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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: High-Tech East who wrote (14538)	9/8/2002 10:09:39 PM
From: High-Tech East	Respond to of 19219

... I hate to be accused of harping ... again ... <g> ... but take a look at this from the September 5 issue of ContraryInvestor.com ... ... AND "BEAT NEBRASKA" _____________________________________________ Fundamentals...You may remember that on Tuesday we ran down equity mutual fund inflow numbers for both the prior week and the official ICI July tally. One of the most important data points in our minds was the fact that cash in equity funds had fallen to 4.1% on July month end as mutual fund managers had actually sold a smaller dollar amount of equities than had been officially redeemed during this record setting redemption month. By sheer simplistic deduction, this meant that any further cash redemptions were going to necessitate direct sales of equities by the funds. Given current uncertainties and the clear change in tone in mutual fund inflow data recently, we consider 4.1% cash in equity funds a dangerously low level. One which must have fund family management uncomfortable. For the week ended yesterday, $3.9 billion was redeemed from domestic focus equity mutual funds. Of this, $300 million came from domestically run foreign focus funds, so we'll call the pure number that influences the domestic equity market a take out of $3.6 billion. At the risk of completely beating a dead horse, the public is not returning to equities yet. Remembering that only over the last three months have we seen the first real signs of equity fund redemption activity since the market peak two and one half years ago. In July, equity fund outflows totaled 1.7% of the then estimated market value of the domestic equity mutual fund complex. As you can see, this is below the panic of 1987 and on par with prior heavy redemption periods of the last three decades. But our personal feeling regarding this number is that it is pocket change. Would 5-10% of the equity mutual fund complex being redeemed really be unthinkable? Or perhaps more? As the baby boom generation edges ever closer to those wonderful retirement years, this won't be a possibility anymore, but rather an inevitability. And the worse the equity markets perform near term, the closer that inevitability approaches. It seems that with 4.1% cash, equity mutual funds are making a bold statement that significant redemptions will not to be seen anywhere over the near term. Otherwise, there's going to be a whole lot of stock for sale, now isn't there?