It’s good to see last week in the rear-view mirror. Even though I get it, a week such as last week bugs me. I understand the reality of market rebalancing, but I don’t like it when the market freaks out. The memories of 2008, 2009, and 2010, and 2011 still linger clearly in my head. So, what I need as a tonic for last week is a decent bounce this week, starting today.
- The quality of the bounce is so important right now. Poor participation or sector leadership may well have more intermediate-term consequences, but if the bulls can make an internal stand, the stage can be set for Dow 17,500.
I am not sure what all of the above means, but I am down with the sentiment – the bulls need to show some strength this week or we might see more selling. The stage is set for some buying, though, and maybe a whole bunch of money that needs to go to work will make it happen. After all, the market is definitely lower right now,
- Investors in U.S.-based funds poured a net $7.6 billion into stock funds in the week ended July 30 on optimism that U.S. stocks could climb further, data from Thomson Reuters’ Lipper service showed on Thursday.
Somebody must think something positive because all that money came in when the market was freaking out last week. In fact, “all that money” is quite a bit of money.
- The net inflows were the biggest in seven weeks and reversed the prior week’s net outflows of $7.6 billion. All of the inflows went into exchange-traded funds, which attracted $7.9 billion, while mutual funds posted $303 million in outflows.
The money left before the freak out and the money came back during the freak out. Somebody has his or her eye on the ball.
- ETFs are thought to represent the behavior of the institutional investor, while mutual funds are commonly purchased by retail investors.
Yup, big money has its eye on the ball. Maybe the mom and pop retail investor didn’t like what they saw last week, as they bailed, but the big investors seem to have understood the week in the market for what is was – a correction of a sort. Why is the money coming back in? The institutional investors must think the market future is bright, despite what happened last week. In fact, one might argue because of what happened last week, and what will happen this week, next week, and in the last half of the year.
- “Expectations are that earnings are going to improve in coming quarters,” said Barry Fennell, senior research analyst at Lipper.
Watching the Dow this morning is making me dizzy. Up and down and all around it goes, so I am jumping off and going across the pond for some interesting news. Good news actually, and if you remember, what just happened in Europe began over two years ago. It was one of the big deals that brought Europe’s banking system, and Europe as well, back from the brink.
- In the biggest advance in European integration since the launch of the euro in 1999, the European Central Bank will take charge of supervising banks from Helsinki to Lisbon in November after subjecting their books to unprecedented scrutiny.
The above news has positive ramifications for Europe on many levels, but one important thing that will likely emerge from this integration is more money available for lending to consumers and businesses. If that should turn out to be the case, and knowledgeable folks seem to think will be, then that too will help propel the market forward. Do you think the big money knew this announcement was coming?
Trade in the day; invest in your life …
