Posts Tagged ‘Mutual Funds’

Monday Market Movement – Do We Ever Go Down?

breadth

We all go down for a piece of the moment
Watch another burn to the death to the core
And the roadshow thrills pack the freaks and the phonies
Sing: now is now, yeah! – Rob Zombie 

There is just no way to win betting against this market!  

Well, actually, there is one way and that's betting that each pop is nonsense and tends to have a subsequent pullback intra-day but, long-term, the cumulative effect of all that low-volume pumping has been a rousing success, to say the least.  

As you can see from Andy Thrasher's S&P chart, there has been some amazing underlying deterioration since the July 4th weekend with the Advance/Decline line falling back to trend and stocks above their 200-Day Moving Average dropping 15% in 3 weeks.  Stocks above the 200 DMA is a fantastic leading indicator for downside move – ignore it at your own risk. 

TNXPeople are panicking into bonds, dropping the 10-Year Yield 20%, from 3.1% to 2.45% this year but it doesn't matter because Central Banksters are pumping SO MUCH MONEY into the Global Markets that there's enough to buy all asset classes simultaneously – something that is unprecedented in Financial History – what could go wrong?

Well, one thing that could go wrong is you putting your money into Mutual Funds.  As it turns out, in an S&P study of actively managed Mutual Funds, only 2 (two) out of 2,862 actually beat the S&P over ANY of the fund's lifetimes (limited to 12 months or longer).  

That's even worse than the average performace of hedge funds, which only averaged a 0.59% annual loss when compared to just putting your money directly into the S&P.

 This dovetails with a conversation we were having this weekend in our Member Chat Room, where I identified 4 trade ideas for a $50,000 Portfolio that only used 1/4 of the buying power to generate $365,512 in projected profits over the next 15 years using CONSERVATIVE options strategies designed to MATCH the S&P, not beat it.…
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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. 


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16th Sequential Equity Fund Outflow Takes Total To Over $50 Billion YTD; Retail Boycott Of Stocks Continues

16th Sequential Equity Fund Outflow Takes Total To Over $50 Billion YTD; Retail Boycott Of Stocks Continues

Courtesy of Tyler Durden

The latest anticipated weekly outflow from equity mutual funds just hit a one month high of $2.7 billion, as reported by ICI, and with that, YTD redemptions by equity investors have hit over $50 billion. Domestic equity mutual funds have not seen a net positive retail inflow since April 28, yet despite this the market has been substantially rangebound and until last week. What is notable is that even during times of relative stock outperformance, courtesy of whoever it is that is left buying stocks, be it HFT algos, or Primary Dealers pumped with cheap Fed liquidity (and don’t forget today is another "free $2 billion courtesy of POMO" day), the investing public refuses to be drawn into owning stocks. CNBC has now failed to sucker its viewers into the stock ponzi for 16 weeks in a row and rising. The clear capital rotation winner- the bond bubble, but that is the topic for another week.

 


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So Just What Happened On July 15?

So Just What Happened On July 15?

Courtesy of Tyler Durden

Now that the market is back to mirroring the melt up from last summer where bad news drove the market higher, and rare good news drove it to the moon, and every day’s closing price is more or less predetermined in the prior premarket session, is it ok if those handful of people who still give a ratus gluteus about market structure understand just what happened last Thursday, July 15 (incidentally the day Goldman announced its settlement, and just pre the infamous OpEx), when the ES-SPY relationship blew up, as the chart below shows. Where futures and SPY have traditionally correlated to 0.999*, on July 15 something snapped.

