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Created on: 5/24/2011 8:58:46 PM   Last Update: 5/24/2011 9:08:58 PM Posted by: RTT
WARNING: This entry is 2197 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.

1 POST Those that must be long the stock market are bearish (670)


those-that-must-be-long-the-stock-market-are-bearishSome of the largest players in the stock market game are the mutual funds, and most of these funds can only be long (that is they cant short stocks). When these type of funds get bearish and need protection they will either buy cash, bonds or defensive stocks. How aggressively they do this can be very telling.

Within our website service we have a custom symbol called @RTDEF or SPDR Defensive sectors. This is made up of the equal weighting of defensive SPDR sectors namely Health care, Utilities and Consumer Staples.

To determine if more monies are flowing into defensive sectors we find the relative strength of @RTDEF versus the SPDR SP500 symbol SPY, this is simply dividing @RTDEF by SPY or our symbol methodology is @RTDEF::SPY. See the chart below.

@RTDEF::SPY = Relative Strength of Defensive stocks versus the SP500.

Currently the relative strength of @RTDEF is very strong, showing the fund managers are very worried. The SP500's meager rally since the Japanese quake is not trusted by the professionals (I wont say smart money, as mutual funds under perform). Maybe the big elephant in the room is the ending of QE2 (quantitative easing by the US Federal Reserve), or is that earnings have peaked, or maybe the European debt crisis or maybe the Central Bank of China raising interest rates and bank reserves.

The action by the fund managers is fitting well with our latest SP500 cycle view.

Keep an eye on your portforlio over US summer, it could get wild. Get time to buy VIX calls.

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SPDR Sectors
 



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Investing Quote...

.."After years of patient study I have proven to my entire satisfaction as well as demonstrated to others that vibration explains every possible phase and condition of the market."..

William D Gann


..“One must search through a maze of complex and contradictory details to get to the significant facts … Then he must be able to operate coldly, clearly, and skilfully on the basis of those facts.” The challenge for the successful speculator is “how to disentangle the cold hard facts from the rather warm feelings of the people dealing with the facts.” Moreover, “if you get all the facts, your judgment can be right; if you don’t get all the facts, it can’t be right”...

Bernard Baruch


..“How many millionaires do you know who have become wealthy by investing in savings accounts?”..

Robert G Allen


.."Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway"..

Warren Buffett


.."Until an hour before the Devil fell, God thought him beautiful in Heaven"..

Arthur Miller, “The Crucible”
 [Contrarian Investing]






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