Monday, June 29, 2015

Money Flows and Other Views for the Market Week

*  Above we see the SPY ETF (blue line) plotted against the money flows into the SPY ETF.  Note that we've seen prolonged outflows from SPY since the start of the year.  That has corresponded with a period of prolonged sector rotation.  Year-to-date, for example, the healthcare sector is up over 13% and consumer goods shares are up 6.6%, while materials stocks are down 1.7%, conglomerates are down 5.3% and utilities are down 8%.  (Data from FinViz).  Interestingly, flows have recently turned higher in SPY, even as we're seeing turmoil abroad.  With uncertainty in China and Europe, I'm open to the thesis that U.S. stocks could become an increasing safe haven both because of relative growth and relative yield.  If that's the case, those money flows should grow and the SPY chart would start to look quite different.

*  If there's a theme that has run through this blog and the books I've written, it's that we develop, not by changing who we are, but by understanding our strengths and leveraging those.  If you want to become a better trader, study the hell out of your best trading.

*  BIS notes that we're less prepared for future financial crises, with rates running out of room to the downside.   

Great post from Ryan Detrick on how data lookback periods can be manipulated to give either bearish or bullish forecasts.

*  Most hated stocks and other top views for the week from Abnormal Returns.

Top quant links from Quantocracy, including the derivation of a promising losing streak indicator.

*  SMB Trading on why it can be a problem to bump up your risk-taking too quickly.

Have a great start to the week!