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Tuesday, December 30, 2014

Daily update 12/30 Domestic fund flows

Investors woke up on the wrong side of the bed this morning.  Don't they know it is illegal to sell stocks at the end of Dec.  Here is the SPX chart.

SPX ended the day slightly below where it was on Dec. 24.  That means the Santa rally so far has not delivered the goods.  Breadth was 58% negative and volume was slightly lower then yesterday.  The selling was particularly broad based.  There were 146 new highs and 48 new lows.  After several days over 200 that was quite a drop in new highs.  New lows were elevated once again.  One day off of an all time high close that is not what you want to see.  The Dow lost the 18,000 mark after several days above it.  Lets look at the futures chart.

The loss of momentum I noted in this chart yesterday played out today.  The futures ended up below the 18 SMA with red price bars.  They have been aggressively buying that first dip below the 18 after the 100 DMA bounce for 18 months.  Will the bulls show up again?  Unless it is different this time they should.  Lets see what happened to IWM.

I guess it picked a bad time to break out as it fell back below the line today.  Even if the bulls show up and get IWM above the line again tomorrow we will still need to see some follow through.  This one is still up in the air.  The key thing to remember is that a clear majority are expecting this to continue up.  If it does not do that then it is likely to fail in a big way.

Greece seems to be back in the headlines again.  Trouble in Europe has caused some sizable corrections in the U.S. in this bull market.  I guess this is one of those things we need to be aware of once again.  In the absence of bad news the bulls are likely to show up again tomorrow.  Unfortunately I still have not quite figured out how to predict the news flow

I have debunked the "this is the most hated bull market" many times in this blog with hard data that says otherwise.  Here is yet another chart.

I have long thought that a lot of money was moving from mutual funds to ETFs.  I guess this chart makes it pretty clear that was the case.  They called this bull market hated because of the mutual fund outflows.  However, that was mostly just moving of money to ETFs.  The missing $50 billion was most likely money moved from equities to bonds as early boomers got into their 60s.  Check out the chart of the Rydex bull/bear assets.

The last bull market (in the circled area) was clearly the least loved bull market in the last 20 years.  This ratio has been well above where it was in then for years.  It is spiking up like crazy now.  That almost looks euphoric.  Money is clearly piling in.  This looks more like it might be one of the most loved bull markets in history.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.