just barely below its lows of February  2014, which was the beginning of a substantial rally. Curve fitting is risky enough without ignoring contrary data on your own charts. 

 

 

 

JackMeOff's picture

Why am I reminded of my favorite PT Barnum stolen quote from his arch rival Daivd Hannum - "there's a sucker born every minute"?

besnook's picture

it has been so long since there has been a real market reaction that they don't even know how to describe it anymore.

when yields go up people rotate to stocks. why? because you lose money in bonds on rising yields.

the only concern here is that yields are not rising into a good economy. yields look they are rising because of inflation. yellen has said for months now she would rather be proactive when it comes to inflation so she is.

the rotation into stocks will be a loser, also. stagflation, bitches.

C9H9N's picture

The greatest fool has his truck nearly loaded.....Or the smart money predicts inflation while holding PMs down. I'll always bet on the existence of fools. It's evening in America.

Bricker's picture

Debt is the driver of growth. When debt collapses markets collapse. When growth stops lending slows.

In simple terms, every market crash has always been defined by debt a crisis. We will not enter a bear market if the central bank keeps manipulating the false market.

Bear markets are defined by slow growth. With the central bank illusion of interest rate controls, its nothing more than a conn job and eventual market crash with a debt crisis.

From the earliest of banking creation, its always been lending of reserves that makes growth work.

C9H9N's picture

Agreed Bricker. Debt is the means by which Capitol can be acquired to produce goods that are technologically possible and advantageous to the market. If the market does not truly value the goods produced by debt, then the lenders ( if they truly have skin in the game) should tighten lending. This is the reason I am for free markets- free of liars and insidious parties gaming. This is not our environment

This whole spiel is governed much as the universal speed limit of light, by resources. By resources. Yes. We are still fancy monkeys using resources.

masons's picture

hey ZH, we need to find what is Druckemmiller doing, who cares about retail investors anyway

Kefeer's picture

DOW 25K and beyond; the market reflects inflation.  Buybacks are back, but maybe it has a major correction - there I covered the bases.

arrowrod's picture

In the meantime, down at the shootin' range, people aren't picking up their brass.  Us thrifty types, are growing our stockpile, but we are being overwhelmed. 

Cassandra.Hermes's picture

FRUITS AND NUTS


Keep jumping around them like monkeys.
The clones,
Commercialized zombies,
And the TV junkies.
Keep throwing berries,
Twigs,
And nuts at them.
Until they wake up
To see what's up 
And figure out why
We're laughing at 'em.” by Suzy Kassem