That makes some sense. There are also other cross currents that make this time of year difficult for equity markets. Foundations and endowments often cut back equities around now if the year is positive to meet their 5% spending requirement. Pension funds that have a stock/bond mandated percentage, often rebalance, which in our case would lead to net selling in equities. Many others. The Mutual Fund selling issue is a fact, but given the last few years, it will have diminished impact since the Oct. year end is for their tax year, not their performance. The tendency this year, I imagine, will not be loss taking, but rather gains trimming.
I'm on record as being bearish starting this week, but my gripe is more structural. We have simply come too far without a pullback. We may very well be in a new bull market here, but we will only know for sure on the pullback. I agree with Z's view that the 1640 to 1720 area would be ideal for the bull case. And the new rally must be led by stocks that are reasonably valued. No more bubblemania leadership.
Best of Luck.
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