One of my favorite stock market indicators is the flow of money into – or out of – mutual funds and exchange traded funds (ETFs).
1. Individual investors were putting more money into mutual funds and ETFs than they had in a long time. His research indicates this is often a precursor to a pullback.
2. While individuals were pumping money in, corporate insiders were taking it out. Insiders were selling at about 27 times the rate that they were buying.
3. New offerings were flooding the market with additional shares, about $100 billion worth, which dilutes value.
i would take my profits, if I’m a trader. And if I’m a long-term player, I would still lighten my equity exposure dramatically. And if I’m a real trader, I’d be short. I went short. We doubled up to fully short this week (the week of June 15).
I think this is the time to short the banks. I also think this is the time to short retail and consumer discretionary. And I’m also looking at selling my oil positions, which had been my safe hedge.
He also told me that cash was the next best option for those who are not comfortable shorting stocks, which a lot of investors are.
http://www.cnbc.com/id/31852906
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