Earlier today we got our first clue that the smart money has stopped "distribution" and is now offloading to retail after we saw the first equity fund inflow, however tiny, in months, and only the second one out of 37 outflows since April, as reported by ICI [5]. The second and far more important one comes from today's Goldman sales roundup, which confirmed that following today's latest borderline ridiculous meltup, retail investors looking for the sucker at the poker table, wouldn't be able to find one. Here's why. Quote Goldman: "As has been the recent trend, our cash flow remains better to sell, both from long-only and hedge funds." And there you have it: smart money (well, relatively so) has "recently" been using every melt up chance it gets to dump the bags with the E*Trade baby. Third and final proof: "ETF flow however skewed toward better buying." At this point retail investors may want to ask themselves: what do they know that the others, who are actively selling to them, don't.
And in other important news, from the same roundup, most definitely not written by Goldman's Tom Stolper, which is now just 140 pips from our latest contrarian target [6]as of 2 weeks ago, we find that the magic line for what could be a vicious thrust higher in the EURUSD pair is 1.2880. Above that, the long-overdue short covering may finally commence: "The EURUSD rally extends another day. First on hopes that the IMF might be bulking up bailout funds, and then on the back of a solid rally in US stocks. Stop-loss buying the whole way up, and for the first time in recent memory, folks looking at short-dated topside calls should the move extend further. Almost all flows from hedge funds. The pair closes just below the 1.2880 pivot. Above there and there’s a chance that all those shorts represented on the IMM report – that is, technical accounts – might start to cover." Summary - hedgies selling stocks and doing all they can to trigger a short-covering rally in the Euro. Oddly, it sound somewhat agreeable.