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Strategies & Market Trends : Stock Attack II - A Complete Analysis

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To: Haim R. Branisteanu who wrote (40485)10/18/2002 8:47:35 AM
From: Kip518  Read Replies (2) of 52237
 
RevShark

10/18/02 08:11 AM ET

One interesting aspect of the recent rally is that it took place during a week in which mutual funds were seeing cash withdrawals. According to Trim Tabs, stock mutual funds lost about $9.3 billion in deposits in the week ended Oct. 16. Market prices are ultimately determined by the supply and demand for stocks so how could we rally when demand is apparently falling? The most logical explanation is asset reallocation out of bonds and short-covering.

Even a minor reallocation out of bonds into equities can dwarf mutual fund outflows and be a very powerful driver but the confidence of the general public in the equities market is something that may have much more severe consequences.

thestreet.com
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