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Strategies & Market Trends : Tech Stock Options
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To: John Lacelle who wrote (47648)7/12/1998 5:46:00 PM
From: donald sew  Read Replies (3) of 58727
 
John,

>>>>Equity Funds report the largest inflows in 12 weeks, totalling $5.4 Billion; International Equity, Emerging Markets Equity & Asia Pacific Funds also report record inflows; Taxable Bond Fund inflows of $1.2 Billion are the largest reported since the beginning of the year.

Week Ending Equities

This week 07/08/98 $ 5.389 B
Last week 07/01/98 $ 0.542 B
Last Year 07/09/97 $ 4.515 B
4 week Mvg Avg 07/08/98 $ 3.597 B

amgdata.com <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

The inflows last week jumped dramatically which is a strong motivator for this helium market, but check the 4 week moving average and right now the inflows are about 20% below last year for same time period. Keep in mind that the price of stocks are substantially higher. Last June the SPX was at 900 so the price of SPX now is 30% higher. So, average inflows is down about 20% and the price of stocks lets say is 20-30% higher. Well how much longer can this last.

I am not a full believer that there is that much money on the sidelines in light of inflow average being that low, so can we conclude that the mutual funds are using have less cash on hand than they did for the same time. I recall on CNBC that one of the fund managers admitted that they were 99% invested. If the market would turn watch how fast the funds pull out with the small investor sucked in and holding the bag long enough for the big boys to get out.

As I stated before, I am now negative towards the market, but will not underestimate the helium in it which will make the market unpredictable for the short-term. In light of that I will be playing a strangle/straddle in the OEX next week since the time value premium of the JULY options will be low. I just have to convince myself that there will be volitility in either direction.

Seeya
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