Hello irby!
With the pop in the market indices yesterday, has anyone noted any fund buying of sectors? If so, was it strong buying? What sectors did you notice this buying in? Apparently the funds have sold off in their sector rotation approach to the market. For instance, the large block high-techs were hit again. Still the funds have allot of money that needs to be placed in the market along with the money they obtained through their profit taking. I see the fund as buying on the dips and I think that is why this market correction we have been seeing has been comparatively minor. So I am looking for this return of fund money to the market and want to find out where it is going.
By the way, irby, this is a good thread.
I think in tracking sectors, we need to think of sector rotation and keep a close look at what the funds (big money) is doing in the market. IMO the funds tend to accumulate stocks and sectors before they move into a strong uptrend and get on the radar screens of others like the general public. Once in an uptrend, I think the funds would tend to purchase the most on the selloffs. They have so much money to move around that they cannot wait for this to happen before the purchase. That is also why they are likely to invest by sector instead of buying into the story of an individual stock. So the fund buys into the leaders of the sector and make their money on the story and fundamentals of the sector. Of course when they have selected the sector to buy in, the funds then must filter the group into individual stocks where they place their money. I wonder what criteria they use to select sectors with and also time their entry into the leadership of the sector? Due to their large presence in the buying and selling activity, I am sure it is in part technically (charts and tape) based, at least to see how they are impacting the stock they are purchasing and to look for supply when they are buying and demand when they are selling.
I think we first need to talk in terms of sectors, and then individual stocks. Without the framework provided by an analysis of sectors and their growing technical strength or weakness, the talk about individual stocks for our purposes here would be meaningless. Some of you are tape watchers, so you can help in this fashion by noting where the big blocks are moving out of and going to by the way you have sectors and industries set up on your screen. The chartists here can help by providing analysis of the short to intermediate term technical strength of particular sectors. Look particularly for signs of accumulation and distribution and evidence of a trend forming. Scan software can help to quickly narrow down the field. The people who follow the corporate market, and the fundamentals of companies and the industries they are in can help with that part of the picture.
Any feedback or suggestions?
Bob Graham |
