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

Stream On '22

 

Stream On ’22

Courtesy of Scott Galloway, No Mercy/No Malice@profgalloway

Two weeks ago, at the Code Conference, Endeavor CEO Ari Emanuel claimed “the total addressable market of content is infinite.” Netflix is spending $17 billion a year to validate his thesis. So far, they’re both right. Since last Friday, Netflix raised subscription prices in 11 countries by as much as 40%. A company’s ability to raise prices is a function of the delta between the price and the perceived value. Nothing better illuminates this delta than the below chart:

Glocal

Squid Game was sourced, written, and produced in South Korea. Within 10 days of its rele...



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Zero Hedge

Notorious Haitian Gang Demands $17 Million Ransom For Kidnapped Missionaries

Courtesy of ZeroHedge View original post here.

A local gang that days ago kidnapped a group of 17 American and Canadian missionaries in Haiti, among them children, is demanding a $17 million ransom to obtain their release, or $1 million for each person.

Since the Saturday kidnapping which drove world headlines, the group has been identified as the powerful and noto...



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Digital Currencies

Facebook Chooses Coinbase As "Custody Partner" For Digital Wallet Ahead Of Stablecoin Launch


Image by Gerd Altmann from Pixabay

Courtesy of ZeroHedge

With crypto markets in the green and equities still riding high on their latest comeback rally, Coinbase has just dropped a bombshell update about Facebook's great attempt to seize control of the global monetary supply (or at least a slice of it) thanks to its nearly 3 billion monthly users who would have immediate access to whatever monetization options they...



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Chart School

Price and Volume Swing Analysis on Bitcoin and Silver

Courtesy of Read the Ticker

Many take guidance from news, pundits or advisors. Well sometimes the swings of price and volume are a better measure of what happens next.

The big boys do not accumulate or distribute in single 1 second trade, they build positions over weeks, months and years. They use price swings in the market to build or reduce positions, and you can see their intent by studying swings of price and volume and applying Tim Ord logic as written in his book called 'The Secret Science of Price and Volume: Techniques for Spotting Market Trends, Hot Sectors, and the Best Stocks'.

Tim Ord is a follower of Richard Wyckoff logic, his book has added to the studies of Richard Wyckoff, Richard Ney and Bob Evans.

Richard Wyckoff after years of...

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Politics

Steve Bannon faces criminal charges over Jan. 6 panel snub, setting up a showdown over executive privilege

 

Steve Bannon faces criminal charges over Jan. 6 panel snub, setting up a showdown over executive privilege

Defiant or following Trump’s direction? John Lamparski/NurPhoto via Getty Images

Courtesy of Kirsten Carlson, Wayne State University

The House committee investigating the Jan. 6 attack on the U.S. Capitol is tasked with providing as full an account as possible of the attempted insurrection. But there is a problem: Not everyone is cooperating.

As of Oct. 14, 2021, Steve Bannon, a one-tim...



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Biotech/COVID-19

Ivermectin is a Nobel Prize-winning wonder drug - but not for COVID-19

 

Ivermectin is a Nobel Prize-winning wonder drug – but not for COVID-19

While ivermectin was originally used to treat river blindness, it has also been repurposed to treat other human parasitic infections. ISSOUF SANOGO/AFP via Getty Images

Courtesy of Jeffrey R. Aeschlimann, University of Connecticut

Ivermectin is an over 30-year-old wonder drug that treats life- and sight-threatening parasitic infections. Its lasting influence on global health has been so profound...



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Promotions

Phil's Interview on Options Trading with TD Bank

TD Bank's host Bryan Rogers interviewed Phil on June 10 as part of TD's Options Education Month. If you missed the program, be sure to watch the video below. It should be required viewing for anyone trading or thinking about trading using options. 

Watch here:

TD's webinar with Phil (link) or right here at PSW

Screenshots of TD's slides illustrating Phil's examples:

 

 

&n...



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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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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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