Flow of funds. Masses running scared & Buying Bonds
So, one would think this massive rally was being funded by investors that are selling bonds and redeploying this money into the stock market. But that’s not the case, according to EPFR data over the past 8 weeks. The flow of funds indicates that money is pouring into bonds instead of stocks. US Equity funds have experienced outflows of $11 billion dollars, while bond-based funds have experienced net inflows north of $95 billion dollars.
This is a fantastic development from a contrarian perspective, for it indicates that the crowd is still incredibly nervous and this data is backed by the Anxiety index and the consistent bearish sentiment readings that have refused to drop despite this massive rally. Hence, the game plan; view all panic-based selling as a huge opportunity to open positions in top stocks at a discount.
Random thoughts on BTC and The flow of funds
After the MACD’s experience a bullish crossover the bitcoin market is likely to take off, and GBTC could surge to the 17.40 to 18.00 ranges with an overshoot as high as 21.00. Until then, the market is likely to remain volatile. In terms of bitcoin that could translate to a move as high as 14,400 with a possible overshoot to 15,500 ranges. If this comes to pass, it will prove that the Hard money and Gold bug community is a dying community and that the idea of Gold going through the roof is another myth. It does make sense to put some of your money into precious metals, but no more than 15% of one’s funds should be allocated to bullion; the ideal figure would be 10%.