Posts Tagged ‘cash on the sidelines’

MUTUAL FUNDS ARE “ALL IN”

MUTUAL FUNDS ARE “ALL IN”

Courtesy of The Pragmatic Capitalist 

Eric King posted this interesting chart showing mutual fund cash levels.   According to King mutual fund cash level has declined to its lowest levels ever:

“The percentage of liquid assets (aka mutual cash levels) was 3.4% in July.  This is the lowest percentage cash level ever and is near levels that accompanied the 2007 equity market peak.”

king1 MUTUAL FUNDS ARE ALL IN

You’re likely familiar with the myth of cash on the sidelines, however, if mutual fund managers are any sign of bullishness it’s clear that they’re quite bullish. The last two times we witnessed cash levels near these levels were directly before the 1999 market implosion and the 2008 market debacle. Surely it’s unwise to use any single indicator to make market decisions, however, this is one macro indicator that is worth noting. 


Tags: , , , ,




11 Commonplace Market Views: True or Myth?

11 Commonplace Market Views: True or Myth? 

Dragon breathing fire

By Susan C. Walker, courtesy of Elliott Wave International 

"Cash on the sidelines is bullish for stocks." Have you ever heard some stock market pundit utter these words? Have you ever wondered if the statement were true? Read this item from the latest issue of The Elliott Wave Financial Forecast, and you’ll wonder no longer:

Myth — Cash on the sidelines is bullish for stocks. This refrain rang like a gong all the way through the declines of 2000-2002 and 2007-2009. In February 2000, when mutual fund cash hit 4.2% (compared to 3.8% in November), The Elliott Wave Financial Forecast issued its “cash is king” advice. Once again, the word on the street is that there is way too much “cash on the sidelines” for stocks to fall precipitously. This chart shows net cash available to investors plotted beneath the DJIA. In December 2007, available net cash expanded to a new high, besting all extremes since at least 1992, a 15-year time span. Despite the presence of this mountain of cash, the DJIA lost more than half its entire value over the next 15 months. Indeed, as the chart shows, cash remained high right as the stock market entered the most intense part of the crash in 2008. Available cash does correlate with the market’s moves, but the market is in charge, not the cash.
--The Elliott Wave Financial Forecast, Jan. 29, 2010

 

Crashing Through The Cash 

 

Now take a look at these 10 statements and decide if they are true:

  1. Earnings drive stock prices.
  2. Small stocks are the place to be.
  3. Worry about inflation rather than deflation.
  4. It’s enough to simply beat the market.
  5. To do well investing, you have to diversify.
  6. The FDIC can protect depositors.
  7. It’s bullish when the market ignores bad news.
  8. Bubbles can unwind slowly.
  9. People can make money speculating.
  10. News and events drive the markets.

Bob Prechter and our other analysts have debunked each of these statements as a market myth. You can discover how we exposed these ideas as myths, and in turn make more informed decisions about your investing.

We’ve gathered the writings that expose these 10 statements as market myths in our 33-page eBook, called Market Myths Exposed. They come from two of our premier publications, The Elliott Wave Theorist and The Elliott Wave Financial Forecast, as well as two of our books, Prechter’s Perspective and The
continue reading


Tags: , , ,




CASH ON THE SIDELINES? DON’T BELIEVE IT

CASH ON THE SIDELINES? DON’T BELIEVE IT

Coin and Paper Money

Courtesy of The Pragmatic Capitalist

The following is a guest contribution from Comstock Partners:

When making our bearish case for stocks we’re amazed at how often our audience brings up the old “cash on the sidelines” argument as a reason to doubt that the current rally can tank.  We have been in this business for a while and don’t remember a time when this fairy tale wasn’t trotted out as a reason to be super bullish.  In fact we don’t recall any point where observers ever said that the market was going down because there was not enough cash on the sidelines.

A relatively recent example was the summer of 2007 when a majority of commentators insisted that the availability of huge amounts of global liquidly would never allow the market to retreat.  The words were hardly out of their mouths (or word processors) before the ECB and the Fed were forced to pour hundreds of billions of dollars into their banking systems.  As we indicated at the time, liquidity is never there when you need it.

The fact is, as John Hussman has so eloquently pointed out, the purchase or sale of a stock is net neutral with regard to cash entering or leaving the market.  For every buyer there’s a seller, and for every seller there’s a buyer.  When “A” buys stock for $100,000 he/she has $100,000 less cash on hand, but “B”, the seller, receives the $100,000.  No net cash has entered or left the market.

The reason stocks go up or down is not a result of cash moving into or out of the market.  Stocks go up when prospective purchasers are more anxious to buy than sellers are to sell.  If there are more willing buyers than sellers at any given level the market has to go up to equalize demand and supply.  In fact, it sometimes doesn’t take any transaction at all to move the market.  If Intel reports surprisingly high earnings and Dell reports a disappointment the bid and asked price moves up or down before any transaction even takes place.

Furthermore, if even one anxious buyer of a relatively small number of shares drives up the price, the total capitalization of all the shares of


continue reading


Tags:




WHAT ABOUT THE “DEBT ON THE SIDELINES”???

