Don, institutional money apparently has been moving into the NASDAQ stocks. They will not "run" with a short term profit. However, this has attracted allot of speculative activity to certain stocks like DELL. This type of money will not keep a stock afloat even though it can cause runs. Note on a down day how DELL is down and CPQ is up. Guess where the big institutional money has been going?
So even though part of this runup by the NASDAQ has been caused by speculative money, there has been allot of institutional money moving in from what I can see. If this sample that I have taken is representative of a more broad pattern, then if the NASDAQ were to drop, it will be this money that will continue to buy stock. So then do not expect there to be a big "blowoff" by the NASDAQ if this is the case. Retracement will be limited or at least short in duration.
I think the key for the longer term performance of the market will be the S&P 500. Look to see what sectors the fund money has been moving to. The funds in their sector rotation have been for a period of time now moving their money back into the market. Market liquidity from this fund money is what has been causing the "elevator" effect to the market you have been seeing this year. As long as there is fund money moving into the market, the market will float higher. Do not forget the record $37 Billion inflow into the mutuals for last month along with the money they extracted from rotating out of sectors. This is why many technicians have been missing their call on market pullbacks and continue to do so. Once market liquidity is factored into this picture, I think the technician will have a much more complete picture of the market.
I will be checking other tech stocks today for what I have been seeing with HWP, CPQ, which is longer term accumulation of stock. DELL is being played SOES bandit style, and IBM has seen initially an exit of fund money but now is seeing more of a mixed bag of buying and selling by the funds. Lately, there have been some fund money willing to help bid the price of this stock up.
Bob Graham |
