Patient Bears
"Everyone is bearish but no one has sold stocks," BofA's Michael Hartnett said, in the latest installment of his popular weekly "Flow Show" series.
He was referring to a familiar statistic. For every $100 that flowed into equity funds since January of 2021, just $2 has come out. That doesn't exactly scream "capitulation," even if positioning prior to this summer's rally looked a lot like despondency.
The figure on the left (below) shows fund managers' supposed underweight in stocks (i.e., the
This makes sense to me. Wish we had a “like” button.
I want to put my money where the 10% of the wealthiest (who control about 78% of global wealth) invest their money.
Cash, commodities and volatility all seem like very short term trading ideas.
Well, I kinda think short term is all we got.
Today is ugly. Not because stocks are down that much, but the stock/bond correlation is so high- nervous about hawkish fed, geopolitics, inflation and options/futures friday expiry does not help
It’s not just that it “does not help,” it’s all that matters. The gamma drop-off is huge. Spot was pinned (see chart below). Somebody at BBG (Alyce Andres) finally wrote about this yesterday (on the terminal: “S&P 500 Index Has A Gamma Magnet at the 4300 Level”), but I mean it’s just so funny how unwilling “regular” market participants are to concede that on some days, it’s just not worth trying to craft a narrative. If you’re not trading tactically and/or if you’re comfortable with your stops, you might as well just go fishing. What you’re seeing on the screens is totally meaningless from a fundamental perspective.
https://heisenbergreport.com/wp-content/uploads/2022/08/SPXStrikesProfileGammaFront.png
What is the effect of 401k flows for market support? Workers probably don’t change allocation quickly or easily. Unemployment is low.
Will “capitulation” look the same as it used to?
H-Man, I don’t understanding all this hand wringing. A macro perspective from the most glass half-full view, both globally and for the US, is really ugly. Tell me a good story about something happening outside of the US. If you say Turkey cutting rates, stop reading this post. Then tell me a good story about the US. After you mention employment, you start scratching your head. So just accept it, we have a lot of bad news we are dealing with that does not bode well for the markets.
“You think SP>4500, and the Fed’s gonna stop hiking?” … no I don’t….I’m expecting Powell to speak at Jackson Hole in full hawk regalia while squawking and screeching through it all…and if markets continue to dismiss and laugh him off we’ll be seeing another 75 basis points higher next month…remember Hitchcock’s The Birds…
Good article, good commentary. In 1993, Dr. Alexander Elder published Trading for a Living. He mentioned that people generally ignore the time dimension. Two, a guy I really respect says “Even when we largely agree on the outcome, nobody knows what the path there will look like.” That’s why this is not a zero sum game. Many, many paths. That’s why each of us strives to develop a set of indicators we look at regularly, a checklist to monitor ourselves, and a firm commitment to improve our knowledge even when we don’t like what we are hearing….By the way, successful people fail all the time. The universal fact is this- the big competitor is myself and my flaws, not the market.