OK – we realize that with the Fed out of bullets, land mines, grenades and bazookas, and just a nuclear bomb or two left in the arsenal (not to mention countless lies), and the administration set to suffer a historic loss in November, it will be Bernanke and Obama’s only hope to ramp the market at least several hundred points over the next few months. That’s fine – nothing would surprise us anymore. After all, mutual funds have a few more billion in redemptions to face before they are all tapped out so the market must illogically surge. But little market abnormalities like the one above still entertain and amuse, and if maybe Liberty 33 could release a press release, blink in Morse Code, or send some other signal as to what happened, we can all go to bed knowing that the abnormal is now officially perfectly normal. And we simply ask, because there was a time, a whopping year or two ago, when such a sudden and violent shift in correlation would mean someone certainly blew up. Of course, with trading now being executed by a handful of counterparties, it would make an answer to such a question all the more interesting, if completely irrelevant in the grand scheme of all things Ponzi.

h/t Credit Trader


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11th Sequential (& Massive) Equity Outflow Reignites Speculation Market Terminally Broken

11th Sequential (And Massive) Equity Outflow Reignites Speculation Market Terminally Broken

Courtesy of Tyler Durden at Zero Hedge 

ICI reports that the week ended July 14 saw another massive outflow from domestic equity mutual funds of $3.2 billion, bringing the July total to $7.3 billion, and year-to-date equity outflows to a stunning $37.5 billion. Yet neither liquidations, nor redemptions, nor mutual fund capitulation, nor lack of liquidity, nor lack of human traders, nor rumors that it is all one big scam, can tame the market’s most recent bout of irrational exuberance: in a time when equity funds had to redeem over $7 billion in stocks, the stock market surged by 90 points!

Just like last week, despite huge order blocks of selling pressure, the fact that volume is so light and liquidity so tight, the market succeeds in ramping ever higher, now that the few remaining carbon-based market participants have reverse engineered the key algo "predictive" frontrunning mechanisms, and manage to fool them that there is bid side interest, into which all domestic equity mutual funds manage to sell en masse. Soon enough there will be little left to sell, which will, paradoxically cause a much overdue market crash. (It is a bizarro market for a reason). And even as equity mutual funds are running on fumes (explains Bill Miller’s call of desperation yesterday), all the money in the world continues to rush into credit funds: the past week saw inflows into every single bond category, with a total of $5.8 billion going into all taxable bond funds. We are gratified that behind the fake equity facade of "alliswellishness", everyone is pulling their money out of stocks with an increased sense of urgency. Retail has had it with this pathetic shitshow of a market: the computer can front run each other for all anyone cares. We are fairly confident that the Obama administration will not have a soft spot in its heart to bail out the quant community… unless, of course, Rahm Emanuel discovers some way to unionize algorithms and give them voting rights.


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Quad Witching Expiration and a Pullback from the Long Term Trend

Quad Witching Expiration and a Pullback from the Long Term Trend

Courtesy of JESSE’S CAFÉ AMÉRICAIN

Wookey Hole Auditon Jobseekers For The Role Of Resident Witch

The front month on the SP futures has now switched from March to June as a part of the Quad Witching Expiration. (Technically it switched last week, but for charting purposes I made the switch last night.) The June Futures have essentially the same formations as did March, it’s just that the earlier months have few trades to mark them.

This is the first serious test for US equities since mid-February, as it has been on a spectacular rally streak, no doubt fueled by excess liquidity applied to a selling exhaustion in the funds. Curiously not among corporate insiders who were selling at a rate of 57 to 1 in this latest rally, no doubt for diversification purposes.

The extent of this correction will be determined on the amount of actual selling that starts to occur. For now what we are seeing is more of a trading correction in response to an outsized rise in price, or as the Street likes to say, the market was getting ahead of itself.

Key levels to watch are 1135 and 1120. If we break those I would look for a consolidation around the 1080-1100 level.


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Mutual Fund Cash Depletion Highest Since 1991

Mutual Fund Cash Depletion Highest Since 1991

Courtesy of Mish

In what can best be described as a contrarian indicator with an uncertain timing trigger, Mutual Fund Cash Depletion Highest Since 1991.

Equity mutual funds are burning through cash at the fastest rate in 18 years, leaving them with the smallest reserves since 2007 in a sign that gains for the Standard & Poor’s 500 Index may slow.

Cash dropped to 3.6 percent of assets from 5.7 percent in January 2009, leaving managers with $172 billion in the quickest decrease since 1991, Investment Company Institute data show. The last time stock managers held such a small proportion was September 2007, a month before the S&P 500 began a 57 percent drop, according to data compiled by Bloomberg.