WHAT ABOUT THE “DEBT ON THE SIDELINES”???

Courtesy of The Pragmatic Capitalist

We often hear about the “cash on the sidelines” theory and how there is this big pile of money just waiting to be invested in stocks, but what about the debt on the sidelines? Which is a more important driver of future stock prices? I have previously spent time debunking the cash on the sidelines myth (with the help of John Hussman’s fine work) and Tyler at Zero Hedge wrote an excellent piece this morning on this phenomenon, but on the wake of my piece about deleveraging and Japan, I think it’s also important to note that the “debt on the sidelines” is mounting and becoming a far more important focal point of the future outlook than any so-called “cash on the sidelines”. After 20 years of mounting debt we could be in for a prolonged reversal, i.e., deleveraging period.  The following chart needs no explanation:

cash on the sidelines as of total credit market debt 922 WHAT ABOUT THE DEBT ON THE SIDELINES???

 


Tags: ,




 
 
 

Phil's Favorites

Sports, Stocks, & the Magic Quadrants

 

Sports, Stocks, & the Magic Quadrants

Courtesy of Wade, Investing Caffeine

Picking stocks is a tricky game and so is sports betting. With the NFL and NCAA football seasons only a few months away, we can analyze the professional sports-betting industry to better understand the complexities behind making money in the stock market. Anybody who has traveled to Las Vegas, and bet on a sporting event, understands that simply choosing a game winner is not enough for a casino to pay you winnings. You also need to forecast how many points you think a certain team will win or lose by (i.e., the so-called “spread”) – see also ...



more from Ilene

Biotech

We have a vaccine for six cancers; why are less than half of kids getting it?

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

We have a vaccine for six cancers; why are less than half of kids getting it?

Courtesy of Electra D. Paskett, The Ohio State University

Early in our careers, few of us imagined a vaccine could one day prevent cancer. Now there is a vaccine that keeps the risk of developing six Human Papillomavirus (HPV)-related cancers at bay, but adoption of it has been slow and surprising low.

Although it’s been available for more than a decade, as of 2014 only 40 percent of girls had received the full three doses of the vaccine, while only ...



more from Biotech

ValueWalk

Bad ROIC Drives Bad Valuation Analysis

By David Trainer. Originally published at ValueWalk.

Return on invested capital (ROIC) is not only the most intuitive measure of corporate performance, but it is also the best. It measures the amount of profit generated for every dollar invested by a company, and has clear links to valuation. No wonder the top buy-side investors increasingly want companies to tie executive compensation to ROIC.

Unfortunately, many investors still rely on...



more from ValueWalk

Digital Currencies

Bitcoin Buyer Beware

Courtesy of Zero Hedge

Entrepreneurs have a new trick to raise money quickly, and it all takes place online, free from the constraints of banks and regulators. As Axios reports, since the beginning of 2017, 65 startups have raised $522 million using initial coin offerings — trading a digital coin (essentially an investment in their company) for a digital currency, like Bitcoin or Ether.

One recent example, as NYT reports, saw Bay Area coders earn $35 million in less than 30 seconds during an online fund-raising event...



more from Bitcoin

Insider Scoop

Marveling At Multi-Factor ETFs

Courtesy of Benzinga.

Related This Goldman ETF Keeps Growing Getting Smarter About Smart Beta Related ...

http://www.insidercow.com/ more from Insider

Chart School

Russell 2000 at Rising Support

Courtesy of Declan.

There wasn't much to say about today, but the one index which caught my attention was the Russell 2000. The index caught a bounce in demand at the rising trendline and also did enough to recover the 20-day MA. Traders looking for pullback opportunity could take a look at the Russell 2000. Stops on a loss of 1,397.


The Nasdaq is primed for a move to challenge 6,350. Today's doji marks indecision just below 6,250 but if it can push above this price level it would likely trigger a spate of short covering. Technicals hav...

more from Chart School

OpTrader

Swing trading portfolio - week of June 19th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Mapping The Market

Frontier laid off state Senate president after broadband vote it didn't like

Courtesy of Jean-Luc

Speaking of FTR – not nice people…

Frontier laid off state Senate president after broadband vote it didn’t like

By Arstechnica.com

Broadband provider Frontier Communications recently laid off the West Virginia state Senate president after a vote the company didn't like—and yes, you read that correctly.

West Virginia does not have a full-time legislature, and state lawmakers can supplement their part-time government salaries ($20,000 a year,&...



more from M.T.M.

Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



more from Promotions

Members' Corner

Robert Sapolsky: The biology of our best and worst selves

Interesting discussion of what affects our behavior. 

Description: "How can humans be so compassionate and altruistic — and also so brutal and violent? To understand why we do what we do, neuroscientist Robert Sapolsky looks at extreme context, examining actions on timescales from seconds to millions of years before they occurred. In this fascinating talk, he shares his cutting edge research into the biology that drives our worst and best behaviors."

Robert Sapolsky: The biology of our best and worst selves

Filmed April 2017 at TED 2017

 

p.s. Roger (on Facebook) saw this talk and recommends the book ...



more from Our Members

Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



more from Kimble C.S.

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David



FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>