@Chipper & Aurelian & Steve,
Thanks for playing…given your opinions are you surprised that volume isn’t rising in SP500 with the price rise? Volume is falling (albeit back to fairly normal historical levels). If money’s shifting from small caps into large caps…or being are taking big bets based on the ‘fed put’'or there is huge leverage being employed in the carry trade and the profits are going into the stock market driving up prices, how are they going in? Volume is falling.
The ‘Fed Put’ could likely be seen in the 2009 to 2012 time frame with a huge spike in volume that gradually started falling back to more normal rates. It’s not being seen any longer.
@Geov. I am not suggesting anyone make tactical allocations based on this. I am just playing around with the new charts. They’re fun. I am not suggesting that a recession is imminent. I am presenting earnings, growth and volume numbers and seeing if people have opinions particularly on these. They seem to point (to me at least) to an overvalued market. I’d be interested to hear opinions that say otherwise? I think fundamentals are very poor timing indicator. The market can stay overvalued and get more so for years. I am just presenting some charts.
I am still mostly very long. I am just asking you and others…volume is falling…there is clearly huge leverage in the system. That money isn’t really going into stocks. Where’s it going? Steve pointed to an article that says it’s going into long-treasuries. I would love some charts on long-term treasury volume to support that. ETF volume has really spiked in TLT…but ETF’s have also matured, so futures data would likely be better here. I don’t know a good source for long-term historical volume charts on these futures. Anyone?
Steve’s article concludes:
“Conclusion: The carry trade causes a rising U.S. dollar, rising U.S. bond prices, rising U.S. stocks, and deflation in commodity prices. Of course, an unwinding of the carry trade will cause the opposite.”
Institutions and hedge funds aren’t ‘pouring into stocks.’ If they were, then…why is volume falling? I am also fairly skeptical that over the past 12 months people have been increasing bets on long treasuries (even if forbes writes that), but at least it’s a theory. I don’t have the charts one way or the other here.
But, I also know that nearly all major futures traders that this article claims are doing ‘great’ with this trade are doing very poorly.
Winton capital’s averaged about 4%/yr returns since 2009. QIM is down over this time. Indexes are very mediocre. These firms aren’t ‘doing great’ and I doubt they are driving up their leverage to bet on LT US bonds.
I’ve also heard companies are buying back shares at greater rates. They aren’t. Not based on P123 numbers. I added a series on this.
I have looked up volume on ES, futures contract. Volume is below where it’s been historically. Not up. So…again…Volume’s not rising and up-down ratio isn’t changing…and companies aren’t buying back more shares.
Anyway…just playing with charts and curious to see any ‘cool charts’ from other sources.
So…where’s all this leverage investing right now?
Best,
Tom