Stocks will rally this year as the prospect of higher interest rates lures cash from fixed-income securities to equity accounts, says Mark Bronzo at Security Global Investors. Data from ICI, the Washington-based lobbying group for professional money managers, show investors have pumped $369 billion into bond funds since March 2009 versus $23.4 billion for equities.

“There’s so much money in the fixed-income market and there’s so much money in money-market instruments paying almost nothing,” said Bronzo, whose firm oversees $21 billion, in an interview from Irvington, New York. “If that money shifts to stock funds, it’s going to be very bullish.”

Equities may be boosted by investors deploying some of the $3.17 trillion held in money-market funds tracked by ICI. While $754.3 billion has moved from the accounts in 14 months for the fastest decline on record, Bronzo says more cash will be withdrawn as investors gain confidence in the economy.

It gets tiring pointing this out, but the only time money can move into the equity market is at IPO time or other offerings. Otherwise it is impossible for sideline cash to move into equities. For every buyer there is a seller. At the end of any normal equity transaction, there is as much cash on the sidelines as before.

So many misunderstand the simple mathematical function of buying and selling, that I feel obliged to make corrections.

Sentiment, Not Sideline Cash, Is The Driving Force

Technology Concepts 1

Share prices do not move up because sideline cash comes in (as noted above it cannot happen in the first place). Share prices rise or fall…
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THE MUTUAL FUND INDUSTRY – INVESTORS DESERVE BETTER

Interesting look under the hood of Mutual Funds, by The Pragmatic Capitalist - Ilene

MUST READ: THE MUTUAL FUND INDUSTRY – INVESTORS DESERVE BETTER

I was shocked to see the front page of Barron’s with the image of investing legend Bill Miller titled “He’s Back!  -  It’s Miller Time”.   The article says Miller is back at the top of his game after a disastrous 2 year run.   A closer look at Miller’s fund and the mutual fund industry actually shows a pervasive and destructive problem on Wall Street -a total and complete lack of risk management.

The Barrons interview claims that Miller’s fund is worth taking a look at again.  Miller himself even says that his patient investors have been rewarded:

“The shareholders who stuck with us believed in our process and have seen us underperform; it has happened before,” Miller told Barron’s in a recent interview. At least “we built up large tax-loss carry forwards, which will mean no capital-gains taxes, which may go up.”

In 2007 Miller lost 6.7% and then lost an astounding 55% in 2008.  His fund is up over 36% this year.  $100,000 invested with Miller over the last two years would leave you with roughly $60,000 today.  Glad you stuck with Miller?  Miller goes on to claim that his performance this year is due to superb risk management:

But this time was different. “This turned out to be a collateral-driven crisis caused by underperforming debt,” also known as toxic assets, Miller says. “We’ve analyzed that mistake and tried to make adjustments to risk management and the portfolio-construction process.”

Risk management?  Hardly.  Read on….Bill Miller is infamous for supposedly outperforming the S&P 500 for 15 straight years.  He has made hundreds of millions of dollars due to this performance and essentially built the Legg Mason brand by himself.  But a look under the hood shows a massive Wall Street problem.   See, Miller is a part of an industry that has been proven to underperform a standard index fund (more than a handful of studies show that over 80% of all mutual funds underperform a comparable apples to apples index).

What mutual funds like Miller’s do is this: they come up with fancy sounding names that give investors the impression they are investing in one thing when in fact they are investing in an index fund clone –…
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About That Hedge Fund Renaissance You Were Told Of Yesterday

About That Hedge Fund Renaissance You Were Told Of Yesterday

hedge fund redemptions

For some reason, yesterday I heard the soundbite that “Hedge funds are back!  On pace to have their best month/quarter/year since blah blah blah” repeated at least a dozen times.

Absurd.  I can think of several high net worth people I’ve spoken with in just the last few weeks that would give up a firstborn child to get away from a gated fund or two.

The hedge fund industry claims many of the most talented managers on earth…but it also features some of the most insipid me-too acts since the tragic Boy Band Craze of the late 90’s launched a thousand cheesy singing groups from Orlando, Florida.  OK, that was a ludicrous analogy, but still…

Many of the late-comers and also-ran funds have already been been drummed out of hedgieland and most funds are but a shadow of their former selves asset-wise.

