The Weekly Update 11/17/2023
Today you will receive an email from The Wealth Strategies Group with the monthly update for The Seven Signs of a Changing Economy™.
Sign #2, Money Flow is so good that I have reprinted here as The Weekly Update. I suggest you print this and put it in your file to look at one year from today. Then next year or November 17, 2024, post Presidential election, let’s compare notes!
2) Indicator: Institutional Money Flow
Where it find it: www.lipperusfundflows.com
What to look for: Increasing or decreasing prices on high volume of large block trades
Sign #2 is our Money Flow weathervane. This sign is used to measure which way the investment money is flowing, i.e., into, or out of, specific parts of the capital markets. It is also used to measure how much money is flowing. Before I get to those stats, let’s observe a few other historically accurate data flow points.
- Since 1950, the six-month period of November through April are the best performing six months of the year at +7% on average (Source: Bloomberg 11/3/2023).
- In just six weeks we start a Presidential election year. In the years where the President is running for re-election, market performance has been excellent. (I expect Biden to run despite ongoing speculation to the contrary). There have been 15 of these election years since 1952 and the average S&P 500 return has been +15%!
- It is my opinion that the Federal Reserve is done increasing interest rates to fight inflation, which you will read below in Sign #7, is dropping like a rock. Even if the Fed hikes one more time it would likely be assumed to be the last one and the markets would do well, i.e., it doesn’t matter.
As for Money Flow, well Mr. and Mrs. 401(k) continued to sell a record amount of mutual funds holding the ownership of Corporate America with sells of $44.12 billion between 10/4/2023 – 11/2/2023, making the annual outflow YTD $168.99 billion! (Source: ICI, Investment Company Institutional, November 8, 2023)
In addition, hedge funds and aggressive trades have the third largest “sold” short position in history!
As you observe the chart below read the three bullet points above one more time out loud! Then, ask yourself what happened after the prior three gold star lows before this one!
You are reading and looking at “Rocket Fuel” to the upside.
Sign #2 is so positive I can hardly believe it.
I’m interested in your thoughts, comments, and observations. Feel welcome to call, email, or stop by the office and say Hi.
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.