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sa<>Bearish About Stocks? So Is Everyone.

the business insider June 18, 2010 | about: SPY


We highlighted before how U.S. mutual fund investors have been pulling money out of U.S. stocks for many years now, with a sharp rout during May, which was the largest outflow from U.S. stocks since Lehman (LEHMQ.PK) collapsed. Here's one of the charts we showed two weeks ago:

click to enlarge

http://seekingalpha.com/article/210691-bearish-about-stocks-so-is-everyone?source=hp_wc

'Average Joe' mutual fund investors have been net-selling U.S. stocks in 2008, 2009, and year to date 2010, according to ICI fund flow data. People obviously still own some stocks as part of their portfolio, but from an asset allocation perspective they've been bearish on equities.

What about 'the smart money'? The hedge funds. Surely they're the ones over-hyping the market right now....

Actually, no. They're bearishly positioned as well. As shown below in a chart from Bank of America Merrill Lynch, via Market Folly, global macro hedge funds have recently become net-short the S&P 500.

Even speculator positions in S&P 500 futures show net-shorting.

>Key take away? It's not just the average mutual fund investor who has been pessimistic towards U.S. stocks. Now even macro hedge funds and futures speculators are bearish.

Thus, while in 2006 being bearish was contrarian, right now being bullish is. Know where you stand within the range of sentiment.

(Charts via Bank of America Merrill Lynch, Macros have big position movements, Mary Ann Bartels, 14 June 2010)
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Disclosure: No positions