That said, the real story you didn’t hear yesterday is that money is still fleeing the industry at an astounding rate…

According to The Hennessee Group:

Investors have continued to pull money out of the hedge funds after having removed a record $152 billion in the last quarter of 2008.

In July, the most recent month for which data is available, clients redeemed $20 billion from hedge funds, significantly more than the $6.9 billion they pulled out in June.

Yes, that’s correct, triple the amount of money was pulled from hedge funds in July than in the prior month.

Too be fair, some of that is related to redemption requests that could not be honored during the heart of the liquidity crisis and some is probably from the worsening conditions in employment and real estate, which forces investors to move money even from performing assets.

But the breathless reporting of the Return of the Hedge Fund we heard yesterday for the most part neglected the fact that the predilection of the wealthy for more plain vanilla investment management has still not changed.  Investors are clearly taking more risks than they were willing to last winter, but they want transparency, control and liquidity – three things that the hedge fund industry cannot offer them, for the most part.

This goes for individual investors, endowment investors, pension investors, sovereign wealth investors, corporate investors,…
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Phil's Favorites

The guts of an Apple iPhone show exactly what Trump gets wrong about trade

 

The guts of an Apple iPhone show exactly what Trump gets wrong about trade

The components of an iPhone add up to a different cost than the phone itself. Poravute Siriphiroon/Shutterstock.com

Courtesy of Jason Dedrick, Syracuse University; Greg Linden, University of California, Berkeley, and Kenneth L. Kraemer...



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Zero Hedge

Bonds, Bitcoin, & Bullion Jump; Stocks Dump On Powell-Pullback, Trade-Talk

Courtesy of ZeroHedge. View original post here.

A stunned equity market could not believe that Batman Powell and Doveboy Bullard dared to talk down the odds of a 50bps rate-cut in July...

Ugly day in China overnight after Monday's snoozefest...

Mixed bag in Europe with a weak open but France and Spain rallying into the close (still red on week)...

Ugly ...



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ValueWalk

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

 

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

Courtesy of Vikas Shukla, ValueWalk

Pexels / Pixabay

The trend of vegan food has been gathering momentum in the last few years as people become more health conscious. They have also begun to realize the environmental impact of raising meat for human consumption. According to PETA, it takes an estimated 1...



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Insider Scoop

Wedbush Steps To The Shopify Sidelines

Courtesy of Benzinga.

Shopify Inc (NYSE: SHOP) ha introduced multiple new initiatives to spur growth, but the stock's valuation is already full at current levels, according to Wedbush.

The Analyst

Wedbush's Ygal Arounian downgraded Shopify from Outperform to Neutral with a 12-month price target lifted from $270 to $305.

The Thesis

Shopif...



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Kimble Charting Solutions

Wilshire 5000 Creating A Triple Top? An Important Breakout Test Is In Play!

Courtesy of Chris Kimble.

The stock market has been on fire of late, rallying up to the edge of price resistance on several indexes. Today, we look at one of those stock market indexes: the Wilshire 5000.

The Wilshire 5000 tracks all of the stocks in the US market, so it is a broad-based index that carries significant importance when gauging the health of the overall US stock market.

Looking at the long-term “weekly” chart above, it is pretty clear that the index is at an important price juncture.

The Wilshire 5000 spent the last 25 years trading within a rising price channel (1)...



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Chart School

Formula for when the Great Stock Market Rally ends

Courtesy of Read the Ticker.

When valuations for the boring water company or the boring electric company is trading like your Facebook, Apple, Amazon or Netflix or Google (ie FANG) you know something is wrong.

This is when a seriously over valued market is screaming at you.

Of course the reader must understand in a world where money printing goes super nuts (Zimbabwe style) the stock market may go hyper inflationary and picking a time frame for a top is never a good idea, but we are not there yet. There is no Ben Bernanke helicopter money to the masses yet (ie MMT). 

To see when water company's (and such like) are nearing the crazy FANG like valuations a review of the Dow Jones Utility Index channel shows us how history can repeat. The c...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

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

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 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 ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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...

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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.

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