Ok so in a nutshell the correction as it were is upon us--> in that the stk action now is manic and primarily small caps. " Speculative " It was a bad sign that banks did not take off further---
Strong bank earnings failed to entice buyers, BofA flows say: At the Open
Oct. 20,
- Strong Q3 results from big banks and rising rates couldn't prompt BofA clients to be net buyers of financial stocks last week.
- Strong equity trading numbers drove better-than-expected earnings at Goldman Sachs(NYSE:GS)and Morgan Stanley(NYSE:MS), while J.P. Morgan Chase(NYSE:JPM)and Citi(NYSE:C) also topped forecasts.
- And the 10-year Treasury yield(NYSEARCA:TBT)(NASDAQ:TLT)rose above 1.6%.
- Financials(NYSEARCA:XLF)gained 1.2% on the week while the S&P Bank ETF(NYSEARCA:KBE)was up slightly.
- But despite "upward revisions to Financials estimates amid Banks results last week, clients sold Financials for the third consecutive week (though corp. buybacks in the sector accelerated; Financials buybacks are once again outpacing Tech buybacks)," BofA strategists Jill Carey Hall and Savita Subramanian write in a note.
- Clients sold in nine of the 11 sectors, with Info Tech(NYSEARCA:XLK)seeing the biggest outflows. Tech, Consumer Discretionary(NYSEARCA:XLY)and Health Care(NYSEARCA:XLV)all saw selling near record levels.
- Overall, BofA clients were net sellers of U.S. equities, with the biggest outflow since June at -$2.3B, seemingly shrugging off the best S&P(NYSEARCA:SPY)weekly performance in three months.
- Institutional clients sold for the third straight week, with the largest outflows since March, while hedge funds also sold.
- "Selling by institutional clients in recent weeks aligns with historical trends: institutional clients’ sales have typically peaked in Oct., suggestive of potential tax loss selling ahead of the Oct. 31 deadline for mutual funds to realize capital gains," Hall and Subramanian write. "Private client selling has typically peaked in Dec., ahead of the Dec. 31 cutoff for individual investors. Flows have typically reversed in subsequent months."
- But overall, clients were net buyers of small-caps(NYSEARCA:IWM)while net sellers of large-caps.
- Hedge funds are now increasing net positions in small-caps<<<<<<<<<<<<<<<
Ok so we have outflows Institutional that we must be aware of. Hedge funds are rotating... a stock like SNAP or ZS might really hurt you.
Although small caps is obviously my forte' lets use that bond yield as a gauge and not follow along. Use these next two weeks to raise cash.
The System that I employ always tips Red and then within 2 weeks stuff is supposed to happen... I myself am a doubter! How can they know when all of this world stuff is changing all the time? How could they know?