Perhaps, the mutual funds were supporting the INDU & S&P for end of the month "mark-up" purposes.
You know what they say, follow the money.
April is historically the best month for equity fund inflows, with 11.1% of the annual inflow invested in April, as compared with the average August low of 5.5%. Furthermore, in spite of the Naz selloff this month, aggressive growth funds continue to take in a disproportionate inflow as compared with value funds or growth/income funds. I suspect that what may be happening is a tug-of-war between the liquidity being removed by individual investors and hedge funds on one side, and liquidity being added by 401 and other institutional investors on the other side. It would stand to reason that the institutional investors would wait for a nadir before committing their funds, and they may have used the early morning ECI selloff as their last good opportunity to commit funds for the month.
Individual investors and houses are quick to the trigger, or are rapidly taken out through margin, as was evident during the market plunge, while the average individual investing in retirement through company plans remains patient and long term bullish. It remains to be seen how this plays out over the next few months, and whether liquidity can remain positive in light of increasing interest rates and continued volatility. I suspect we will continue to be surprised by contrarian market moves.
All in all, this remains a dangerous market. |
