So after all the explanations, is liquidity increasing or decreasing at the moment, day, week, month ?
This type of liquidity you are looking for that affects the US stock market, measured in terms of available stock for trading, (AMZN), and cash available going in, (or out), is here....
Liquidity . . .
Consistently a reliable indicator on which to base the timing of trading and investment decisions; The KEY to understanding how and why markets move.
As of June 28, 1999: (a Summary)
Liquidity has been positive over the past nine weeks, yet stock prices have dropped. Obviously portfolio managers have been increasing their cash positions, as they seem to have been reluctant to pull the trigger on new positions with a FOMC rate hike meeting staring them in the face.
Sell on the rumour buy on the news. Our guess is that the market will pop early this week even before the rate hike is announced. Even if the Fed raises the Fed Funds rate by 50% basis points -- almost already fully priced in -- our guess is stocks will make a quick dip and then start a decent rally.
Yes, there are lots of new offerings in the pipeline, but since portfolio managers are nervous here, if the market does take off, they will not start using up cash to buy new deals until at least a week after stocks pop.
We do remember that the market is down as many times during the summer months as it has been up. The key is how fast will the new offering calendar suck cash out of this market. If cash takeovers keep happening and it takes a week or two before the new offering calendar tops $5 billion, then we can have a nice run here.
Strong Liquidity + Sideways Stock Prices Equals Cash Buildup.
Cash Takeovers & Buybacks Still Huge. New Offerings Slow.
Margin Debt Soars 26.2% Year To Date Vs. Market Gain of 6.8%
Corporate Investor Not Leveraging To Pay For Buybacks & Takeovers
Mutual Fund Flows Continue To Drop. June US Equity Rate Down to $9.3 Billion
Here, you can obtain the data for daily, weekly, and monthly:
trimtabs.com
Daily: (through June 21, 1999)
trimtabs.com
Weekly (through June 21, 1999)
trimtabs.com
A glossary of terms:
trimtabs.com
However, this is a fee based service, there is a 30 day trial period.
Here are the fees... not cheap.
trimtabs.com
No, I do not use this service.
My trading is based in a combination of Voodoo (T/A indicators such as MACD, +DMI/-DMI, ADX,) with a prescreening of "sound" companies, with a relatively volatile trading history... eyeing companies that have recently "suffered" a shock in price... always paying attention to overall psychological sentiment, (of which SI is part of such measure)
Once position is established, then I start selling covered calls, preferably those stocks that have high premiums... until they call them away... then I start all over.... sometimes, I do engage in "day, or week trading" with a small % of funds.
Of course the objective is based on greed, but I am patient, and I hate stock [market] hens... who squawk doom and gloom, a la 1929... taking for granted all the advance and technology since then....
Above all... my pet theory tells me that the gargantuan population increases of late... almost guarantee a continuous bull market for many years to come, provided the masses of people get some education.... at least enough so, that it would make them capable of participating in the market.... globally.
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The liquidity I am referring to in my Paul Bunyan "explanations", is that due to the recent devaluations of late in most third world countries, (certainly it is the case in Lat Am), they are viewing the US dollar (and Market), as a safe heaven to protect their life savings, which in many instances these have been destroyed due to said devaluations.
In addition, many of these countries, (Mexico, Brazil, Argentina), to name a few, have been under the directive of US and European educated "leaders".... who although on the one hand have introduced, forced, get away with the imposition of Free Market systems.
However, they have done so, in a very Latin American style, which means lots of corruption.... this simple variation, because is so grandiose, destroy the positive effects of the free market, and accentuates the "discipline measures"... giving a bad name to "Free Markets", in the eyes of the respective populations.
I can go on, but you get the picture...
Enter the Internet...
This is giving the capability to many individual investors, (for now, only the very wealthy, but in time, this will extent to the more common "man on the street"...
They view the US Dollar, and market as a safe heaven... regardless of internal fiscal or interest rate policies, as in any event, they will be better off with their savings in US Dollars than in their local currencies, since they are all basket cases.
This will not affect demand for AMAZON, as it is a risky stock and most Latin American investors are very conservative... nevertheless, this could change as information flows.... and GREED, by the way, does not recognize borders, or national origin. In addition, the liquidity I also referred to in my earlier post is from the US baby boomer, who seem to be "voting with their wallet" to take matters into their own hands and make investment decisions by themselves... i.e. investing more in individual stocks, than in mutual funds... (my theory tells me that this will continue to take place for the next 10, maybe 15 years, or somewhere in between)
I understand that the majority of funds, which really drive demand overall are corporations, investment funds and the like.... However, it is my opinion that more funds are being managed by individuals and increasingly become more important.
Let's not forget that there may be several billions of dollars in inheritances that as the older generations pass on, an important percentage of said wealth will find its way in the stock market.... this money could be coming from appreciated real estate.
And, finally, as for the other markets, i.e. Asia, (ex Japan), Europe, and Latin America....
My personal opinion is that:
Japan is in the toilet, and will remain there, in spite of speculators and governments to prop it up.... until they learn that "life-time employment" is not guaranteed, plus their tax system seems to be all screwed up... not to mention that banks and insurance companies seem to be in the hole... But I really do not know Japan, nor Asia that well...
Europe... well, the EURO is doomed from day one. Too many differences, not only in their economies, but in their characters, they will never function as a "single" economy. Besides, too much welfare.
Latin America, We are too corrupt, however we are more homogeneous than Europe, (at least we have the same language, (except Brazil, where they speak Portuguese).... Dolarizing the sub-continent could bring discipline to the Politicos... but the expert say, it is not that easy....
So in short, I say, liquidity will increase for both the US Dollar, and equities market, as all these people will find the US Dollar and market more attractive, companies in the US based in their discipline and technology will continue to thrive, and expanding their markets globally....
As for day trading.... I think that I am preaching to the preacher himself, so no, I do not have a good tip... sorry.
I hope this clarifies a little more about the fire, kindling, oxygen supply and the rest of the earlier gibberish... sorry for taking so long to respond... I went to eat a delicious Salmon with a great California Chardonnay... (1996 Cuvée Sauvage), named after the wild yeast they use (as opposed to a commercial yeast)... fermented unfiltered (I believe such is called "sur lie" --sorry, Yo no hablo Francés, so I may be mistaken).
Salúd. |
