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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (54643)	6/19/2000 10:37:00 PM
From: Stcgg	Respond to of 99985

Liquidity Trim Tabs Up Date - Monday, June 19, 2000.. On Friday liquidity was positive $1.1 billion. The Trim Tabs Market Capital Index was down $126 billion, 0.7% at $17.56 trillion. As of the COB June 15, the year to date change is down 0.3%. NYSE is down 1.3%, S&P down 0.4% & Nasdaq is up 1.4%. All equity mutual funds had an inflow of $4 billion on Friday. US funds had an inflow of $3.5 billion following the NAV up 0.6% on Thursday. The average NAV was down 0.2%.The breath was positive 45-13. International funds had an inflow of $0.4 billion. The average NAV was up 0.5% For the week ending Thursday, June 15, US mutual funds had inflows of $2.5 billion. Aggressive Growth got $41.5 billion, Growth $0.5 billion and Growth & Income $0.5 billion. New offerings picked up to $3 billion. Liquidity Trim Tabs reported today that stock market liquidity last week stayed positive $7.9 billion on the back of ATT's completing the cash purchase of Media One for $19 billion. The net actions of corporate investors in terms of growing or shrinking the overall trading float of shares is the best leading indicator of future market direction. Other than the Media One deal being completed, we conclude that, by their actions, corporate investors are basically bearish. (1) New offerings again approached the $2 billion weekly rate -- while less than the $5 billion we had predicted, was still an up tick. However, the much anticipated China Unicom and Deutsche Telecom deals were priced on Friday and will start trading today, Monday, thereby dramatically boosting this week's new offering totals. (2) On the other side of the ledger, newly announced cash takeovers slumped to under $1 billion for the first time since mid-April. (3) Similarly, while newly announced stock buybacks did rebound to $1.8 billion from the under $1 billion weekly pace of the prior fortnight, that is still much less than the $4 billion weekly rate of the prior two years. (4) Add to the slowdown of stock buybacks and cash takeovers (5) The fact that insider selling -- particularly at tech stocks with huge option overhangs and recently unlocked former IPO's -- remains at high levels. Equity fund flows turned volatile last week - one day with inflow and the next day with outflow and the flows, both in and out, were large. What the flow volatility says to us is if the stock market goes down for more than a day or two at a time, then funds could see big net redemptions. The one area of flows, which have been strong is high yield funds, having an aggregate inflow last week of $765 million, or .65% of total junk bond fund assets. That compares with outflows from all other bond and hybrid funds of $1.5 billion. Obviously, junk bond investors believe the economy is slowing, therefore lowering yields, but not enough to cause defaults. Redemptions in equity funds would be the last straw necessary to break the bull market's back. May's modest decline in margin debt meant that this stock market is still highly leveraged. The only saving grace has been hefty mutual fund inflows. Without those inflows, this market is very vulnerable to a sharp downturn. Margin debt grew by $100 billion between the end of October and early April. Since then, margin debt is down just $40 billion. Yet, the overall market is relatively unchanged since last November. That says that many investors are still highly leveraged. What stocks have they bought on margin? Obviously the best NASDAQ 100 names that most of the Aggressive Growth funds also own. If Aggressive Growth have outflows lasting more than a few days, then the big NDX names, such as Cisco, Oracle, Dell and the like will be quite vulnerable to another major down draft. We turn short term bearish this week from neutral the prior report. Why? A hefty new offering calendar to start this week, combined with a slowdown in float shrink activity by corporate investors are two reasons. Another is the volatility of fund inflows that says if this market goes down for more than a day at a time, we could see hefty outflows lasting more than a day. Bearish corporate investors, volatile equity fund flows and highly leveraged individual investors does not bode well for overall stock prices going forward. In our model portfolio we short 2 (two) Russel 2000. Regards, TrimTabs.com Investment Research 707 874 9546 >><<