There was a sharp reduction in the money moving into stock funds in November, which is also bullish, but it would have been even more bullish if there were outflows from stock funds. This did occur at both the bottoms in 1998 and 1990. Aside from the cash levels held by mutual fund managers, money market assets are at a record level and seasonal inflows into the market are heaviest early in the year. The fire has been lit but the gasoline needs to be thrown on it. The 1998 and 1999 timeframes represented major intermediate-term lows while the one this year occurred before a nice tradable rally.
Downside risk is low and the probability of an improved market environment is rising.
The McGraw-Hill Companies Inc. All rights reserved.